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The most frequently asked question perhaps is, how long is my short-term/Intermediate-term/long-term?
The answer is, it depends.
When in my report, I say, for example, “I expect some short-term weakness ahead” or “The SPX intermediate-term target is around 1,000”. These are based on my analysis so the time involved had a range:
- The short-term is one day to a week or two at most.
- The intermediate-term is a week to a month or two at most.
- Anything longer than 3 months are long-term to me.
On the other hand, in order to be objective, I use mechanical trading signals as my official trend indicator.
- When the short-term model is buy, I regard the short-term trend is up and when the sell signal is given, the short-term trend is down. Chart 1.0.0 S&P 500 SPDRs (SPY 60 min) plays the major part of my short-term model.
- When the intermediate-term model is buy, I consider the intermediate-term trend is up, while the model is sell, I regard the intermediate-term trend is down. Cobra Impulse System and Non-Stop are the models I use for the intermediate-term trend.
- Similarly, my long-term trend signals are based on: 4.0.1 SPX Long-term Trading Signals and 4.9.1 TSX Long Term Trading Signals (apply to SPX as well).
- You can find my official trend signals in a table at the end of each daily market outlook as illustrated in the chart below.
Why is trend important?
Because trend is the tide, when the tide is up, although among it there’s a wave down but that down wave won’t go far and vise versa. By the way, why is this site mainly about the indices not individual stocks? Because the indices are the tide while individual stocks are the waves. Wave cannot go against tide, that’s the key to a successful trading. So accordingly:
- If my official short-term trend is down, I do short-term short only;
- When the intermediate-term trend is officially up to me, I long only, on the intermediate-term.
- When the intermediate-term trend is up while the short-term trend is down, I’ll be careful in my short-term short, because the intermediate-term trend to the short-term trend is like tide to wave too.
- When the long-term trend is up while the intermediate-term trend is down, I’ll be very careful with my intermediate-term short, especially if I follow the Non-Stop model.
- The best trade is when long-term agrees with the intermediate-term and the intermediate-term agrees with the short-term.
- This kind of tide and wave rule can go on and on, but I think you’ve already got the essences: Follow the Trend!