NEW YORK ( TheGoldAndOilGuy.com) -- Trading with the trend should be your main focus for long-term success no matter what type of trader you are ( options trader, stock trader or ETF trader), although it's not as easy as it sounds.The good news is there is a simple trading model that removes 95% of trading analysis and greatly reduces trading-related emotions because the key technical analysis rules based on one of the world's best chart technician's (John Murphy) technical analysis methods have been applied to the chart automatically. The key is to identify the trend of the market. Once that is known you can focus on trading strategies that take advantage of the current trend. Over the past few years I have been creating this indicator/chart layout tool that converts my chart reading experience, tips and tricks into a simple system removing analysis paralysis, which causes most individuals to second-guess what they see and don't pull the trigger. Using too many indicators or read/listening to several other traders commentaries with different views than you causes this paralysis. My simple red light-green light model clearly shows a viewer the current trend and expected price range (high and low) looking forward a couple days. I use a series of data points such as volatility, volume, cycles, momentum, chart patterns and logic rules. It even shows extreme pivot points helping you find low-risk entry prices for both bull and bear market conditions. Recent Trends and Signals for the S&P 500 Index Daily Chart:
The key to long-term success is to buy during broad market (S&P 500) corrections once sentiment, cycles and momentum are starting to flash extreme oversold conditions. These show up as green arrows on the trend chart. At that point most sectors and high-beta stocks such as IBM ( IBM) , Google ( GOOG) etc. should be at key entry points, with most of the downside risk removed already. Remember, three-quarters of stocks follow the broad market so it only makes sense to follow it, too. What about a runaway stock market? This is when the stock market does not pull back but just keeps grinding its way higher and higher... The only thing you can do is sit in cash, or look for a stock or sector that is having a small pause or pullback and get long with a small position until you get that broad market pullback and major by signal to add more. Below are a few sectors showing a minor pause/pullback within this bull market.
Mid-Week Trend Conclusion: Overall, the broad market remains in an uptrend. While I would like to see the S&P 500 pull back and give us another major buy signal as it did in December and February, I don't mind that much if prices keep running higher as it just give us more cushion and potential profits for when the trend does eventually roll over and flip signals. I hope you found this report interesting. It's just scratching the surface of this topic but it's a start. This article was written by an independent contributor, separate from TheStreet's regular news coverage.