(2014-10-27, 05:16 PM)GeorgeM Wrote: I have a question regarding stop loss placement. When setting a stop loss level do you take as reference a intra day or eod low ? thanks!
The intraday low and end of day low are the same thing. Did you mean something else?
Yes. What I mean is this: when you set a stop loss you need a basing point, pivot, under which you set it. When you look for this basing point you consider only the prior close prices or the intra day lows also ? John Magee speaks is his book about close below a certain level. However, Stan seems to go for an intraday stop ....How do you do it ?
(2014-10-28, 09:04 AM)GeorgeM Wrote: Yes. What I mean is this: when you set a stop loss you need a basing point, pivot, under which you set it. When you look for this basing point you consider only the prior close prices or the intra day lows also ? John Magee speaks is his book about close below a certain level. However, Stan seems to go for an intraday stop ....How do you do it ?
You need to consider the intraday lows as well, and give a small amount of room below that to allow for volatility around the low. With Weinstein's investor method you'll want to use the last significant weekly low for the pivot and the 30 week MA also, whereas the trader method is much tighter and looks for the most recent support area using daily lows and usually the 50 day MA also. The most important thing to consider with your stop loss is is the level where you are putting it significant for the timescale you are trading and are you willing to sell your position at that level.
(2014-10-28, 09:04 AM)GeorgeM Wrote: Yes. What I mean is this: when you set a stop loss you need a basing point, pivot, under which you set it. When you look for this basing point you consider only the prior close prices or the intra day lows also ? John Magee speaks is his book about close below a certain level. However, Stan seems to go for an intraday stop ....How do you do it ?
You need to consider the intraday lows as well, and give a small amount of room below that to allow for volatility around the low. With Weinstein's investor method you'll want to use the last significant weekly low for the pivot and the 30 week MA also, whereas the trader method is much tighter and looks for the most recent support area using daily lows and usually the 50 day MA also. The most important thing to consider with your stop loss is is the level where you are putting it significant for the timescale you are trading and are you willing to sell your position at that level.
Very good. Thanks!
One last question about this issue: what do you mean by "significant" weekly low ?
I'm tweaking my scoring system. I can't see that Weinstein's method says anything about the closing price on breakouts - e.g. whether it must be higher than the breakout level. If it does that would make sense - but I'd like to cross check with the view of others.
(2014-11-25, 09:37 PM)pcabc Wrote: I'm tweaking my scoring system. I can't see that Weinstein's method says anything about the closing price on breakouts - e.g. whether it must be higher than the breakout level. If it does that would make sense - but I'd like to cross check with the view of others.
he advocated the use of limit orders, so that would suggest he didn't use the closing price. Personally, I wait for a daily close after the weekly breakout
(2014-11-25, 09:37 PM)pcabc Wrote: I'm tweaking my scoring system. I can't see that Weinstein's method says anything about the closing price on breakouts - e.g. whether it must be higher than the breakout level. If it does that would make sense - but I'd like to cross check with the view of others.
It was covered in the email interview that I did with Stan in May 2013 and depends on whether you are an investor or a trader, as it's different for both.
Here's a copy of it:
Quote:Q. The subject of volume comes up time and time again, as to it's importance in the method nowadays considering the rapid growth of Dark Pools, ETFs and Indexing, which all distort the volume data. So can I please ask if the way you view the volume data has changed over the years since the book and if there's anything we should be looking for specifically these days that's different from the books take on volume prior to and following a Stage 2A breakout? And on trader continuation breakouts within Stage 2?
A. Volume on a breakout is still important (although perhaps a bit less so than a few decades ago), and I do want to see volume pick up on a breakout.
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?
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.
Q. Previous interview on Financial Sense Newshour - when did you reverse the bearish view you had in that interview and what were the reasons? As in the interview you were suggesting covering extended shorts and looking to do further shorting on the next rollover - which then began in late December, before the huge whipsaw at the start the year took us back into a Stage 2 again. So what changed your view that the short term bottom in November was actually more significant, as we were hoping that you were going to talk about that in the latest interview?
A. I reversed my bearish stance starting in mid November (moving incrementally as I always do). I first turned short term bullish on November 16th when there was a “key reversal day†on good volume. Then in early December, we turned positive on the intermediate term trend too when the SPX cash, etc. moved above their respective 50 day moving averages (and there was a significant improvement in my S&P and Secondary Surveys). Finally, in early January we turned long term bullish also when the market broke out above key resistance, and the S&P and Secondary Surveys also turned clearly positive.
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?
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.
