Since our last update we have been waiting for some significant price action so we could identify some trading opportunities. We identified that we were seeing what we consider a Head and Shoulder chart pattern which is a bearish pattern. Despite us saying that this is a bearish signal we did not recommend that this was the time to go short because the market was oversold and due for a rally which has now taken place. Due to the lack of follow through to the downside we will be sitting on our hands waiting for further evidence. When we turned bullish in June after taking out resistance we also experienced a lack of follow through. In both of these situations, the lack of follow through is the markets way of telling us to stay on the sidelines. The market has not made up its mind and we cannot force the market to give us the right market conditions to enter. Its during these times that new traders over trade as the market gives them no follow through signals and thereby making the trader reverse his positions too frequently. We call this the chop zone where undisciplined and anxious traders get chopped into pieces. This is the time when newbie traders manage to lose all prior profit they made during good market conditions. Professional traders always experience loses but they are better at assessing choppy market conditions so they cut the amount of trades, thereby limiting their losses. We use disciplined money management profiles which helps us stay focused on the end game (bottom line). In any trading situation you have to be objectionable and always have a plan as not sticking to your plan in choppy market conditions will definitely result in losses. When your mind cannot see any reason to place a trade you should be telling yourself that it is not time to trade and not thinking that forcing a trade on is the right thing to do. This is how we see the daily chart analysis at the moment; the Head and Shoulders has been formed with very little follow through but still significant enough that it has taken out support to the left of 8 months prior price action. The price action has now rallied since the formation slightly more than would normally be expected but still not enough to have taken out the prior lower high price pivot which means it is creating lower highs and lower lows. Staying on the sidelines at this point in a cash position means we can be objectionable about what the market is doing and not being emotional about what you want it to do if you were in the market. With this being a choppy zone we are waiting to see if price will fall lower or price will retest the prior major high before we make any further decisions.