Guest Author - Guido Deboeck

What is it that you do not understand about market moves? Does the bouncing surprise you? If you read other articles posted on this site about market direction you ought not to be surprised by the current back and forth bouncing of the markets

Let’s look back: from the middle of August last year the NASDAQ climbed from 2163 to 2531 by February 22 this year. That is a 17% increase! Then came February 27th, the market declined for all kinds of reasons, the least of which are probably the drop in the stock market in Shanghai. A correction was “overdue” in the opinion of the experts.

The market bounced for a couple of weeks, but a new rally started on March 14th and got confirmation on March 21. Since then the markets are again in rally mode, confirmed uptrend with so far one or two setbacks.

In fact, after a short three-week correction, the NASDAQ has been in a trading range between 2400 and 2500, more or less, for five months. IBD wrote: “Each time it tried to break above 2500, such as in mid-January and in February (just before the start of the correction) it quickly turned its tail. At the same time, it snapped back each time it tested the support at 2400”.

In sum the market is zig-zag-ging in a narrow trading range, trying to make up its mind if it will break out to the upside or fall back and continue a decline.

How do you find which way it will go? You don’t! You simply let the market tell you day by day where it is heading. What is most needed in these circumstances is discipline and patience. There is no need to jump into the market with all your assets; instead try some carefully researched stocks, with super fundamentals, and watch them closely.

If the stocks you picked drop 5 to 7 percent, say ”sayounara” and get out. Friends of mine are leaving for Japan next week and hence plenty of niece memories came back to my mind about visits I made to Japan years ago... If instead they rise, stick with your holdings, accumulate more shares and build your exposure.

It’s not easy to make money when the markets zig-zags, but when the challenge is greater than usual the rewards can also be more interesting. After all it can be boring to invest in a market that goes straight up!

My current favorite pick: Trina Solar Ltd, traded as ADS on NYSE under symbol TSL. It is a Chinese manufacture of solar modules providing electric power for various applications.

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