First we need to define a correction: it is a temporary dip but not recession double dips that will drag on longer.
1. Accumulate cash. I just halt buying any stock and selling stocks for several weeks as of 5/19/2011.
2. Prepare the buy list. It is based on
a. The good (from my analysis) stocks that perform reasonably well
b. The stocks that have performed very well.
c. More controversial her: some stocks could become value when it plunges a lot; be careful a bad stock could go to 0 (esp. with unresolable problems and from emerging countries)
d. Buy contraETFs - place 3% less than the market prices.
e. Buy covered calls for stocks equal to 300 or less to cut down commission.
My logic is that if they performed well and plunge in prices due to correction, they will climb back. One's opinion.
I also check the % they lose due to the correction. The more they lose, the better buy. Again, one's opinion.
I've been right many times but was wrong last time anticipating a correction. Market timing is not a science and market is not always rational. I've more rights than wrong. The last anticipated correction had not been materialized. I missed some gains, but it is better to be safe.
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.