(2014-07-19, 04:22 AM)jgalt Wrote: 1. Certain stocks seem to be in perpetual stage 2. That is, they started off low and have been climbing for years. There is no clear cut stage 3, stage 4, or 1 at all. A good example would be NYSE:IBM which has been plodding along for the last year with the price oscillating around the 30 week MA. This current phase was preceded by years of continuous advance. How would one treat those stocks? Would you just consider it to be in a stage 3 top phase and ignore it completely?
Another example would be Microsoft (MSFT) which if you look at it from the beginning looks to be in a stage 3 top for the last 15 years. But when you zoom in, you begin to see the price fluctuating around the MA with some mini break outs and break downs. How does one approach these stocks? Can stage analysis by even applied in such a case?
Stage Analysis can be applied to all stocks and is done using a weekly chart, and you'll generally not want to have more than 3 years in view, so that you are zoomed in enough to see the support and resistance levels that are most likely to have some relevance. IBM for example moved into Stage 3 in mid 2012 and finally broke down into Stage 4 in mid 2013, but the Stage 4 only lasted until the end of the 2013 and then it moved back into Stage 1 and then a weak Stage 2 breakout in March 2014. The breakout was a failed one, as it would have taken out the investor stop loss position in June 2014, before reversing higher again. So I'd reclassify it personally as forming a higher Stage 1 base now and so would need to clear the 198 zone swing high to make a fresh attempt at moving into Stage 2.
A lot of stocks will go through the entire four stages in a single year and if you look back at page 18 in the book Weinstein defines the timescales for the two methods. The trader method is each significant two to four month move, and the investor method is up to 12 months.
Some stocks look to have gone up in a straight line for years as you scale out on the charts, but if you zoom into each few year period you can see the Stages play out. However, this doesn't mean that you will always see all four Stages, as in stocks in long term uptrends you'll often see a Stage 2 advance followed by a long sideways Stage 3 consolation of possibly a year or more, before it makes a Stage 2 continuation move higher, and this can repeat many times. And you can also see many mini Stage 3s as well as it tries to shake out the weak hands before making another continuation, and even the occasional false Stage 4 breakdown.
So Weinstein's methods are about catching each significant Stage 2 advance over the time frames I mentioned and avoiding the sideways periods and down periods.
Another point to remember is that Stage Analysis is not just about the price action only. That is only one part of the equation, as you need to consider the other key components of volume, relative performance versus the market, and significant near term support and resistance zones as if all four of those aren't in gear with each other then you should avoid and move on as you need to consider the opportunity cost of each trade.
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.
Quote:I guess your best bet like isatrader said is to look at Interactive Brokers.
Thanks Isatrader and Goodtyneguy. Looking at their website it seems to me that they don't offer ISAs nor SIPP. The pattern day trader rules you mention seem to be a US thing. I'm in the UK. I'm assuming somehow that I'd be operating effectively in the US not the UK. I will certainly bear them in mind. Unless I am getting a good batting average, which seems not exactly the case at the moment, I'll avoid margin.
It does seem (I phoned them) that Interactive Investor offer buy stop limit orders (rising orders) on their accounts. I might open a modest share dealing account to see if it works.
Overal I think I got keen in the last few weeks and bought a number of things that broke out - but due to the use of fill or kill orders were bought a little late. Hence I've been a bit grumpy due to the losses in the pullbacks - most things have been showing losses. However, it looks like many are now climbing out of the pullbacks. Perhaps a little pacing might help - so not everything is pulling back at once.
I've added a feature to my stock screener to see if I can move to breakouts from continuations rather than initial breakouts and see how that works.
I think I need to add a little patience as well as timing.
Quote:I guess your best bet like isatrader said is to look at Interactive Brokers.
Thanks Isatrader and Goodtyneguy. Looking at their website it seems to me that they don't offer ISAs nor SIPP. The pattern day trader rules you mention seem to be a US thing. I'm in the UK. I'm assuming somehow that I'd be operating effectively in the US not the UK. I will certainly bear them in mind. Unless I am getting a good batting average, which seems not exactly the case at the moment, I'll avoid margin.
They offer a SIPP account but not an ISA. In the case of the latter, I badgered them for a long time and encouraged others too over on the T2W forum but to no avail. I think you will find Stadia Trustees the most cost effective administrator/trustee if you only intend to hold a stock broker account in your SIPP.
They are regulated by the US SEC so they have to comply with the PTD rules despite the UK branch being located in the UK. I do n't think it's a problem with SIPPs as they do not allow margin accounts inside this structure.
(2014-07-24, 02:05 AM)goodtyneguy Wrote: They offer a SIPP account but not an ISA. In the case of the latter, I badgered them for a long time and encouraged others too over on the T2W forum but to no avail. I think you will find Stadia Trustees the most cost effective administrator/trustee if you only intend to hold a stock broker account in your SIPP.
