[the_manassa_mauler]

The focus in the method would be to remain with the leading stocks / sectors for the most part. There might be some exceptional stocks that are late movers (it's never utilities though), but for most part Weinstein, O'Neil etc all suggest that the leaders come out first from a significant decline in the market, and will generally continue to be strong until the end of Stage 2 advance. But they will have significant pullbacks and consolidations along the way. So, at this point in the Stage 2 advance you will have less Stage 2A breakouts, and much more continuation breakouts from higher consolidation bases. So you should be identifying the leading stocks and watching for proper bases to form that shake out the weak hands, and then be ready when they begin to make continuation breakouts.

Ideally, what id like to do in my roth & 401, is go w/ sector mutual funds and etf's much more then indiv stocks b/c of less risk. furthermore, they seem to more broadly capture the early movers and the slower movers w/in a sector as a basket, yet can perform very well. its why your sector table above the 150 avg appeals to me. Charting wise, for the sector, wouldnt etf's work better then mutual funds sense you get volumes with them?.... also can you define to me, what you mean by a stage 2a breakout vs stage 2 breakout?.... regarding lagging sectors, like utilities and energy, are there some time cases that even though they are lagging they can still be very explosive profitable stage 2 moves. I get it w/ utilities, by nature, even at their best, they just dont move that explosively. However, couldnt a case be made for energy along these lines: its been in a very long bottoming stage 1 base. weistein talks about how long term bottoms, esp head/shoulder bottoms, can end up being very powerful breakout moves. Also energy has gotten taken out artifically moreso by covid slowdown, yet projecting forward into fall, can move forward strongly riding the all hands who have been quaratined coming back to the econ.?

I post these each week on my twitter account. So you can find the last weeks one here: https://twitter.com/stageanalysis/status...1336330241

Thanks for the twitter headsup. Im now finding good stuff there too. I have a ques re your % of stocks above 150 MA table: is the nyse & nasdaq sectors literally looking at every stock within that particular exchange? .... & do you ever see a sector stay in the 80% range much more longer then normal before pullbacks?.... finally, do you also ever include small caps vs large caps as sectors w/in your 150 MA table?

I use stockcharts custom screener for the majority of mine, and a lot of visual scanning to prune the results down. This is the purpose of my daily watchlist that post in the blog. As I look for all the stocks showing the characteristics that we look for and highlight them, whatever position that they are in at the time. As some may be months away from a buy point, but it the methods characteristics that I'm looking for, and so I can make a note of them, and start to monitor the stocks nearer to buy points more closely.

when you screen stocks on stockcharts, wh/ screen variable items do you put in place that work best to abide by weistein's methods?... secondly, am I correct to deduce from what you are saying, that the stocks on your watchlist had all the correct parameters of what weistein looks for and have either already made their stage 2 breakthru move? Do you also include in that watchlist, ones that are well set up to break into stage 2 and on the cusp, but just havent moved yet?  if they are months away from a buy point, is this b/c they already broke up into stage 2 and are too extended, or is it b/c they have all the other characteristics but are just not technically close enough chart wise to a breakout?

I try not to be bullish or bearish, but instead just focus on the individual setups that I'm seeing and whether they are working or not. Currently, we've had two or three weeks of the leading stocks with failed continuation breakouts and getting hit on earnings quite hard. Whereas, some of the laggards have been doing well and breaking out. Hence why the S&P 500 moved into Stage 2. So breadth has been improving for the broader market, but the leaders continue to pullback. So I think we could be seeing some base building in those while some of the laggards rise up, but it should show which of the leaders are going to be the best, as they should ideally pullback the least on lighter volume, and show strong relative strength, and then make continuation moves once the market is ready.

But I think we are in a much tougher environment now in the short term, even though we are seeing signs of Stage 2 market. So, as always I recommend just to follow the price action and maintain proper risk management.

when you say laggards, do you mean stocks w/in sectors that are doing well, or do you mean lagging sectors themselves?.... is the tougher envir that you point to b/c of the uncertainity and questions due to covid, a vaccine & how long or severe shutdowns will be? or it b/c of election and fear of what a biden winning may do policy wise to the econ.? or does it simply mean, that there a conflicting technical signals in the charts themselves?

I hope that helps.

thanks again for you help and services.

