Jeff deGraaf, technician extraordinaire (formerly of Lehman now at Renaissance Macro Research) makes an interesting observation about the heavily overbought markets.
Last week, the S&P500 had ~93% of all stocks trading over their 200 day moving average. Normally, this degree of overbought should lead to a correction. As you can see in the inset box, it sometimes does.
However, if you are looking out a year, we see that over the past 3 instances, markets have been higher.
The takeaway is that you should determine if you are a trader or an investor before thinking about whether to lighten up or add on dips.
Different timelines and holding periods should consider different responses to the volatility.