[isatrader]

This question is on the pullback method..
I've attached the FTSE350 sector beverages, after going through potentials and then went to an individual stock within the sector..and came up with Sab which is looking identical to the sector, falling relative strength compared to FTSE350 (spx would be the same if not worse)
If my analysis is correct beverages, and Sab have broken down into stage 4 and is now at the pullback stage, on declining volume compared to the breakdown which is all per the book. The stage 3 has lasted for exactly a year, so a nice topping period, but with no topping pattern.
so if everything is as I think, we should be looking for our low risk entry...and this is where the book doesn't really expand upon.
Is there anything that we would look for, possibly on the daily chart? Do we wait for the angle of the 10 to move down.
any advice on this setup..does look like a classic one
I've also attached the daily, which looks like a stage 1 so would a similar approach to the weekly method be the best bet?

thanks all

The pullback entry is part of the method that doesn't have a great deal of information unfortunately and was why I asked a question on it to Stan in the Q&A I did last year.

Me
Q. Secondary entry point following a Stage 2A breakout – how do you determine the entry point on the pullback? Do you suggest buying while the stock is still correcting, but is close to the original Stage 2A breakout level? Or should we wait until there’s a clear reversal on a daily basis, following a test of the breakout level or close to the breakout level? Or something else?

Stan Weinstein
A. I suggest doing secondary buying when a stock pulls back close to the breakout point, and you then see it stabilize near that level.

Obviously the question was on the Stage 2A initial pullback, but they are very similar, except I think the Stage 4A initial pullback could move quicker. So he suggests that you wait until you think you see stabilization near the initial level.

My personal preference with this is to see how it behaves around the breakdown level and then first wait for a lower weekly closing price, and then look to go short below the previous weeks low. So in this case if it makes a close tomorrow below 2927, then I'd be looking for a entry below this weeks low of 2865, but it would have to close the day I enter below that level as well for confirmation or I'd want to get out. But as I said, that's just my preference and not what the method recommends.

I also find the 2 hour chart works well with the same settings as the weekly chart, so you can perform an intraday stage analysis to fine tune the entry point.

[malaguti]

Just thought I'd put an update to the sab pullback..you were so right about the 120 following similar principles. we have a close now lower than last weeks, and I've marked the previous weeks low. Something tells me we will get a telling reversal pattern

[boondock]

Hello, great site, very useful for someone getting into using weinstein methods. My question relates to the use of stop orders in conjunction with weinstein strategies, a lot of trading and investing books recommend using stop on quote orders but I have a hard time trusting their use, so I was wondering how others handled using buy stops as advocated by weinstein. The reason i don't trust; I was looking at ISLE as a possible continuation buy due to my interpretation that it had broken out on 1/27 from a 9 month consolidation pattern then gone into another pennant like consolidation. I set a stop at 9.31 last weekend, with a limit of 9.5 to protect me from getting in at market after a large up gap. THe stock had closed at 9.09 friday, opened 9.02 monday, but my stop triggered and I was in for 9.07. Thankfully I had my eye on my account, and got out of the position with .5% loss as the stock went on to register about a 10% loss over next couple days. Inquiring with my brokerage they reported that the stock had an offer of 9.99 over the weekend and therefore my stop was hit. So how do you weinstein vets use stops buy or sell, when either trying to capitalize on a move from Stage 1b to 2a or protecting capital with sell stops. Do you not use them, only have them in place during trading hours, etc? Read a book on trading by O'Conner that posits sell stops shouldn't be used at all as market makers know where they are and go after them. Given that brokerages trigger stops based on National Best Bid Offer prices, couldn't any punter put in an out of line bid or offer on one share to trigger any stops out there which seems to be the case in the above example? Wasn't sure where to turn for answers to these questions so I'd really appreciate any input. Thanks

[isatrader]

