FDX was not the anchor.  Retail sales among other things weighed on the Tuesday action.

I thought the market might be under some pressure on Tuesday due to the relatively weak outlook of FDX. Its business moves the goods of the nation; if it is not looking at a good current quarter, that is not good for the stock market. FDX ended up having a decent day, however, gaining over 2% on the session. The market overall did not have such a great day. There were losses across the board, but they were not big.

It is a big story, however, that the market lost even a little ground. Every time it looked like it would sell to start a session, the buyers came back in and pushed it higher. Not so on Tuesday, but the losses were not great. NASDAQ, -0.5%; SP500, -0.3%; Dow -0.3%; SP600, -1%; SOX, -1%. I hate to see the growth-sector stocks getting pummeled, but they tend to be more volatile. They have been lagging on this move. Only recently did SP600 run out and take the lead. The SOX has been out in front most of the way, but even those stocks are getting stretched and came back a little more.

Stocks started lower. They bounced around in the morning, but it was all mostly under water. It was back and forth below the flat line, and in the late afternoon they sold to match the mid-morning lows. There was a double bottom, but the market could not do anything with it. It just traded back to the top of the range by the end of the day. As noted, it still produced losses for all of the indices.

The real catalyst for the cascade lower (that is tongue-in-cheek, of course) was the January retail sales. They did not fall negative, but they did miss expectations and fall compared to the prior month. +0.3% was not much of a gain when +0.5% was expected.

The New York PMI rose to 15.43   a nice run from just under 12   but it missed expectations. There we go again with expectations being missed. Import prices rose 0.8%, more than the 0.3% in December. It shows the trend is progressing. Cotton is surging and at a 150-year high. It is up well over 100% in the last six months. Just about everything we eat is up, and that was not helped by the recent storm. The ice destroyed zucchini, cucumbers, tomatoes, orange juice   you name it and it was hit. All of the produce will shoot through the roof. There is a joke going around that those who can afford grapefruit juice and orange juice will be the people hit by the Obama tax program increases. That just underscores how much prices will be jumping.

These are import prices, not the stuff that we make at home. Nonetheless, everything around the world is moving up in price. Whether it is a commodity or a finished product, it is moving higher. Do not tell that to the Fed. We do not have inflation, so there is nothing to worry about at all. No matter that the dollar has dropped 6% over the last six months. Everything we buy costs that much more to pay for it, but that is not inflation; that is just erosion of our currency.

Remember, we will be able to devalue our currency into prosperity even though no other nation has ever done it in the history of the world. We are the United States, and we have some good socialists in charge of our government. They know how to run things. After all, the government knows best, and we are a bunch of peons. We never built this country, and we could not know anything about what to do or how to make any money. They will show us how.

I am going to digress, but bear with me. There is an interesting show that my children watch called American Pickers. It is not about a bunch of rednecks and hayseeds picking their noses; it is about guys who pick through other people’s junk   or their treasures (that lies in the eye of the beholder). They find things to sell and try to turn a profit. The interesting thing about this is they give a history about what they find. I realized that the US, in our relatively short history, has invented most of what the 20th and 21st centuries had great use for.

People may say that is not true, but think about the basic items of commerce: cash registers, gasoline pumps, etc. You name it, and we have come up with it. We see a problem and we have a better idea and fix it. Why on earth would we want to adopt the system that Europe has which fails to produce anything new? I know that is somewhat extreme to say, but it is amazing what commonsense things have been invented in the US that you would have thought would have been invented in Europe or elsewhere.

I did digress, but I will get back to the real story. The story was that the economic data put a damper on the market. It was not the earnings from FDX. Even though the economic data was pretty good overall, it was not up to expectations. There is a string of beats in all of the economic data. Tuesday was not bad, but it was not the beats.

What do you get when a market is extended and you get some disappointing economic news? You get a pullback. Was it a big pullback? Surely you jest. We have had bigger one-day pullbacks that reversed anyway. We had a test of the 10 day EMA for a couple of days that reversed. The only thing was this one did not reverse, but it did not hit down to the 10 day EMA either. All in all, not much of a headache on the day, but it is something to watch.

