A pullback is almost definitely coming this week

A pullback in the stock market is almost assuredly coming and my sense is it will begin this week — after the end of the first quarter.

April begins the second quarter of 2014, earnings begin Monday, April 7th and the game begins anew. Asset managers who have "dressed up" their portfolios for quarter end will now need to assess the impact of earnings, future guidance, continued Federal Reserve withdrawal and the broader global macro picture upon stock prices.

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A re-pricing of risk is overdue. While expectations of 8 percent to 12 percent gains are not unreasonable for 2014, a noticeable pullback likely caused by an overbought condition and temporarily-deteriorating technicals will cause traders to bail out of some of the better performers as they raise cash. (Note the pullback in some of year's best performers in the past week).

The U.S. stock market has been essentially flat in 2014 — as it continues to digest the explosive move from 2013. European markets have also been absorbing their 2013 moves, while Asia has, for the most part, been decent with Japan building a floor after their dramatic move higher in 2013. China has been the wild card — in a downtrend for 5 years, it is now causing a bit more angst for investors as analysts/strategists try to discern the macro data of late. The recent weakness in copper is only adding to the slowdown chatter.

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Long-term investors will not panic. In fact, they are anxious to hit the "BUY" button when the nervousness hits, taking advantage of the weakness. This will allow the markets to pull back without collapsing as demand lies just below the surface.

An S&P 500 pullback to the 50-day moving average of 1834 is expected, while a move lower to the 200-day moving average is a possibility if earnings begin to really disappoint. This, I believe will be the extent of the repricing. I am not in the camp that thinks a 10-percent correction is in the cards. Ten percent from the highs would take us back to 1690. The only way the market would really start to break down is if geopolitical tensions heat up or the macro data weaken substantially.

To be clear, any increased tensions in Eastern Europe between Russia and its neighbors will cause global markets to go into "risk off" mode but I also would expect this to be temporary, providing yet another opportunity for the longer-term asset manager/investor.

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Once the market adjusts, then some churn to build a foundation should be expected as the macro data improves, the Fed withdraws and the talk of rate normalization continues. Then, a move higher based on real fundamentals will take hold. The market can and will sustain higher rates — it just has to be convinced that the economy is firing on all cylinders.

—By Kenny Polcari

Kenny Polcari is director of NYSE floor operations at O'Neil Securities and a CNBC contributor, often appearing on "Power Lunch." Follow Kenny on Twitter @kennypolcari and visit him at kennypolcari.com.

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Disclosure: The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.