A RANGEBOUND MARKET DESERVES A STUDY OF WHICH LEVELS TO SELL AND WHERE TO PLACE THE BUYS
When we look back through each chapter of the market of 2012, marked by every passing week, we will remember last week as the warning signal of the sideways range that was to come and this week as the confirmation that we are now in it. It's a necessary component of every bull market to be able to absorb gains, while recalibrating the buyers and sellers in preparation for the next phase.
The modus operandi over the next couple of months will be very short-term in nature. It will involve buying weakness and selling strength within the perceived range, if you are so inclined. My preference is to rotate assets into more aggressive names within the portfolio on weakness and take profits, where they are available, on strength. I am not in index ETF, short-term trading mode here. The range simply isn't wide enough and the potential for volatility still remains small.
Here are some illustrations for your perusal:
click chart to enlarge
NASDAQ COMPOSITE
IWM
CRB (COMMODITIES)