When we take a look at the individual stocks, you will see they did not perform that well. Betting against the market has been tough thus far. I would not start betting against it based on the action Tuesday.

Wednesday is packed with data. There are housing starts, building permits, PPI, industrial production and capacity utilization, not to mention crude oil inventories (although they have become somewhat pass  right now), and the Fed minutes. We can see what the Fed was talking about   how many dissented and how angry these men were.

It is always curious to see who is a dissenter and who is fully behind the Fed Chairman and his Quantitative Easing II (going on Quantitative Easing III from what I hear). Two of them have already said do not look to me when it comes to voting for anymore extending of the balance sheet. We will have to see how it was in the meeting itself   if they spoke up or if they waited until they left the meeting and then stabbed Bernanke in the back. That is life on the Fed during controversial times.

There is a lot of data tomorrow. The backdrop to this is that the President put out his budget. It is just incredible the statements being made and what they are doing. I do not care what side of the aisle you are on, this applies to everybody: There are very few men who can go up there and maintain their character. Some of them do not show up with any character in the first place, to that is not an issue with them.

It takes a very strong person to stick to their principles once they are in Washington. Once they see the size of the problems confronting the nation, they tend to fall back and punt. I think this budget was a punt. There were a lot of bold statements made. A budgetary committee was supposed to have some great ideas, and none of those were followed. They are basically going to wing it.

We have tripled the size of the debt, and we will keep our spending at the level. Call it what you want, but it looks like a disaster is coming. The market may be whistling past the graveyard now, but we all could be eating dog food out of a can at some point. That is really not our concern right now with respect to the stock market, however. You might keep it in mind when planning on how to use your profits, but it is not what we are worried about for tomorrow.

Looking at the indices and leaders, we saw a pullback. It is a nothing of a pullback. The only thing that makes it interesting is that the market has not had one in so long. When it has a day of pullback, everyone gets excited about it. It has not turned into anything major. No break of the trend. We do see some stocks having trouble, however.

Now we will look at the pullbacks for opportunities. The market has been running and is still in its trend. We do not want to get in front of it, try to play it the other way, and then get crushed. The downside has been pushed back to the upside. Each time there is a downside day, you have to think it is about time   it has to end at some point, and maybe this is it. We will look for downside plays to be ready, and we will look for upside opportunity for stocks that have pulled back. A lot of these were hard drops, so we may not be looking at some of them. Others such as GLW looked decent in their nice pullbacks. We will find those.

It is probably a bit early to get ready to buy, but we will be looking. If it is a nice 1-2-3 pullback, then we can be ready to buy as stocks bottom at near support and start to bounce again. If it gets a bit uglier, we will start seeing the leaders like the semiconductors and maybe some retail stocks start to go struggle. Then you have to throw the industrials in there as well. If they start to struggle, we will then see a pullback. That is one we can play.

I do not anticipate a major selloff. Again, we will look for any pullback to be something along the lines of November. A nice correction that gets stocks set to rally again. There is still a very good foundation for this move called the Summertime Base, with the inverted head and shoulders at the right place after a big selloff. We have had two legs to the upside. We are looking to see if we can get a third. You might say we had our second consolidation in January. You might say that, but if you look at the SP500, it was not. A one-day, knee-jerk reversal is not a consolidation.

We will see if we get the pullback. Thus far it has not showed up. We will continue to play the upside, but we will mind our stops. Take gain if they get in trouble. Once they get in trouble, they usually have to go to a correction before they get out of it. If we get a pullback, take your gain and be happy with it. Look for other opportunity. Again, we will be looking for downside, and we will look for any rotation into other areas. If the money leaves some of these leading groups and looks for other places, we will follow it.

The trend is still in place. We will not get wild about playing the downside until we see something more significant. It takes awhile for a big trend to turn for a big selloff; a correction, however, can come quickly. We will be looking at downside plays as they present themselves.