Rather than riding the emotional highs and lows of the news flow out of Europe and its subsequent perceived effect on the futures, a better approach is to let the dust settle after the opening hour or so of trading. Thus far, the bulls have not given up dip-buying quite so easily, since it has generally worked very well over the past several quarters. Bears looking for a bloodbath today are sorely disappointed, as the biotechnology, financial, and transportation stocks look to be outperforming to the upside.
I am open to both longs and shorts here, until one side starts to gain the upper-hand. Until proven otherwise, we remain in a bull market correction, with some relatively obvious lines in the sand for me–1358 on the downside for the S&P 500, and closing above 1405 on the upside. That said, I am not an eager dip-buyer here. There is no telling just how deep a bull market correction can go, which is all the more reason to avoid complacency. My heaviest position here is cash, and has been since this correction began.
Generally speaking, the market is not designed to be easy. It can appear so during trending periods, so long as you are not fighting it the whole way up. When the market enters a corrective phase, it only illuminates just how tricky things can get. I am not interested in making bold bets here. The time for that will come again, but for now avoiding a summer blunder is priority number one.