[the_manassa_mauler]

isatrader.... not sure if you saw the last post on this thread. I had some question re your last post reply to me. If you get a chance, I'd be interested in your takes.... thanks

[isatrader]

isatrader.... not sure if you saw the last post on this thread. I had some question re your last post reply to me. If you get a chance, I'd be interested in your takes.... thanks

Sorry, I hadn't had a chance to get back on these yet. I should be able to tomorrow.

[the_manassa_mauler]

isatrader.... not sure if you saw the last post on this thread. I had some question re your last post reply to me. If you get a chance, I'd be interested in your takes.... thanks

Sorry, I hadn't had a chance to get back on these yet. I should be able to tomorrow.

thanks.... just thought you may have missed the post.

[isatrader]

Ideally, what id like to do in my roth & 401, is go w/ sector mutual funds and etf's much more then indiv stocks b/c of less risk. furthermore, they seem to more broadly capture the early movers and the slower movers w/in a sector as a basket, yet can perform very well. its why your sector table above the 150 avg appeals to me. Charting wise, for the sector, wouldnt etf's work better then mutual funds sense you get volumes with them?....

I've never traded mutual funds, so can't share any experience there I'm afraid. But having volume always helps.

also can you define to me, what you mean by a stage 2a breakout vs stage 2 breakout?....

Stage 2A is the very first breakout from a Stage 1 base. Whereas a Stage 2 continuation breakout, can be from any of the more minor base that form when a stock is already in Stage 2.

regarding lagging sectors, like utilities and energy, are there some time cases that even though they are lagging they can still be very explosive profitable stage 2 moves. I get it w/ utilities, by nature, even at their best, they just dont move that explosively. However, couldnt a case be made for energy along these lines: its been in a very long bottoming stage 1 base. weistein talks about how long term bottoms, esp head/shoulder bottoms, can end up being very powerful breakout moves. Also energy has gotten taken out artifically moreso by covid slowdown, yet projecting forward into fall, can move forward strongly riding the all hands who have been quaratined coming back to the econ.?

All the sectors usually move into Stage 2 eventually in a bull market. They just come out at different times. So there will likely be a period down the line when the energy stocks start to have explosive moves into Stage 2 on volume. But when they do they will start showing up in the daily scans that I run for the watchlist. But at the moment, the only area of the energy sector making the watchlist has been solar stocks and a few outliers.

Try not to let what you think should be happening cloud what you see in the charts. If the stocks in those sectors setup from proper basing patterns, with volatility contraction and then start breaking out on heavy volume, with outperforming relative strength versus the S&P 500 and no near term resistance. Then you'll know it's time to start testing the waters.

Thanks for the twitter headsup. Im now finding good stuff there too. I have a ques re your % of stocks above 150 MA table: is the nyse & nasdaq sectors literally looking at every stock within that particular exchange? .... & do you ever see a sector stay in the 80% range much more longer then normal before pullbacks?.... finally, do you also ever include small caps vs large caps as sectors w/in your 150 MA table?

I use the stockcharts 11 major sectors in the custom scanner but exclude anything anything under 50M market cap. Just to filter out the micro cap stocks from it. So covers around 4000+ stocks

Yes, sectors can stay in the upper or lower extremes zones for long periods.

No, is just a straight comparison of all stocks

when you screen stocks on stockcharts, wh/ screen variable items do you put in place that work best to abide by weistein's methods?... secondly, am I correct to deduce from what you are saying, that the stocks on your watchlist had all the correct parameters of what weistein looks for and have either already made their stage 2 breakthru move? Do you also include in that watchlist, ones that are well set up to break into stage 2 and on the cusp, but just havent moved yet?  if they are months away from a buy point, is this b/c they already broke up into stage 2 and are too extended, or is it b/c they have all the other characteristics but are just not technically close enough chart wise to a breakout?

The watchlist is made up of around 6 different scans, that I merge together and then and manually cull down visually.

Scans are just the starting point. You have to learn to see the characteristics that we are looking for in the method, as well as other methods too. And also how to spot developing patterns before those characteristics have fully developed. As with breakout trading you need to spot the stock before the breakout in order to get in at the methods ideal entry points. But if you do spot a stock after the breakout has happened, and it has the A+ characteristics of a leading stock. Then you shouldn't chase, as you missed it. But it will give multiple opportunities on future pullbacks and bases to get in to it if it a leading stock, as they don't just explode and collapse, unless you are trading penny stocks Real leaders, stair step their way to new highs, form a new base, and breakout again to new highs, and repeat. So, if you missed a good one, and it's still early in Stage 2. i.e. before follow on base 1 or 2. Then it should go on your watchlist, so that you are ready for the next entry point, which might be a few months away still.

when you say laggards, do you mean stocks w/in sectors that are doing well, or do you mean lagging sectors themselves?.... is the tougher envir that you point to b/c of the uncertainity and questions due to covid, a vaccine & how long or severe shutdowns will be? or it b/c of election and fear of what a biden winning may do policy wise to the econ.? or does it simply mean, that there a conflicting technical signals in the charts themselves?

