Editor's Note:

Look at the last six weeks in the market. We had an -8% plunge in the last half of June and now a +7% bounce in July. Investors are obviously confused and stocks are getting tossed around as sentiment reacts to economic data and news. I suspect that the market might chop around sideways as we wait for the upcoming Jobs report this Friday.

Given the volatility and lack of clarity on the state of the economic rebound, longer-term investors will want to stay very defensive and keep their capital ready. We would much rather buy a bounce from the July lows than chase the move now with the major averages still struggling with overhead resistance.

There will be individual exceptions and that's why I've added a couple of new watch list candidates tonight.