Top? Start of a Correction? Bounce? Bottom?

The markets current dip was not something unexpected. There were clues littered all other the tape. Speculative stocks were the top performers, no real leadership (except for AAPL), and pretty much every stock looked like a screaming buy. This is a combination for disaster and a sign of a top in an unhealthy market. But tops and corrections do not form in a day. They are a long, drawn out process (just as a bottom is) and can take anywhere from a few days to a few weeks to truly materialize. Bounces such as today's can still be played and new potential buys may appear, ready to be bought and flipped.. The key is to lower your holding period of a stock when the VIX is rising or at a lofty level. In a decreasing VIX environment, a longer holding period is rewarded. The truth is, we can never be 100% sure if we are in a top/correction or bounce/bottom. It is easy to look back at a chart and see that something was a top or bottom, but in real time, in the present, predicting the future is a tricky and near impossible feat. We can use clues and trends to predict but we can never be 100% certain unless a true (real) trend change occurs (such as a high vol breakout or breakdown).