My how time flies, even when you’re not having fun!  Only 30 days ago, the media were scoffing at anyone who suggested it might be a good idea to trim your stock holdings and “go away” for the month of May.

Now the early sellers are getting their laughs:  Stocks fell again on Thursday, bringing the Dow’s loss for the month to 6.2%, while the Nasdaq skidded 7.2% in May.  For both indexes, it was their largest monthly loss in two years.

I won’t dwell long on the supposed reasons for Thursday’s decline.  Initial claims for unemployment compensation were up 10,000, to their highest level in five weeks (a sign of softness in the jobs market).  GDP growth for the March quarter was revised downward to an anemic 1.9% annual rate, versus the originally estimated 2.2%.  Chicago-area purchasing managers reported the slowest growth for their local manufacturing businesses since September 2009.

None of these news tidbits should surprise you, because I’ve been cautioning for several months that the U.S. economy was due for a slowdown.  You can’t have a boom on one side of the Atlantic with a slump on the other.  And yet, plenty of bulls were quite willing, despite the historical evidence, to swallow the notion that America could somehow “decouple” from Europe—indeed, from the rest of the world.

Well, that’s what market corrections are for: to correct wrong ideas that get into investors’ heads.  Fortunately, I suspect that the current setback won’t prove nearly as severe as last summer’s edition, which lopped off 19.4% from the S&P 500 index (closing basis).

In fact, we’re probably close to a vigorous snap back rally that should erase much, though perhaps not all, of the red ink the market has spilled since early April.  Surveys show that the overenthusiastic investor sentiment of late winter and early spring has melted into worry, even outright fear—a big plus from a contrarian standpoint.

In addition, most of my short-term gauges of market breadth and momentum are hinting at a bounce soon.  So I’m inclined to do some modest buying in here, focusing on undervalued stocks with armadillo-like defensive features.  These names will serve us well over the next year or two, even if the market has to absorb a few more blows — from Europe or elsewhere — later this summer.