(2020-04-23, 08:26 PM)Joe725 Wrote: Thanks, i think if anything i'm just too eager to buy something at the moment. On average how many Stage 2A's do you see a week? 1? I just have been scanning some of the code on ProRealTime for the last week or so and have come across 0. Not sure if I am doing something drastically wrong.
Wait, plan and marshall your ressources. When you see stocks breakout out above their 150d moving averages, BET I ALL.
I'm not currently actively looking for trades. Stage Analysis got me out in fair time before the market went down, som I'm in no hurry to get back in. I'm patiently waiting until a clear market direction reveals itself.
Sometimes the best thing you can do, is nothing. Hope this helps.
- Marcus Haugaard "The Tape Tells All" - Stan Weinstein
Wait, plan and marshall your ressources. When you see stocks breakout out above their 150d moving averages, BET I ALL.
I'm not currently actively looking for trades. Stage Analysis got me out in fair time before the market went down, som I'm in no hurry to get back in. I'm patiently waiting until a clear market direction reveals itself.
Sometimes the best thing you can do, is nothing. Hope this helps.
Haha that's the perfect video! I guess i'll just have to sit and wait. Just annoying, with the whole lockdown thing I have more spare time than ever!
Hi,
I was wondering if this would be a proper breakout candidate meeting the stage analysis criteria? I understand one should not buy it even if it is a good breakout candidate because the overall market (TSX) is still in stage 4, so this is a purely educational question.
CTC.TO (a Canadian retail chain) has broken its trendline on above average volume 2 weeks ago and price is above the SPX price line. However, I am not clear as to whether the 30 MA is still considered to be in a downtrend even though last week it seems to have started to curl up a bit. If this is not a breakout candidate what would I need to see to go long (if the TSX had not been in stage 4)?
(2020-04-26, 07:08 PM)marry123 Wrote: Hi,
I was wondering if this would be a proper breakout candidate meeting the stage analysis criteria? I understand one should not buy it even if it is a good breakout candidate because the overall market (TSX) is still in stage 4, so this is a purely educational question.
CTC.TO (a Canadian retail chain) has broken its trendline on above average volume 2 weeks ago and price is above the SPX price line. However, I am not clear as to whether the 30 MA is still considered to be in a downtrend even though last week it seems to have started to curl up a bit. If this is not a breakout candidate what would I need to see to go long (if the TSX had not been in stage 4)?
Thanks for your thoughts.
Hi marry123,
The 30 week MA has turned up this week with the continued move higher, so it is technically in early Stage 2A. However, it would not be considered an A+ candidate, firstly because it's still below significant near term resistance. See the section in Chapter 4 in the book (p96) The Less Resistance the Better, as it's currently pushing up against the consolidation range that made up a large portion of 2019. And one of the key requirements of successfully trading with the method is to avoid stocks that are still under near term resistance.
I've added the ichimoku cloud to the weekly chart, as this gives a rough visual guide to where the resistance is and considers the time based nature of resistance too, as it projects the cloud six months into the future. So I find this useful if I'm ever unsure about resistance. As ideally you want to trade from a proper base once it's clear of resistance.
Also, note the moving averages on the daily chart. The 50 day MA is still below the 150 day MA and the 200 day MA (which is still declining). You want to see the reverse of this when considering resistance, as the 50 day should be above the 150 day MA and the 150 day MA should be above the 200 day MA and they should all be moving higher.
One of the biggest mistakes that new users of the method make is to try to get into a stock that's had a big Stage 4 decline of a year or more that is then just starting to turn up after a very small base. I did this many times myself when I was beginning to learn the method. But this is literally the opposite of what the method is, and Stan talks about it on page 1 of the book. As our aim is not to buy low and sell high. It is to buy high and sell higher.
