It depends what you mean by "proper response"? Do you mean from a philosophical, "just war" perspective? Or from a recognizing-the-geopolitical-realities perspective?
From a philosophical perspective, Israel is well within its rights to bomb Hamas military and government buildings, invade the Gaza Strip, overthrow Hamas, and reinstate Fatah.
From a realistic perspective, that's easier said than done and isn't worth the cost to Israel. The best solution is for Israel to continue bombing the crap out of them for maybe another 24-48 hours, then try to return to the status quo ceasefire agreement as soon as Hamas ceases the rocket attacks.