Kass: The Sideways Correction

Mr. Market typically does his best to harm the most investors, and a sideways correction would likely continue to keep the skeptics out of the market and poorly position those investors for the next leg higher.

In this framework, a two-sided market becomes our investment reality, in which money can be made in "playing" the sideways consolidation (both long and short). This means that tactically I plan to be bolder in buying sector- and stock-specific ideas on dips, while continuing to short extended areas and stocks rather than waiting to buy on a sharp correction.

Incidentally, this scenario also provides a good backdrop to sell option premium in both calls and puts.

Color me less bearish on the market averages now and a bit more opportunistic in buying/shorting.

While the world's stock markets are no longer on sale, I continue to see improving credit spreads, a general skepticism surrounding the "bear-market rally," growing signs of economic stability, upward corporate profit revisions and a reallocation of large U.S. pension plans out of fixed income into equities as the proximate catalysts to the next leg up in the S&P 500 to around 1,050 by late summer.

Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.

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Know what you own: Some of Thursday's most active stocks in midday trading include Regions Financial (RF), Bank of America (BAC), Direxion Daily Financial Bear 3X Shares (FAZ), Direxion Daily Financial Bull 3X Shares (FAS), SPDRs (SPY), Financial Select Sector SPDR (XLF) and Citigroup (C).