Hello, great site, very useful for someone getting into using weinstein methods. My question relates to the use of stop orders in conjunction with weinstein strategies, a lot of trading and investing books recommend using stop on quote orders but I have a hard time trusting their use, so I was wondering how others handled using buy stops as advocated by weinstein. The reason i don't trust; I was looking at ISLE as a possible continuation buy due to my interpretation that it had broken out on 1/27 from a 9 month consolidation pattern then gone into another pennant like consolidation. I set a stop at 9.31 last weekend, with a limit of 9.5 to protect me from getting in at market after a large up gap. THe stock had closed at 9.09 friday, opened 9.02 monday, but my stop triggered and I was in for 9.07. Thankfully I had my eye on my account, and got out of the position with .5% loss as the stock went on to register about a 10% loss over next couple days. Inquiring with my brokerage they reported that the stock had an offer of 9.99 over the weekend and therefore my stop was hit. So how do you weinstein vets use stops buy or sell, when either trying to capitalize on a move from Stage 1b to 2a or protecting capital with sell stops. Do you not use them, only have them in place during trading hours, etc? Read a book on trading by O'Conner that posits sell stops shouldn't be used at all as market makers know where they are and go after them. Given that brokerages trigger stops based on National Best Bid Offer prices, couldn't any punter put in an out of line bid or offer on one share to trigger any stops out there which seems to be the case in the above example? Wasn't sure where to turn for answers to these questions so I'd really appreciate any input. Thanks

Hi boondock, welcome to the site and thanks for the question.

Last year I did a brief Q&A with Stan, and he said the following:

ME
Q. The book had a whole section on buy-stop orders, which I presume has been dropped over the years due to false breakouts that you would get these days? As I read your Technically Speaking interview from 1997 in which you were talking about buying a strong close above the breakout level, and also note in the GTA reports I’ve come across that you always say something like “A breakout (on a closing basis) above that level would be the signal to do buying”. So I’m assuming that the buy-stop section from the book is now void, and that we should be looking to buy breakouts near the close of the day if they are above the breakout level and towards the high of the day?

Stan Weinstein
A. Because of the increasing amount of false breakouts, investors should only do buying when they see that the breakout isn’t false (and that it closes above the given level). However, a trader should do at least partial buying on an intraday basis when it breaks out above the given level (using a buy stop order), and then if at the end of the day it turns out to be false and it closes back below the level, then traders should immediately get out. But if not false and it hasn’t run too far, then later in the session, traders too can do additional buying.

Personally I don't use buy-stops and don't know many that do on here as you have a much higher risk of a false breakout, but one suggestion that might be of use is to set up alerts, that will be triggered when a price level you are watching is reached instead, as that way you can enter a partial position manually once you've checked the chart, and then monitor it until near the close, which if still strong and hasn't run too far above the breakout level then you can do additional buying as Weinstein said in his answer.

[Sapphire]

Sorry I haven't been on the boards for a while, due to medical reasons. I think I've mastered how to find the smaller priced stocks using this method. I invested in TTHI back in early may when it was trading in the high $2 per share. I think this stock is in stage B right now. What do you think?

[isatrader]

Sorry I haven't been on the boards for a while, due to medical reasons. I think I've mastered how to find the smaller priced stocks using this method. I invested in TTHI back in early may when it was trading in the high $2 per share. I think this stock is in stage B right now. What do you think?

Yep, it's had a very good Stage 2 advance so far, and you re correct it would be considered as in Stage 2B now, which means late in Stage 2. So well done on the excellent gains.

[Sapphire]

Thanks! I've finally done something right, with your help of course!

[boondock]

Hello again, Had a question about buying the pullback after a breakout. Easiest to use a couple of examples from the investor method watchlist. Would a volume validated breakout that then substantially pullsback on low volume be generally viewed as a nice discounted secondary entry point for an investor or is it considered somewhat of a failed breakout? SMTX had high volume breakout followed by 4 of 5 days of low volume pullback where price dropped below breakout price, put in the context relative to down week for the market. Or would seeing a consolidation pattern like SIMG and looking to enter above consolidation range be wiser? Essentially at what point is a high volume breakout considered failed?
Thanks