Market Trading Cycle 1

[justinblasi]

The Market has shifted gears recently, and you may find that you will need to tweak your trading game as well.
The market is still in a down trend based on a 6 month period. We will use the Dow to keep things simple. As you can observe from the 6 month chart we are still inside the down trend channel. We are close to testing the resistance of the channel at Dow 13,000, which also happens to be a psychological point as well.

On a 3 month time frame, we are in a straight channel. We have tested support 3 times, and technically it looks good for each time tested. It bounced from support at higher levels each time. If you look at the chart from a distance many may say and have said we have a double bottom. We are at a critical level on this time frame because we are about to test resistance around 12,750. If we break out of 12,800 this should confirm the outbreak.

On a 1 month time frame we are in an uptrend channel. We have channel support around 12,326. This looks to be a possible level to add positions if retested and confirmed.

On the 6 month time frame, we do not feel this is a great time to add new positions for we are about to be testing channel resistance. On the 3 month time frame, we also do not recommend adding new positions at this time, for we are about to test resistance on the charts for this specific time frame as well. On a 1 month time frame, we are in the middle of the uptrend channel. A good level possibly to add a short term position would be around 12,400 with major support around 12,300.
Any long term positions should be lightened up at this point and if we do have a break out don’t worry we will retest the break out point in time. At this point, you may choose to redeploy capital on positions. At Elite Trading & Speculation we are mainly short term traders. Now in this short time range uptrend, channel support levels are rarely broken on a daily time frame and weekly time frame. Contrary to when we were in the down trend, support was almost always broken.
Just remember never by at the top of a channel or near the test of resistance; wait for a confirmed break out or the retest which inevitably always comes.
Bottom line you must always change your trading rhythm with changes in the market. You must be patient in your stock picks. Wait for your price inevitably a stock will retest support levels; don’t buy at the top!


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