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Complacency is dangerous, especially in a rapidly changing world. For more than three months, investors who have been on the long side of the market enjoyed a broad rally that pushed the S&P500 close to its pre-2008 highs. In the last few days, things are changing, for three reasons: First, the Fed has made it clear that there would be no Q3 any time soon. Second, European woes resurfaced with concerns over Spain's sovereign debt. Third, the US government reported a lackluster employment report that put on hold hopes for a sustained US recovery. This means that financial markets are about to undergo a period where fear replaces euphoria, which may cause wide fluctuations in every asset category. What should investors do?

First, diversify across asset categories, rather than just across stocks. For instance, buy shares of SPDR S&P500 (SPY), Power Shares QQQ (QQQ) and fixed income ETFs like AGG (NYSEARCA:AGG), BND (NYSEARCA:BND), LAG (NYSEARCA:LAG), and TLT (NYSEARCA:TLT). More sophisticated investors may want to buy puts on SPY and QQQ long positions they hold or buy the VIX contracts (VXX).

Second, sell QE sensitive assets like SPDR Gold (GLD) and ishares Silver Trust (SLV), as well as, economically sensitive companies like Cliffs Natural (CLF) Walter Energy (WLT), Freeport-McMoRan (NYSE:FCX) Copper and Gold, Ford (F), General Motors (GM), Toyota Motor Company (TM), and Honda Motor Company (HMC), Nike (NKE) and Coach (COH).; and banks like Bank of America (BAC), and Citigroup (C), and Regions Financial (RF) Morgan Stanley (MS) and Goldman (GS) that were at the center of the financial crisis.

Third, buy non-cyclical stocks that pay good dividends like Pfizer (PFE), Bristol Myers Squibb (BMY), Abbott Laboratories (ABT), Eli Lily (LLY) and Merck (MRK).

Forth, sell bellwether stocks like Apple (AAPL), Google (GOOG) and Microsoft (MSFT) that had a big run-up during the recent rally--and are usually easy to cash-out to cover margin calls during major corrections.

Source: 4 Trades For A Turbulent Market