The current trend of the market is down short and long term. While that is not a profound statement, it is clear that investors continue to look for a bottom in order buy. What might prove more prudent is to look for a trend change. A trend change is a clear indication of money flowing into the sector. The challenge of waiting is the fear of missing out on the move. In reality greed motivating us more than fear is keeping us from investing. Emotions control the investment process more than logic at times. With the broad market and sectors down 30-40% the tendency is to want to buy cheap. In other words we don’t want to miss out on this opportunity. How do we know this is the point of opportunity? We don’t, we don’t want to miss it though if it is.

Looking at the charts of all the major indexes and the sectors I don’t find any that are currently in an uptrend short term. That does not mean there are not positive trends somewhere, they just are not in the major sector of the broad market. The table below is the list of the ETFs corresponding to these sectors. The 52 week high and low is listed along with the current trend short term. They are all losers. The next evolution would be for them to become limpers if the trend is to change. We are currently having a difficult time building a base. Yesterday the Mid and Small Cap indexes both hit new lows. Trying to pick the bottom here is a dangerous game.

The first step is going to be building a base and thus far, that has not materialized. It doesn’t mean we are not in oversold conditions. It does not mean there isn’t potential value looking forward. It simply means the trend is still down and fighting the trend is a dangerous game. You may be right and catch the updraft at just the right time. But, the risk of doing so is extreme from my simple point of view.

Wait for the base to form before you start trying to build positions. If you are a short term trader and trying to find the opportunity don’t guess. Make sure you have some kind of defined strategy to play any positions. The focus is assuming a turn to the upside. If you are playing the trend down the same premise would be true, wait for a change before vacating your short positions.

This of course is a simplistic view of trend analysis, but the point is to not fight the trend that is predominately in play. The trend will change, they all do, the key being patient enough to wait for the trend change versus trying to predict one.

Jim Farrish, founder and editor of Melbourne, Florida-based SectorExchange.com, writes regularly about sectors and speaks widely about investing and money management.