Q. Near term resistance/support - It was noted in the interview that you picked EXPE and AMZN as potential short candidates, but one of the members wanted to know why they were picked out considering the near term resistance they both have on the way down. For example on EXPE there's near term resistance in the 60-50 zone that it's currently in? I can see the other reasons that you might dislike it, in that 10 week MA is declining, the 30 week MA turned down this week also, but Fridays strong reversal turned it back up again; the Mansfield Relative Strength versus the S&P 500 is now below the zero line for the first time for a few years, and the negative volume is picking up. There's also a six month head shoulders pattern forming and so I have it as in Stage 3B at the moment with a breakdown to Stage 4A as a strong weekly close below 57?
A. Although I’m not advocating a lot of short sells with the market so strong, I felt that EXPE was a good Stage 4A example of a stock that you should most definitely not be long, and if you were considering doing shorting, would be interesting on a rally back toward resistance in the 59-60 zone, and note on the latest rally, it’s failing right in that area near its 200 day moving average. As for why I’m so negative on it, it’s below its 50, 150, and 200 day moving averages and has broken significant support and is in Stage 4A.
Q. Earnings - should stocks close to their earnings release be avoided until the data has been digested by the market? Any guidance on this would be welcome as it's a questions on earnings and how to deal with them are often raised.
A. Traders should most definitely stay away from stocks that are coming out with earnings (especially in a market that is so over-reactive, such as this one).
Q. Stock Prices - Adjusted or Unadjusted data? A lot of charting services adjust the stock charts for dividends, stock splits etc. Splits obviously have to be done, but adjusting the charts for dividends distorts the historical support and resistance levels important to the method. So should we use unadjusted charts were possible?
This is also important to know with regards to continuous futures contracts, as for example the US 30 YearTreasuries charts are one of the major charts we follow as I manually copy and paste the price and volume data from the CME each week to get the most accurate chart possible. So I have pure unadjusted data, however, I've noticed some chart services adjust the data to remove the rollover gaps, but I think this distorts the support and resistance levels again?
A. I suggest you use “adjusted†data.
Q. Continuation moves during Stage 2 - relevance of volume on a continuation moves following a small consolidation of only a few months or so? Do you still look for the same requirements, or is it less important as long as the Stage 2A breakout previous to it fulfilled the at least two times the previous fours weeks average volume?
A. Volume is less important on a continuation move in Stage 2 than it is on the original breakout but there should be at least some marginal increase in volume.
Q. In the GTA reports you have short descriptions of all the sub-stages, which weren't in the book. Is there anywhere we can get detailed information on the sub-stages from?
Also, the Stage 1 - Basing Phase. May begin accumulation has raised a few questions also. Like do you recommend someone using the investor method do any buying in Stage 1, and if so how to go about it? And the same question for people using the trader method, as I noticed in one of the interviews you mentioned that you recommended some trader buying even as early as Stage 4B- in some instances?
A. I really don’t have “detailed information†on the “sub stages†that you ask about. It’s somewhat of a “gut feel†(obviously when a stock is first breaking out of a base and moving into Stage 2, I label it “Stage 2A†(early in the advancing phase). And after it’s been in that stage and becomes extended, I label it “Stage 2B†(late in the advancing phase). And if I just put a “Stage 2†rating on the stock, theoretically, I feel that it’s not yet ridiculously extended and is in the middle of its move (but again there are no “hard and fast†rules).
Q. I follow a broad range of market breadth indicators as suggested in the book, like advance decline, momentum index, new highs new lows and many more to try and best replicate you weight of evidence approach with the resources I have and recently also added some economic datasets such as the S&P Case-Shiller Home Prices Index, which I note has just moved into Stage 2A. So my question is, do you think Stage Analysis can be used on economic data such as this?
A. Yes, Stage Analysis can be used with economic data (such as your doing with the Case-Shiller Index), but I don’t suggest that you make that part of your “Weight of the Evidence†as the economic data will usually be “lateâ€.
Okay, David, that’s it. And now I wish you well in what is a very interesting and challenging market, and I hope that this input proves helpful to you, but understand that I can’t do this again as I have a very “heavy†and “tight†schedule.
Best always,
Stan Weinstein
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.
(2014-11-25, 09:37 PM)pcabc Wrote: I'm tweaking my scoring system. I can't see that Weinstein's method says anything about the closing price on breakouts - e.g. whether it must be higher than the breakout level. If it does that would make sense - but I'd like to cross check with the view of others.
It was covered in the email interview that I did with Stan in May 2013 and depends on whether you are an investor or a trader, as it's different for both.
Here's a copy of it:
Thanks. That reminder is appreciated. I have a feeling of deja-vu, I think we may have discussed something similar in the past. I've tweaked my screener for a couple of the methods I use for detecting breakouts. For one I have increased the time window for detecting a breakout but tightened the volume criteria.
