Right now, the Transportation average is trading in an obvious range. That trading range will determine the direction of the markets until further notice, because of a wide range of factors outlined here, and especially here.
The move today in the Dow up over 100 points is further confirmation that the bottom from a few weeks ago won't be revisited until the Transportation index starts falling and testing support levels of the trading range.
The current set-up will make for some great short term trading in stocks that have a beta of 1 or close to 1, where the S&P or DOW are the benchmarks. If you do trade, be sure to use risk management techniques such as position size limits (2-3% of your portfolio in any position fully invested), and trailing stops (25-30%). Also, use limit orders or stop-limit orders to purchase stocks, so that you don't get screwed by ultra-short term gyrations in the markets.
For long term investors - or the buy-and-hold types. I recommend continuing to selectively and conservatively add to positions. Focus on stocks and funds that are beaten-up, and look to take profits soon on stocks and funds that perform well.
