The equity markets continue moving back and forth on their volatile 2010 ride, and recent trading has been no exception. In fact, the market started out robustly higher in Tuesday’s trading, but by the closing bell, stocks actually had fallen into the red. Some technical analysts consider Tuesday a key reversal day for the Dow Industrials, and that reversal is considered a signal of a pending market decline.

Take a look at the chart here of the Dow Industrials. As you can see, the index has been very volatile all year long. The iconic measure of the market also remains trading well above both its short-term, 50-day, and long-term, 200-day moving averages. Yet, with the Dow near its year-to-date highs, there is plenty of worry that a correction of 4%-8% could be in the wind.

I think that if we do see this kind of pullback, it will be a healthy sign for stocks going forward, as they need to come back down to sustain the wider bullish uptrend. This pullback, if it does indeed take place, won’t impact intermediate- and long-term investors, but it won’t be too fun for short-term traders who are long this market.

If you have a lot of short-term money on the table, it might be time to start thinking about paring down your exposure. If you are a longer-term investor with a lot of cash on the sidelines, then I suggest waiting for the pullback to blow on to Wall Street. Then once the selling winds have passed, it will be time to get back into stocks.