This is a government policy and government whispers driven market, as well as one where GDP growth rate projections are being reduced. Earnings projections must logically follow.

Technically, the S&P 500 has failed to go above the 38% Fibonacci retracement level from last low to the recent high. While this may sound or be mystical, it is nonetheless one of the indicators that a significant number of technical analysts follow, therefore it becomes real and meaningful. A test of the 1100 low is now a high probability.

Accounts we manage which have chosen to tactically allocate between Owning, Loaning and Reserving, currently have 25% or less in stocks (and 5% to 10+% of that is in a gold ETF). Better buying opportunities may be ahead. Buying early rallies in this volatile market is not a good idea, unless taking a strong stand on a long term position regardless of short-term price action.

Conservative investors with a greater emphasis on capital preservation than reaching for gain, would probably refrain from re-entering the SP500 until it goes back above its 200-day average and is more than 50% or 60% of the way back to its July high. Of course, if it craters from here, all new price points would apply.

Upon re-entry, all but aggressive investors, should probably select large-cap, high quality, above average yield companies with strong business franchises, and demonstrated history of dividend payments and dividend increases. Getting paid cash while holding stocks is important, and grows more important as the portfolio becomes part of the cash flow source to support lifestyle or operations.

FULL DISCLOSURE:

While saying wait for a significant rally to buy, I have personally sold options (cash premium in to me now) to purchase SP500 shares in limited quantities if the index reaches 1000 and 970 (currently 1141). Those are levels where taking incremental risk might make sense to me personally, however, if it falls like a rock through those levels to 2008 levels, I will regret my decision to sell the options. Since risk control is key at all times, my exposure is limited in proportion to my assets. Such action is both aggressive and not available in IRA or 401-k accounts, nor in accounts that are not authorized for both margin and options level 3. [level 0 = writing covered calls; level 1 = buying long options; level 2 = options spreads; level 3 is "naked" option writing]. I would not personally purchase the index at this time and would personally wait for the 50% to 60% retracement to go long at this general level in this macro environment.