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Market bull Tony Dwyer sees an unsettling pullback forming, but he urges investors to buy it

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A big buying opportunity is unfolding, market bull Tony Dwyer says

One of Wall Street's long-time bulls believes a potentially stomach-churning pullback is unfolding in the market reminiscent of the mayhem of May.

Canaccord Genuity's Tony Dwyer blames too much enthusiasm surrounding all-time highs and overbought conditions.

But don't fear. He contends a pullback will create a solid buying opportunity.

"It's kind of like it was at the end of April. On April 30, we made the same kind of call," the firm's chief market strategist told CNBC's "Trading Nation" on Monday. "Nobody expected that, and all of the sudden you got a 6.5% or so decline from peak. We think it'll be a little bit less than that. But just similar setup."

The S&P 500 sharply rebounded from the May sell-off in June. Weeks later, the index was rallying to new highs.

This time, Dwyer speculates the pullback began last Tuesday, a day after the S&P 500 hit its all-time high of 3,017. The index is off 1% since then. Based on his calculations, the S&P has another 4% or so to fall.

"Even though you're within 1% of an all-time high in the market, only 36% of stocks are above their 10-day moving average," Dwyer said. "And, you've seen some of my intermediate-term indicators roll over."

His year-end S&P 500 target of 2,950 implies stocks won't muster a second-half rally.

However, his 2020 year-end target of 3,350 shows a more than 12% gain from current levels. In a note this week, he said his fundamental core thesis remains positive because of an easy Federal Reserve, low inflation, positive economic growth and valuation expansion.

"Rather than chase the tape, I'd rather buy it on a little bit of a dip," said Dwyer, who's advising investors to target offensive groups including industrials, financials, consumer discretionary, technology and communication services.

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A pullback is starting to strike stocks, market bull Tony Dwyer says