THIS FEELS FAMILIAR AND LOUSY

The past 5 or 6 trading days have been miserable. If I was fully invested my nausea would resemble the swine flu. While I've taken my inoculation of holding cash, writing calls, and shorting a few names, the sick feeling still overwhelms me as I watch the equities that I own crater.

The sweaty brow, clammy hands, and ache in the pit of my stomach are symptomatic of my feelings last Spring as the market plummeted. Is this downward move just a minor, sideways adjustment or the onset of a major correction that will again test men's nerves?

We've only slid down to 9750 on the Dow and 1042 on the S&P so the bulk of the market's recovery is intact. Yet it feels as if we've fallen off a cliff. Rebounding equities have felt so good after the misery of the recession and credit crisis. Will investors panic and attempt to avoid a repeat of the March lows by selling out or will they view a 10-15% correction as a buying opportunity and start pushing prices upward again?

My guess, and it is obviously just a guess, is that the bias is still positive and after some of the gains are protected and taken off the table, the buying will resume. But the names will be different. The crappiest of stocks have done the best in the rally, and even the boldest investor should sense that it is time to become more cautious. Speculative names will be replaced with reasonable investments.

Over the next 6 months I still believe we will head lower, but not yet. So, use upcoming rallies to lighten up so that when the swine flu of investments hits us the nausea, chills, and aching won't become terminal.