Chart Your Way to a Lifetime of Profits

by Chris Rowe  
Email This   Print Page  Tweet This Tweet This

Free Trading Guides

Different analysts have different ideas about the length of each time frame of the three trends. But, basically, trends have three time frames:

1. Short term (days to weeks)
2. Intermediate term (weeks to months)
3. Long term (months to years)

Each one of these trends is a portion of the next bigger trend. For instance, the intermediate-term trend can be a correction in the long-term trend, and a short-term trend can be a correction in the intermediate-term trend.

Here's a two-year chart of the S&P 500 (SPX):

In the example above, the two diagonally ascending red lines show that the long-term trend of the market is up. (It's been a while since we've seen an uptrend like this -- but it's great for illustration purposes.) And while this is a two-year chart, the long-term trend had been up since 2003.

Highlighted in blue is the intermediate-term trend. Notice how it sort of zig-zags toward the top and bottom of the long-term trend's "channel."

Then, within the blue highlighted intermediate-term trend is the short-term trend. I used the green and red vertical lines to highlight some of the short-term up- and downtrends within the intermediate-term trend.

More By This Expert

Houghton and Atkeson

What's Ahead for the Markets

Looking into June, the market should begin refocusing on upcoming earnings reports for evidence the economy is gaining momentum.

Watching the Treasury's Actions

In the short-term, the government's bond auction is likely to be a key driver of stocks.

Treasury Auction Boosts Market

The Treasury's auction of two-year notes brought an upside surprise which should alleviate fears of a lack of demand for U.S. paper.

Credit Markets Point to Upturn

The credit market, a reliable indicator of equity direction, suggests we will break out of the SPX's trading range to the upside.

Market Cooling Down

The market seems to be saying that a 30% move up from the lows is ahead of the real economy and the market needs to allow the economy to catch up.

Options Broker Center

Compare Brokers