This market has had a tendency to punish anyone who reacts too quickly to signs of trouble. The irony is that we are so stretched and in need of a little weakness that it is tough not to be vigilant and move fast at the first sign of trouble. We know this one-sided action won't last forever, and if we can time our exit right, it will pay off nicely.
Unfortunately, the problem with being highly reactive to market action is that there are many false signals. That is still much better than being anticipatory, but when you react to weak action and we immediately turn back up it can be frustrating.
So far, we have a decent bounce and little memory of yesterday. Apple (AAPL) is at its lows of the day and the ISM number was weak, but the dip-buyers are active and keeping a bid under the market.
Don't forget that Fed chief Ben Bernanke is coming up again, and his silence on further quantitative easing is what caused yesterday's action. Any comments about QE can move this market very fast.
I have a few trades going in Pharmacyclics (PCYC), Fusion-io Inc. (FIO) and a few others, but I'm not overly aggressive with any buying. The action in small-caps yesterday worried me and my trust level is low.
More from James "Rev Shark" DePorre: