Every day I am bombarded with news articles telling me which direction the market is headed next, what's happening with interest rates, the price of gold, or what the next move is for the U.S. Dollar.  Most of the authors have very sound reasons for their beliefs.  Whatever the market or sector, for every story you find that says the next move is up, you can find an equally compelling argument for why the next move is down.  That's what makes a market, a buyer and a seller.  But, how do you, as an individual investor, make any sense of it?

In some cases, it's easier than you think.  While shorter term price movement is generally controlled by traders, some longer term market trends are somewhat predictable.  For example:  We all know that interest rates have been declining for some time.  With the federal lending rate near zero, rates certainly can't go down, and are likely to reverse direction sometime later this year.  When interest rates rise, bond prices fall; the U.S. Dollar will likely rise; and we may see some decline in interest rate sensitive sectors, such as real estate, utilities, and financials.  ProFunds and Rydex have a number of funds which are ideally suited to take advantage of these somewhat predictable market trends.

The problem with big trends is, it's difficult to get the timing correct, plus there are many market forces at play which may cause any given sector to deviate from its' historical movement in relation to interest rates.  Although you may get the overall trend correct, it can be a very bumpy road.  One of the best ways to protect yourself is to use asset allocation to diversify your portfolio.  An even better way is to use tactical asset allocation.  With this strategy you would overweight the asset classes that are poised to benefit from market trends, such as rising interest rates, and underweight, or short the asset classes that are likely to be adversely affected.

Although you will want to hop on this band wagon early, it's probably still too early to make your move.  In the weeks and months to come, we will expand this article, taking a look at the specific sectors that are likely to be affected by rising interest rates; whether you want to be on the long or short side; and the specific mutual funds you will want to invest in.

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For the short term investor or trader, being on the correct side of the big trend isn't as important as the timing.  That's because markets don't move in a straight line.  They tend to do a little zig-zag movement, regardless of whether the big trend is up or down.  Prices tend to move in channels, and when they stray towards the outside of these channels, we tend to see reversals.  As with the bigger trends, these smaller price movements tend to be predictable too.  If you want to be more proactive, and try to take advantage of shorter term price movement, you are left with two options:

• develop your own timing system
• find a reputable firm with a great track record and follow their advice

Our philosophy is to spread our assets across several asset classes, and to switch back and forth between the long and short side of each asset class, taking advantage of the short term zig-zag price movements.  The foundation of our system is its' simplicity.  Once you get the hang of it, it only requires about 10 minutes of your time, two or three days per week.  AccuFundTrader is consistently ranked as one of the top performing market timing services by Theta Investment Research and TimerTrac.com.