Sometimes you just don't have clarity. And when that happens, I always find it is best not to do anything. But sometimes you may not want to be in the market or can't be or you just don't know how to trade it.
And in those circumstances, merely stand aside.
If this is your choice, be comfortable with it, relax and don't ruminate or even castigate yourself if the market goes a little higher.
I stand aside sometimes just to let the market sort itself out - that is, to see what the next move is. We could be fast approaching such a time. And at such times I try to look at the market from a number of perspectives. This is part of the process of challenging each time perspective analysis as shown below, and also any views one may hold.
Let's take a look at these various scenarios.
First, a daily chart:
Chart 1
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This suggests a dip and then another move higher.
But then in a weekly picture we see something more sinister:
Chart 2
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Another leg down. So could perhaps the dip we saw in the daily chart (Chart 1) turn into the beginning of the wave five down?
And to the monthly:
Chart 3
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Further out we see a rosy picture. But what we don't know is whether the wave four low is complete, which is indicated by the wave four circle being 'grayed' out.
But what we do see is an impressive wave five up - to around seven or eight thousand. But note it could take seven or eight years to get there. And anything could happen along the way.
We have recently seen only good news in the media and analysis reports, but we are now starting to see some mixed views. One might say some balanced views. And this is consistent, really, with what we are seeing in the charts. Little clarity.
But the only reason we might not just walk away from this market and hit the beach without any charts is that at these levels, it would be tough to argue that we may not see some profit taking.
So if you have made some good money in the past few weeks, you may want to think about protecting it.
Enjoy the ride
Tom Scollon
Chief Analyst
Trading Tutors Team
