This column was originally published on RealMoney on March 29 at 12 p.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

I was talking with another trader on Wednesday about how the market environment is changing almost daily. In late February, the bears were so strong, they were stampeding (if it's possible for bears to stampede). No matter how far prices fell, it seemed like it was never too late to sell.

Once prices bottomed in early March, the up and down volatility started grinding away, and the battle raged. If you bought late, you bought the top, and if you sold late, you sold the bottom.

Suddenly, we got a higher low, and the market took off again. No matter how far prices ramped, it was never too late to buy.

Where are we now? Well, the front lines are pretty much carved out. We're back to what looks like a trading range between the breakout and last week's highs.

Why am I doing an "Al Michaels" on this market, taking you through a play-by-play dialogue? The exercise serves to illustrate the importance of adapting trading strategies in response to changing market environments.

I'm hearing from folks who are frustrated for various reasons. They're getting stopped out of their long positions right at the bottom of a pullback or out of their short positions right at the peak. If that's not the problem, then they're buying pure momentum, only to find that they're the last ones to the party.

The solution to these problems is clear: Don't do that. You've got to change your tactics to meet the

current

environment. In a highly volatile market, you've got to loosen up your stops to avoid getting stopped out at the bottom. Yes, you could tighten them to protect your profits ... but if you tighten them too much, you might as well just close the position into some strength, because you'll get stopped out soon enough. Why go through the bother of monitoring a pending stop?

And if you're chasing momentum? Hey, that game worked a couple of weeks ago, but all the momentum chasers are in now. I've said on many occasions that the critical question for any momentum trader to ask prior to buying is, "If I buy now, who is behind me to take me out at a higher price?" If you have a hard time answering that question, you're too late. Change your strategy to match the market. If you're more stubborn than the market, you'll lose.

Let's get to some reader requests.

This daily chart of

Apple

(AAPL) - Get Report

shows a stock that looks an awful lot like a double (or even triple) top. And before we can start looking for a top, there has to be a meaningful advance to reverse. AAPL certainly fills the bill there. This stock has just gone up and up and up.

A few days ago I mentioned the merits of

looking at multiple time frames, so before we look to short this name, let's zoom out to the weekly chart.

Oops! This doesn't look like a top to me. It looks more like a congestion area largely defined by higher lows and a flat top -- a right triangle. There are two ways to trade this -- either hope for a pullback to the rising support line or wait for a breakout above resistance. No way I'd short this stock -- not as long as iPhone looms on the horizon. After that? Well, that's a "short story" for another time.

On Tuesday, I asked for guesses as to which security most closely mirrored

Goldman Sachs

(GS) - Get Report

. One reader got it right, naming the

S&P 500

as highly correlative with Goldman Sachs. I'm always happy to take credit for good ideas, but this isn't one of them. I actually got this idea from another trader, Todd Harrison.

Goldman is in blue, and the S&P is the candlestick chart in the background. Why keep 'em both up on your screen when either will do? Notice how the breakout levels for both issues are parallel -- $200 for GS, and 1410 for the S&P. Watch how these two behave when the mid-March breakout levels are tested. That's the best clue I know of about the future direction of the market.

Bank of America

(BAC) - Get Report

is forming what looks like a broadening top, with declining support and resistance lines formed by lower lows and lower highs. The challenge for the bulls is that each low takes the stock farther away from the established resistance line. That's a tough hill to climb, and these patterns have a high probability of failure. With the stock falling out of what looks to be a six-month top, I think a move lower is more likely than higher. I'd look for a short entry above $52, with a buy stop just above $54.

The 10-year Treasury note yield (TNX) is the benchmark yield for rates, and from the looks of this chart, they appear to be headed higher, not lower. With a higher low following a higher high, the next obvious resistance line is around 49. Until TNX hits that level, I'd be bullish on higher fixed-income yields.

Be careful out there.

At the time of publication, Fitzpatrick held no positions in the stocks mentioned, though positions may change at any time.

Dan Fitzpatrick is the publisher of

StockMarketMentor.com

, an advisory newsletter and educational forum dedicated to teaching effective risk management and trading methodologies to aspiring traders and investors. He is a former hedge fund manager and a member of the Market Technicians Association, and he now trades from his home in San Diego, Calif. While Fitzpatrick holds various securities licenses, he does not give recommendations to buy or sell stocks. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. He appreciates your feedback;

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