Forget about Fibonacci numbers and oscillators for a moment. Just look at the S&P 500 index daily chart below. You will notice that we had an initial leg down in May. Over the past five-plus weeks, though, the net result of all of the noise has been a wild roller coaster ride to nowhere. The random, sudden fluctuations have left most traders emotionally exhausted, drained not only mentally but also financially from all of the chopped up trades and commission fees.
I know that I have been a broken record about holding heavy levels of cash during corrective periods in the market, but it is for good reason that I repeat myself. When you take the mid-point of the action since late-May, it indicates that each and every move has been faded, but not in such an obvious manner that there was easy money to be made.
At some point, the market will find the supply or demand to break either way for a tradable move. In the interim, opting for cash gives you the objective frame of mind that is required in order to quickly adjust with the market.