Patience, my dear

One of the things I am starting to appreciate is that you have to trade differently in different market conditions. In an uptrending market, the idea should be to buy on pullbacks and hold on advances. On the other hand in downtrending markets, the idea should be to sell on advances and definitely NOT HOLD on pullbacks. Essentially it means that if the market is trending downward, then if the stock wasn't sold off initially when the trendlines were broken, then the first advance should be sold. Of course the tricky part of the equation is to figure out whether the market is in an uptrend or a downtrend; something that I am kind of learning as I go along!!

I've been talking about about technical trades, support and resistance levels. Charles Schwab recently has shown strength and formed some very interesting trendlines. I also recently figured out how to post images so here goes.. You can click and open the chart in a new window for a more readable version

• A,B : Two differently drawn "long term" downtrend lines broke and formed support levels. The B downtrend was broken with very good up volume. The A downtrend also broke on above average volume but not very good compared to B
  
• C: Short term downtrend lines were broken on above average volume
• X: Support levels were formed during these volatile, violent movements
• Y: Higher trending intermediate term resistance levels are being formed. Higher trending resistance levels will possibly act as support levels in the future if the stock breaks above it.
• Z: The stock is still trying to find it's short term support levels in order to establish a solid upward trend. A good first guess would be the earlier first resistance level during C, which is between 9.6 and 9.8. A good second guess would be between 9.2 and 9.4
  
• The stock has also broken above it's 200-day MA and should find support there.. which I think will coincide with the above two levels depending on how the stock moves in the next week.
  

I will enter an option trade since I am quite convinced that this is on an uptrend. I will wait for the first pullback to around the 9.6-9.8 level and buy:

1. Either out of the money June 2005 @12.5 calls
   
2. Or in the money June 2005 @7.5 calls for around $2.4-2.6
   

Charles Schwab

So essentially waiting is what I'm going to do which is kind of hard when you're waiting for a pullback on a good trade. All you need is just a little patience..