The Expected Friday Bounce

We're finally seeing a bounce this morning as the short-sellers book some timely profits. Right now it all depends on your time frame. In the short-term we due for a bounce, but over the longer term, a solid argument can be made that a top has been put in and that we are now entering an extended correction phase that not only includes time (through stock market rotation) but also price (as valuations come down).

What does this mean? It means that if you're a long-term investor, you should reduce exposure on strength and build some more cash to buy stocks lower. However, if you're focus is short-term, you'll want to have a fair mix of both long and short positions. Short-term traders should also keep their positions relatively small. As always, it depends on your time frame and risk tolerance.

For what it is worth - if you're looking to sell and raise cash, next week will probably provide you a better opportunity than today. The reason? Historically the market has been a solid performer the week of St. Patrick's Day and Friday's option expiration in March. In fact, the Dow has been up 7 of the last 8 Mondays before St. Patrick's Day.