Make no mistake about that - this is certainly not an easy tape to trade. The markets bounced off MA(200) today, but things don't look too encouraging for the bulls. If MA(200) does break, the next support level is the March lows - 1256.
If you are long, you want to see the MA(200) act as support, but you don't want to see consolidation around these levels. Ideally, major moving averages should act as springboard and not as a consolidation zone. Too much time around these levels gives the market time to work itself off from oversold levels and the bears a chance to regroup and make a fresh attack on the indices.
So, how to play these markets? All things said and done, the momentum lies firmly with the bears. Plus, with Greece weighing on the markets, this also becomes a news dominated market, making it a tough market to trade. If you are not comfortable shorting stocks or do not have time to monitor your positions closely, cash is not a bad option here. Remember, being short term investors, we have the luxury of staying in cash, which buy and hold investors do not have. This seems like a good time to use that option.
Take care and good luck!