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Use Pullback as Buying Opportunity: Technical Strategists

Tuesday, 25 Jan 2011 | 11:56 AM ET

The market is due for a correction in the near-term, but use the opportunity to buy, as stocks will soon rebound thereafter, according to chief technical strategists Ryan Detrick of Scaheffer’s Investment Research and Mark Arbeter at S&P.

“There’s potential for a correction—4 to 6 percent,” Detrick told CNBC.

Technical Tuesday
What the charts are saying, with Mark Arbeter, S&P, Ryan Detrick, Schaeffer's Investment Research.

Among reasons for a pullback, Detrick noted that February historically has been the worst month for stocks. He also added that small-cap stocks in the past have been a leading indicator of overall market performance.

“Small caps led us on the way up…and [they were] down 4 percent last week, so this is a chink in the armor. "

"But nothing major," Detrick added.

He said he then expects a 12- to 15-percent rally after the market goes through its correction cycle.

In the meantime, Arbeter said he sees the S&P 500 declining to a range of 1,160 to 1,200.

“I look at a broad spectrum of sentiment indicators and they’re all tilted very strongly toward the bullish camp…we’ve had a strong run since July, so the market needs a break here,” he said.

Arbeter recommended investors use the pullback as a buying opportunity.

“Gold and silverare going to pull back hard and that creates a great opportunity,” he suggested. “And we’ll probably make new highs in the overall indices sometime later this year.”

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Scorecard—What They Said:

  • Arbeter's Previous Appearance on CNBC (Nov. 16, 2010)
  • Detrick's Previous Appearance on CNBC (Jan. 14, 2011)

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More Market Analysis & Opinion:

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CNBC Slideshows:

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CNBC Data Pages:

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Tuesday's Top Dow Laggards (as of this writing):

Johnson & Johnson

American Express

Bank of America

Exxon Mobil

Merck

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Disclosures:

No immediate information was available for Arbeter or Detrick.

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Disclaimer

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