Chris Rowe

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The "dominant trend" is the long-term trend, but no matter what your time horizon is, you should be aware of the next larger trend and the next shorter trend, because the next shorter trend will help you time your trades, and the next larger trend will dictate your stance on the market.

For average investors, it's best to buy and sell bullish positions only during long-term uptrends.

In other words, the average individual investor shouldn't short stock at the top of the uptrending long-term channel. Instead, long-term channel tops should only be used to sell or hedge long positions.

Once you've decided what type of investor or trader you want to be, you should focus on making purchases near the bottom of the next larger trend's channel.

For example, if you are an intermediate-term trader, you would want to be a buyer of the S&P 500 (or any security with a similar chart) when the blue highlighted intermediate-term trend is near the lower red line (the bottom of the long-term channel).

Chris Rowe is the Chief Investment Officer for Tycoon Publishing's The Trend Rider. To learn more about him, read his bio.