Now, we are going to see the market's guts. A "nasty" correction of less than 1% is really nothing to be worried about, especially since the 20DMF is still in "neutral". As a matter of fact, the 20DMF cannot be in a buy mode before a much steeper correction that would push the lower panel back in oversold. In the meantime, we are in cash (after a cover your shorts signal). Back-testing has also shown that buying on a "cover your shorts" signal leads to lower results than staying in cash. T hat being said, some specific sectors such as Gold for example, could act differently from the general market. This is the reason why I like to follow the PM sector- which still has not produced a buy signal yet.
My general strategy is to buy early, but quickly sell if I sense that I am making an error. I might therefore buy/sell several times before staying in a trade for a longer period. Writing about the PM sector, we can see a very negative general sentiment towards gold/silver (You can see that the PM related ETFs are all showing distribution)... However, some gold mining stocks start attracting money again (GOLD, AEM, ABX and IAG-TRE). Not enough to spark a trend change, but enough to note some possible underlying change. As I write these lines, gold is slightly down. This is good, because it allows the sector more time to attract buyers (to think and react). I believe that a buy signal could come today or tomorrow. Of course, it is safer to wait for a market confirmation, for example a GDX bounce over its 200MA.
You could also keep an eye at the stocks I mentioned yesterday and see if they reverse back to their neutral zone on still positive LEV activity (NSM, CDNS, VRTX, RDC, BIDU) seem to meet these conditions, even though they are not at a support zone yet.