I meant stock laggards that have underperformed the market since the March low.

The tougher environment is because we are months out of the market low now, and a lot of leading stocks are starting to pullback and form new bases, and individual stocks pullback 2 to 3x what the market does normally. So, a lot of people get shaken out of positions as breakouts haven't been working as well as they were a few months back when the Nasdaq was surging.

Finally, ignore the news, turn off cnbc / bloomberg especially. As they won't help you. Follow price & volume. As if any of what mentioned above is an issue for the market, then the price action will soon tell you.

[daddybyday]

Hello, All,

My project of reviewing charts on all of my currently-held positions goes well, and I think I'm learning a lot just forcing myself to look at charts.  I have noticed one thing however.

Most of the companies that I own are wonderful, solid companies, but they have all experienced fantastic Stage 2 runs, and are either back in Stage 2 after a Stage 3 Base, or currenly in Stage 3.  So my quesion is, how do I find a few of these companies BEFORE that initial Stage 2 run?  Is it just that, where the market is now, after an historic bull run (with a barely-noticed Bear Market in the middle of it), that they are few and far between?  Can anyone share any tips or secrets to screen and find some of the companies earlier in their journey so to speak (without spending 10 hours a day looking at hundreds of charts).  What I don't want to pick on Isa, but what type of screener is he using to find the breakouts that he's posting (I suppose I could just limit my investing to those--he's kind enough to post them for us) ;-).  Seriously, though, how would you go about setting up watch lists or screens of companies that are most likely to break out?  I'd love to hear some thoughts on this!

Thanks!

Tom

[the_manassa_mauler]

All the sectors usually move into Stage 2 eventually in a bull market. They just come out at different times. So there will likely be a period down the line when the energy stocks start to have explosive moves into Stage 2 on volume. But when they do they will start showing up in the daily scans that I run for the watchlist. But at the moment, the only area of the energy sector making the watchlist has been solar stocks and a few outliers.

Try not to let what you think should be happening cloud what you see in the charts. If the stocks in those sectors setup from proper basing patterns, with volatility contraction and then start breaking out on heavy volume, with outperforming relative strength versus the S&P 500 and no near term resistance. Then you'll know it's time to start testing the waters.

thanks for your reply & time... 

Sector personality in an initial bull market is interesting to watch. So it sounds like Weistein feels when a bull market commences, its the intial sectors that break out, that will usually have the strongest legs thru the entire duration of the bull market... I guess my thinking is too bottom fishing here.  The plight of missing the initial sectors wh/ broke out early....  That said, I do wonder if sometimes, even though a sector (like energy now) is late to the game, can they still have an impressive 2a breakout & longterm legs in a bull market. Especially if they were stymied early by freaky, highly irregular events (like covid).... Your bottom line advice on watching the chart and cutting out noise is sound. Curious though, have you found in the past that sometimes due to freaky events, that some lagging sectors, can end up being strong long leg players also in a bull market?

The tougher environment is because we are months out of the market low now, and a lot of leading stocks are starting to pullback and form new bases, and individual stocks pullback 2 to 3x what the market does normally. So, a lot of people get shaken out of positions as breakouts haven't been working as well as they were a few months back when the Nasdaq was surging.

certainly is causing choppiness.... are you yourself, just mainly waiting for pullback continuation plays to reload or are you starting to look at some players in the lagging sectors wh/ are starting to pop their heads up as intial 2a breakouts?

thanks again for all your help

[ianbate222]

Hi Isa,
I am touching base about RY which you commented on twitter in a reply to my post to you.
You noted a week back it is early stage 1 but I was wondering if it could break above the 2020 high of 80.74 and still not show a buy trigger based on stage analysis unless price breaks above the RS line and big volume comes in?
I also want to point out that the site nextbigtrade screener shows RY is in stage 2 for 4 weeks now so clearly that is not correct so I am following your methodology to determine entries which is why RY is still not a buy.
Thanks for your thoughts,
Ian