Mmmmmm I’ve been waiting for a pullback in the stock market for a while now. Just so happens I will become eligible for my 401k plan in the next few days. Talk about perfect timing. But with all of the talk from all the so called experts out there, let’s take an overall look at what is going on in the broader economy and I will give you my thoughts on if this is a correction, or if we are going to enter a bear market.

With this week’s declines we have pretty much erased all of our gains this in the stock market this year. The DJIA is down 0.2% this year, with the S&P and Nasdaq being up 3.1% and 2.4% respectively. Hopefully you saw the volatility in the beginning of the week and had a chance to enter some stop order to protect yourself. If not, I would not be too concerned as we should bounce back to stay positive for the year.

I think we are setting up nicely for the ‘Santa Claus rally’ that always gets talked about each 4 th quarter. You have to take into account that this sell off may be because fund managers and individuals alike were starting to take some profits. I mean in 2013 we were upwards of 20% gains for all major indices, and then up about roughly another 6-8% on the S&P and Nasdaq at the halfway point this year. My guess would be that given the geopolitical risk and not the best of news coming out of Europe that people were just not comfortable risking those mediocre gains that were made heading into the end of the year. Time to rebalance and start putting in place a strategy for 2015.

Also it is not out of the norm to see some volatility in the stock market at this point in the year as people may be selling some of their positions they took a loss on this year for tax purposes trying to offset some gains. Some of these companies may pose a good buying opportunity as investment companies may still be high on their potential for next year and may be looking to buy back in after the wash sale period passes by.

Overall, we just saw the US economy grow above a 4% pace for the 3 rd quarter. A good sign if you are a long term buy and hold investor and one major reason I believe this is a normal correction and not us entering a bear market like some doom and gloom dummies (I’m sure we are all thinking of the same person here).

We also have to take into account the declining price of oil. Personally I think we can all agree this is good for the economy as it gives the US consumer more discretionary income which I think will be a factor heading into the major retail holidays in this quarter. I know this only saves the average person 5-10 bucks when they fill up, but on a national level that has the power to add to a company’s bottom line and increase earnings. Lower oil prices should also be here to stay too as OPEC just announced it sees less demand heading into this winter due to expectations of a mild winter, and the fact that the Saudi’s just increased oil output. I kind of feel bad for some MLP holders when I think about this.

Last but not least, we are seeing the overdue and much welcomes resurgence of the US dollar. Well, maybe resurgence is too strong of a word for now, we will see. This should hopefully help boost foreign investor confidence and bring those inflows of cash into US equities.

All in all, with everything that was just said, I believe if you are a long-term buy and hold investor you will make it out alive. Nothing to worry about. Traders should still have their opportunities as the volatility should continue. I would be a buyer, maybe use dollar cost averaging now as a strategy to get in, and don’t get lost in the panic of the moment. This is a healthy market evet and most would argue long overdue and much needed. I would expect to see discretionary income go up as oil goes down and earnings to continue to come in solid as we report the 3 rd quarter. Just beware of companies that have a lot of exposure to Europe, stay domestic. America is always the place you want to be.

My stock market analysis is not meant to be taken as a recommendation as to what you should be doing in your portfolio. You investments should always be based off of your own risk tolerance and suitability given your situation.