So avoid stocks that have had big declines and instead focus on stocks either making big bases of a year or more, or stocks that are already proving themselves in Stage 2 and breaking out of early bases. Mark minervini talks about the Stage 2 base count on page 80 of his first book. Focus on trading breakouts from base 1 and base 2 once a stock is in Stage 2, and you'll do much better, as at that point the stock has already proved it's in a Stage 2 uptrend, but it's still early enough to get in a make big gains before the rest of the crowd discovers it.
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
(2020-04-26, 07:08 PM)marry123 Wrote: Hi,
I was wondering if this would be a proper breakout candidate meeting the stage analysis criteria? I understand one should not buy it even if it is a good breakout candidate because the overall market (TSX) is still in stage 4, so this is a purely educational question.
CTC.TO (a Canadian retail chain) has broken its trendline on above average volume 2 weeks ago and price is above the SPX price line. However, I am not clear as to whether the 30 MA is still considered to be in a downtrend even though last week it seems to have started to curl up a bit. If this is not a breakout candidate what would I need to see to go long (if the TSX had not been in stage 4)?
Thanks for your thoughts.
Hi marry123,
The 30 week MA has turned up this week with the continued move higher, so it is technically in early Stage 2A. However, it would not be considered an A+ candidate, firstly because it's still below significant near term resistance. See the section in Chapter 4 in the book (p96) The Less Resistance the Better, as it's currently pushing up against the consolidation range that made up a large portion of 2019. And one of the key requirements of successfully trading with the method is to avoid stocks that are still under near term resistance.
I've added the ichimoku cloud to the weekly chart, as this gives a rough visual guide to where the resistance is and considers the time based nature of resistance too, as it projects the cloud six months into the future. So I find this useful if I'm ever unsure about resistance. As ideally you want to trade from a proper base once it's clear of resistance.
Also, note the moving averages on the daily chart. The 50 day MA is still below the 150 day MA and the 200 day MA (which is still declining). You want to see the reverse of this when considering resistance, as the 50 day should be above the 150 day MA and the 150 day MA should be above the 200 day MA and they should all be moving higher.
One of the biggest mistakes that new users of the method make is to try to get into a stock that's had a big Stage 4 decline of a year or more that is then just starting to turn up after a very small base. I did this many times myself when I was beginning to learn the method. But this is literally the opposite of what the method is, and Stan talks about it on page 1 of the book. As our aim is not to buy low and sell high. It is to buy high and sell higher.
So avoid stocks that have had big declines and instead focus on stocks either making big bases of a year or more, or stocks that are already proving themselves in Stage 2 and breaking out of early bases. Mark minervini talks about the Stage 2 base count on page 80 of his first book. Focus on trading breakouts from base 1 and base 2 once a stock is in Stage 2, and you'll do much better, as at that point the stock has already proved it's in a Stage 2 uptrend, but it's still early enough to get in a make big gains before the rest of the crowd discovers it.
Thank you Isa for explaining things. It is a huge help to have someone like you break things down and point out what to watch for in terms of buying stocks breaking out in proper bases. I will keep learning and waiting for your posts as to when the indices have reached their proper buy points.
Hi Isa,
I think I found one that may meet your requirements. It has broken out of a base that has been about 3 years in the making. It broke out on huge weekly volume in Jan. running from around 0.15 to 0.30 roughly while the 30 MA was moving to the upside. The price broke above the SPX price line some months back.
It has resistance at 0.30 and 0.35 so the question is when would one buy this now if one did not know about this stock and did not buy on the breakout at 0.15 cents? It has come back to test the 30 MA at around 15 cents so everything looks really good as it seems to just be starting its phase two run but my uncertainty is whether one needs to wait to see it break above 0.35 cents or whether even at current levels it is considered a proper entry long.
(2020-04-27, 12:34 PM)marry123 Wrote: I think I found one that may meet your requirements. It has broken out of a base that has been about 3 years in the making. It broke out on huge weekly volume in Jan. running from around 0.15 to 0.30 roughly while the 30 MA was moving to the upside. The price broke above the SPX price line some months back.
