The Greece debt crisis has caused a plunge on the global market recently, some might argue that it's due to the overbought on the market that is moving too far apart the fundamental of the economics. (http://marcfaberblog.blogspot.com/2010/05/cause-of-sell-off-is-that-markets-run.html)
A relief news about the Euro bailout with 1 trillion dollar aid package released yesterday from the European Union making a turn around on the global market to rebound. (Is this for long term?)
Well, if you are trading technical analysis and react to the everyday news, it will only cause you panic and frustration. Cut loss and reduce position is a technique to adjust your risk of your trade to protect your capital.
I would expect this rebound to form a lower high.
If you are bearish, you may want to take this chance to short when the lower high is formed.
If you are bullish, you can either take a smaller position to trade now since there are a lot of stocks showing reversal signal; but, you may incur higher risk to trade now as the reversal is uncertain. I would suggest to enter when a higher low is formed to enter with a lower risk.
The bull is badly injured and need some time to heal. I would stay sideline for the moment until a better opportunity is established.
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