[theory6453]

With the US markets beginning to look like they could be moving into early Stage 3 soon, I thought it would be a good time to post Chart 7-13 from Chapter 7 of the book as a reminder, which shows the ideal short sale entry points and general pattern as a number of stocks are beginning to break down into Stage 4.

That actually brings up a question I had about the overall markets being in Stage 1 or 3... The book maintains that one should mainly take long positions with the occasional short when the overall market is in Stage 2 and vice versa when the overall market is in Stage 4... but what types of positions/setups should we be looking for in transitional phases such as Stage 1 or 3? If we do move into a Stage 3, I realize that we should keep an eye on our long positions to move our stops up so that they get stopped out and we keep our profits. But what sort of setups should we be looking for in these transitional phases? And what would be the distribution (if I'm looking to have 6 positions, do I take 3 long and 3 short when in Stage 3).

Apologize if this question has already been asked/answered or if it's addressed in the book and I haven't gotten to it yet (i'm about 3/4 done with the book currently). I could be over-thinking this again. I'm sure there's no concrete answer to the question but I just want to get people's feedback as to what they would be looking for when the overall US market is in Stage 3.

Thanks,