By the looks of it they might give the option of flexible order types in multiple markets rather than in just one. Something to think about. My SIPP pot is not large enough yet to consider this, I started it recently as a top-up to my workplace pensions. It is certainly something to consider for the future.
I read a Stan Weinstein quote online that I liked. From "The Heretics of Finance", Stan Weinstein was asked, "What drives your innovative process"? Stan's answer was, "I think it's the desire to be great. I kid around and call myself the MICHAEL JORDAN of technicians. I like to think that I'm one of the best. I think that's what drives me. At this point in life - I'm sixty two - it's certainly not the dollars, but the desire to excel and the gratification I get from it. Knowing that I am going against the best minds and the best computers on the Street. When you win and come out ahead, it's a great feeling."
(2014-07-19, 04:22 AM)jgalt Wrote: 1. Certain stocks seem to be in perpetual stage 2. That is, they started off low and have been climbing for years. There is no clear cut stage 3, stage 4, or 1 at all. A good example would be NYSE:IBM which has been plodding along for the last year with the price oscillating around the 30 week MA. This current phase was preceded by years of continuous advance. How would one treat those stocks? Would you just consider it to be in a stage 3 top phase and ignore it completely?
Another example would be Microsoft (MSFT) which if you look at it from the beginning looks to be in a stage 3 top for the last 15 years. But when you zoom in, you begin to see the price fluctuating around the MA with some mini break outs and break downs. How does one approach these stocks? Can stage analysis by even applied in such a case?
Stage Analysis can be applied to all stocks and is done using a weekly chart, and you'll generally not want to have more than 3 years in view, so that you are zoomed in enough to see the support and resistance levels that are most likely to have some relevance. IBM for example moved into Stage 3 in mid 2012 and finally broke down into Stage 4 in mid 2013, but the Stage 4 only lasted until the end of the 2013 and then it moved back into Stage 1 and then a weak Stage 2 breakout in March 2014. The breakout was a failed one, as it would have taken out the investor stop loss position in June 2014, before reversing higher again. So I'd reclassify it personally as forming a higher Stage 1 base now and so would need to clear the 198 zone swing high to make a fresh attempt at moving into Stage 2.
A lot of stocks will go through the entire four stages in a single year and if you look back at page 18 in the book Weinstein defines the timescales for the two methods. The trader method is each significant two to four month move, and the investor method is up to 12 months.
Some stocks look to have gone up in a straight line for years as you scale out on the charts, but if you zoom into each few year period you can see the Stages play out. However, this doesn't mean that you will always see all four Stages, as in stocks in long term uptrends you'll often see a Stage 2 advance followed by a long sideways Stage 3 consolation of possibly a year or more, before it makes a Stage 2 continuation move higher, and this can repeat many times. And you can also see many mini Stage 3s as well as it tries to shake out the weak hands before making another continuation, and even the occasional false Stage 4 breakdown.
So Weinstein's methods are about catching each significant Stage 2 advance over the time frames I mentioned and avoiding the sideways periods and down periods.
Another point to remember is that Stage Analysis is not just about the price action only. That is only one part of the equation, as you need to consider the other key components of volume, relative performance versus the market, and significant near term support and resistance zones as if all four of those aren't in gear with each other then you should avoid and move on as you need to consider the opportunity cost of each trade.
THank you SO MUCH for the info. I get it now. I apologize for the late reply as I was out of the country on vacation and did not have access to a computer. Thank you again...it all seems so clear.
(2014-08-15, 03:45 AM)JimStudent Wrote: I read a Stan Weinstein quote online that I liked. From "The Heretics of Finance", Stan Weinstein was asked, "What drives your innovative process"? Stan's answer was, "I think it's the desire to be great. I kid around and call myself the MICHAEL JORDAN of technicians. I like to think that I'm one of the best. I think that's what drives me. At this point in life - I'm sixty two - it's certainly not the dollars, but the desire to excel and the gratification I get from it. Knowing that I am going against the best minds and the best computers on the Street. When you win and come out ahead, it's a great feeling."
I have this book in physical copy which I plan on reading when on holidays. What's your thoughts on it, is it as good as the Market Wizards book(s)?
(2014-08-18, 10:54 PM)Tryst Wrote: I have this book in physical copy which I plan on reading when on holidays. What's your thoughts on it, is it as good as the Market Wizards book(s)?
I haven't read the book but I found a good portion of the interview with Stan online. I especially liked where the author asked Stan, "Why do you share your inventions with others rather than keeping the edge to yourself?" Stan's reply abbreviated was, "If you and I are on the same page, I can be of more value to you. ........ I think I can make you a better client of mine by showing you the world as I see it. ............ The more I can get you to see why I'm saying what I'm saying the more value added I can be and more you'll feel comfortable with my advice."
I believe it is from's Stan's desire to teach and the fact that he is a master teacher that we gain so much from his books, interviews, and the few Global Trend Alerts we come across.
