NEW YORK (TheStreet) -- Right now, the stock market is facing an interesting psychological set-up that will determine the direction of major stock market indexes such as the S&P 500, Dow Jones Industrials and Nasdaq.Also affected will be their corresponding index ETFs including the SPDR S&P 500 ( SPY - Get Report), SPDR Dow Jones Industrial Average ( DIA - Get Report) and PowerShares QQQ Trust ( QQQ - Get Report). There is a palpable anxiety on the part of investors and traders who have been left behind by the massive surge in the major stock indices so far in 2013 to capitalize on any dip to hitch a ride onto the back of the runaway bull market. This is why, up until now in 2013, every minor dip in the major indices has been bought aggressively.
The psychological profile of these folks is such that they are unable to pull the trigger on buying while stocks are rising sharply, for fear of being the sucker that buys at the top. However, any dip in the market may alleviate the fear of being the "last sucker to buy" and psychologically paves the way for these investors to go ahead and purchase stocks anxiously, presumably before the bull market resumes. Anxiety Among Longs There is another cohort of anxious investors and traders out there right now, and they represent the exact mirror image of the investors and traders who are anxiously awaiting a dip for the opportunity to buy. These are the folks who are holding large paper gains from the stellar advance of the stock market thus far in 2013. They are very anxious to preserve their gains and not give them back in the event of a potential market correction. In this regard, the recent rash of disappointing fundamental macroeconomic data on real income, consumer confidence, consumption, durable goods, ISM manufacturing, ISM services and employment, as well as disappointing earnings data from important bellweather stocks such as Oracle ( ORCL - Get Report) and FedEx ( FDX - Get Report) got these people very nervous. The increasingly terrible situation in Europe has them even more nervous. Adding to the nervousness of the longs is the deteriorating technical internals of the market. Indeed, there seems to be emerging a rarely experienced consensus amongst high-profile technical analysts such as followers of Tom Demark's system, various Ellioticians and conventional technical analysts that the stock market is due for a significant correction.