New trading strategy

Original strategy:
My traditional trading strategy is not working very effectively in the current market. My original strategy is based on the principle that "the confirmation or believability of an up or down move is a strong function of the volume". It used to work like charm before and worked all through the bull and bear markets except in the present bull rally phase. I think government interventions in the last 6 months have changed the trading landscape in an unknown way and there are many cross curents in the market and that is why we cannot use traditional tools any more for some time to come. [I will not be ababdoning my tools for good. I will be following the price and volume actions, especially around the resistances and supports, but I will not use them to trade with any more this year.]

Cause for conern:
Recently I have found that even a low volume up day can have a high volume down day the very next day, and a high volume up day can be followed by an equally high volume down day. This kind of thing is expected only during a turn around phase. That would mean that we should interpret the current entire 1000-600 (minus 40%) and 600-1000 (plus 70%) on sp500 as some kind of battle zone between the bulls and bears, which can be carried back and forth over a time period of say 6-to-18 months. The battle will not be decisively won by either camp until economy either goes south for good or gets a real footing. Another interpretation is that the range is actually narrow, may be between 700 (plus 14%) and 800 (minus 12.5%) on sp500 but the bulls and bear are overdoing the move in both directions. Usually the range of back and forth between the two camps is narrow, plus and minus 15%. The so-called the bottoming process will see several moves in this range and it is usually very hard to make any money in this environment since before you enter a trade the trend is usually too far along and too close to the resistance in that direction.

New strategy:
That is why I have abandoned my long-term approach and gone strictly to 2 day simple moving average piercing the 13-day moving average. I am actually tinkering with 13-day simple MA and may try the 10-day SMA. On the shorter time side the 2day SMA seems to blunt the gap up or gap down enough without losing the significance of gap up or gap down; may be a 3 day will work better - I haven't tested that. This comes from my belief that the rally in either direction is probably lasting 3 month right now and should show up within 2 weeks of inception. If the rally lasts longer than 3 months then so much the better. And always keep a tight sell order in place. Limit sell order at 13-day SMA seems to be working out right now. I will try to be flexible with that and if we are above some support then I will not use 13day SMA but instead the support level minus 2% as the get-out-of market price.

RISKS: (1) The danger for current trading rule is that if we enter a phase near a major support or resistance following the rule blindly will subject me to severe whipsaws. Therefore, I will not follow it blindly near the resistances/supports and will remain out of the market if kicked out. This should protect me somewhat against the whipsaws. (2) Staying out of the market in times near the resistances or supports has a risk that if we do go through the resistance/support then I will have to buy the same shares for a little bit more. I am willing to take that risk in the present climate.