Thursday’s rush to the exits by institutions backs up our short-term call for a pullback. 

Watch and wait. Punctuation marks like these at the end of bull legs can last anywhere from a day to weeks and months, if not years. Odds are the major indexes will test their 50-day moving averages. We’re not trying to make grand statements about the long-term direction of the market. We’re driving a car, and paying very close attention to the road as it winds before our eyes. 

More heavy selling will keep us cautious. Only a significant deterioration of market leadership and key sectors falling convincingly below their major moving averages would make us outright bears.   

These pullback/corrections are great litmus tests that separate strong growth stocks from weak ones.