Friday's sell off has carried over, as expected. Things are not looking very good right now for the US economy. This doesn't necessarily mean stocks will perform poorly. The question is will the US economy pull us into a recession and a worldwide market decline, or will the strength in worldwide markets hold up stocks? That question remains to be seen.
The Schlumberger (SLB) call made me more bearish than I've been in a while. The oil service sector is one that has been performing well, as is expected to perform well. Schlumberger said things could get worse in the next couple of quarters. The stock, of course, dropped 10%. Wall street always looks for perfection from the so-called "leaders" of the market. This will also be the case when Apple(AAPL) reports later today. If there is the slightest hiccup, the stock will drop. Both companies are outstanding, and are excellent long-term stocks even though neither is attractive for a buy right now.
I'm still in wait-and-see mode because of a few things... I think the Fed will cut again at the end of the month, and this could prop stocks up again until the end of the year. I'm not sure how much longer they can avoid a larger decline though.
I think some emerging markets will pull back a little, but will also rally into the end of the year.
Like I said, it's wait and see mode. If you're not comfortable, theres no problem being in cash, or even adding a small short position.