For the past 40 days we’ve been tracking and trading a market with cyclical pattern resembling the 2011 drop in the market as well as the choppy consolidation period that lasted for an extra month. This market requires more patience than we are used to, especially since 2011. During the period between Feb and Oct 2011, the market chopped and then severely dropped before it finally caught traction and began its bull climb again. Bull markets go through these phases and require traders and investors to be very patient, but always ready.
A seasoned trader with some wisdom and experience in trading knows that you don’t get two separate time periods in the markets with exact pattern during each period. But the cyclical patterns that were created during the 2011 chop/drop have so far been playing out again in a very similar way this year. We merely pointing out the struggles that we need to go through to resolve the chop and start the bull trend again. There can be several fake rallies and big slumps that can make trading this market very challenging.
That is why until we have confirmation of a renewed trend, it’s very important to keep a short term perspective on our trades. Any trading during the choppy consolidation period is all about catching momentum moves rather than a trend move in our Index Trading systems. The STOP prices will be tight because a reversal can happen every couple of days.