It has resistance at 0.30 and 0.35 so the question is when would one buy this now if one did not know about this stock and did not buy on the breakout at 0.15 cents? It has come back to test the 30 MA at around 15 cents so everything looks really good as it seems to just be starting its phase two run but my uncertainty is whether one needs to wait to see it break above 0.35 cents or whether even at current levels it is considered a proper entry long.
The shape and position of the chart is much more what we look for in the method, and I've marked up the weekly chart to highlight the Stage 2A breakout point, and you can see some volatility contraction occurring on the daily chart. Although the percentage moves are very high due to the size of the stock.
The initial Stage 2 continuation breakout point from its first base would be a daily close above 23 imo, as it put in a lower high at that level in early March. So that would be one potential entry point, but as you said it's already pulled back, so the method does allow for pullback entries when it's in early Stage 2. So it is in a buyable position. But I personally always prefer to buy a breakout, as it confirms the path of least resistance is still higher, and shows momentum is in its favour.
The main issue I would have with this stock is the illiquid nature of it, based on it normal daily price action. Which makes using a machine stop loss virtually impossible, and means that the bid ask spread is generally very high. i.e. on checking this morning its spread was 4%. That means that you'd open the trade down -4%, plus whatever your entry and exit fees are based on your position size. So you could find yourself having to recover more than 5% just to breakeven on the trade. Which to me would be unacceptable personally, as I think costs and spread should be below 1%. This is not a requirement of the method however, but backtesting from others has shown the dramatic effect that high spreads and fees have on overall performance of a portfolio. So its best to focus on highly liquid stocks if you can, as well as minimising trading fees.
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
(2020-04-27, 12:34 PM)marry123 Wrote: I think I found one that may meet your requirements. It has broken out of a base that has been about 3 years in the making. It broke out on huge weekly volume in Jan. running from around 0.15 to 0.30 roughly while the 30 MA was moving to the upside. The price broke above the SPX price line some months back.
It has resistance at 0.30 and 0.35 so the question is when would one buy this now if one did not know about this stock and did not buy on the breakout at 0.15 cents? It has come back to test the 30 MA at around 15 cents so everything looks really good as it seems to just be starting its phase two run but my uncertainty is whether one needs to wait to see it break above 0.35 cents or whether even at current levels it is considered a proper entry long.
The shape and position of the chart is much more what we look for in the method, and I've marked up the weekly chart to highlight the Stage 2A breakout point, and you can see some volatility contraction occurring on the daily chart. Although the percentage moves are very high due to the size of the stock.
The initial Stage 2 continuation breakout point from its first base would be a daily close above 23 imo, as it put in a lower high at that level in early March. So that would be one potential entry point, but as you said it's already pulled back, so the method does allow for pullback entries when it's in early Stage 2. So it is in a buyable position. But I personally always prefer to buy a breakout, as it confirms the path of least resistance is still higher, and shows momentum is in its favour.
The main issue I would have with this stock is the illiquid nature of it, based on it normal daily price action. Which makes using a machine stop loss virtually impossible, and means that the bid ask spread is generally very high. i.e. on checking this morning its spread was 4%. That means that you'd open the trade down -4%, plus whatever your entry and exit fees are based on your position size. So you could find yourself having to recover more than 5% just to breakeven on the trade. Which to me would be unacceptable personally, as I think costs and spread should be below 1%. This is not a requirement of the method however, but backtesting from others has shown the dramatic effect that high spreads and fees have on overall performance of a portfolio. So its best to focus on highly liquid stocks if you can, as well as minimising trading fees.
Thanks, Isa. Yes, the problem with this is it is a penny stock so has the big spreads which is a negative. I am trying to find Canadian stocks that meet the proper buy criteria on the TSX (being mindful the exchange is still in stage 4) as they are not penny stocks like those on the Canadian Venture exchange such as OVT.V so have high liquidity. But it is helpful to see that this stock is what you look for in terms of the stage analysis method (if it were not for the high spreads).
