The Market Forecast

Go to Intermediate Term Tutorial

Short-term traders will use the Market Forecast in much the same manner as those with a longer term outlook, but will also use the shorter term cycle lines to determine entry and exit points for the trades. Let's look at a standard Market Forecast chart that covers a typical three month period:

Notice that on 7/22, the momentum, short-term, and intermediate lines were all deep in the lower reversal zone. Once an indicator line is that deep into the reversal zone, pressure builds quickly for a change of direction.

Then on 7/23 as all those lines began to turn up.Within four trading days, the momentum signal line had reached the maximum upper reversal zone. It was ready to start its way back down.

On 7/29, the momentum turned down again, pulling with it the over extended short term line a day later. Momentum will often lead the short term line by a day, providing an 'early warning' as to the expected change.

Those four days where momentum and short term cycle lines rose, would represent a single trade on the short term cycle. On the Titan 500 chart below, we can see possible returns for the trade:

Price on entry : $6.12 on 7/23
Price on exit : $7.81 on 7/29
Profit : 21.6% in four trading days!

Should we switch and play downside at this point? We can see that the intermediate cycle (purple) is is still trending up after 7/29. That generally means the most profitable plays will also be to the upside following the intermediate cycle until it turns down. But if we play in an opposing direction (down in this case), while there may be profitable moves, the risk will be that the moves will be small and likely, very short lived.

A rule of thumb is: if intermediate line has not passed through the halfway point on the chart, opposing moves could still be significant enough to play. So in this case, its playable.

Price on entry : $98.38 on 7/31
Price on exit : $116.65 on 8/5
Profit : 15.6% in four trading days!

The next entry point for a short-term play was on 8/5 through 8/9. Here again, we'll use the Titan 500 fund where we entered at 6.61 and closed the position at 7.86. A return of 16% in four days.

At this point we would avoid playing opposing moves since the intermediate cycle line is now above the 'zero' halfway point.

The final entry point for a long position occured on 8/14 where the fund was at 8.02. The exit came on 8/19 with the fund priced at 8.56. Clearly the pullbacks are getting more shallow and the runups are becoming smaller as we are moving deep into the upper reversal zone. We're not going to try to squeeze anymore out of this move, but will await the direction change that could be imminent.