[goodtyneguy]

What a break through for understanding the Weinstein method!!

It really fills in the gaps that have been left by the change in market conditions since SFPIBABM was published.

I would like to thank David for his email and of course I would also like to thank Stan if he drops by for taking his valuable time to give us such a comprehensive reply. Much appreciated.

[Locked in]

Truly great that Mr. Weinstein himself found the time to answer some questions for the site/you. Thanks Stan! And thanks David for getting it in!

I really found this specific question/answer helpful as it validates some of the moves I have been making and provided some additional details.

"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."

Of course however, the entire post was extremely valuable to me. Great questions and answers!

[goodtyneguy]

He's ignoring his own advice to look for a minimum of double volume for trader break outs on AMAT

I think that this is a question of whether the first small continuation breakout also needs double volume on the breakout, as I've always believed that the volume rule only applies to the initial Stage 2A breakout and much bigger continuation move patterns like shown in the book, when the stock has gone sideways for a long period and not been able to break a level of resistance and then finally breaking out again.

I don't think in this case it's a big enough consolidation to warrant the volume rule again as the initial Stage 2A did have it just about and the overall cumulative volume shows it's moving in the right direction for the time being still. So I think you might be being a bit too strict, as there are normally many small consolidations in a Stage 2 advance and so each one won't have a volume surge to breakout out further.

Stan confirmed your believe on this one in his Stage Analyses board "interview". I'd just like to add that Bill O'Neil in his book "How to Make Money in Stocks" recommends that one should look for an increase of volume at least 40% above average on the break out day. I think his look back period is 50 days. This he applies to break outs of bases and cup with handle patterns so I think this may be a good guideline for volume for BO's on continuation buys.

EXPE doesn't look a very good pick to me either for the same reason mentioned above with Amazon. In addition the rally back up to the BD level was on higher than average volume and the price has closed above the 200 dma, but what do I know.

I've noticed you are using the exponential 50 and 200 day MAs, which will be different to the simple 200 day MA which the majority look at, so it's actually still just below the 200 dma following Fridays snap back rally on the market breakout to new highs.

Sorry about that, I don't know what happened there my template is set up with SMA's, will have to keep an eye on that!

I agree with you on this in that there's strong support to get through in the 60-50 zone, but I can see why he might find it interesting as it's made a six month head and shoulders pattern, and recently broke below that and the 200 day MA, which it rallied back up to close right on Friday as the 200 day MA is at 59.09 and the price closed at 59.

Relative performance versus the S&P 500 has broken down below the zero line and has been declining for many months, and the cumulative volume has rolled over and is declining also. The 10 week MA is declining, but the 30 week MA has not yet turned down yet, but did earlier in the week. But overall it's technical attributes are on the lower end of the scale now after being positive for the majority of the last year, as you can see on the attached technical attributes chart I've made up in my software to give a quick view of a stocks strength. As you can see, eight weeks ago it's started turning red after having a score of 8 out of 8 for most of the last year. Whereas now, it only has a score of 2 out of 8 and so I'd personally rate it as Stage 3B with a weekly close below 57 to move into Stage 4A imo.

"A" trade rather than an A+ methinks.

Update: I managed to have a look at the April 26th GTA report that Weinstein does, and this is what he said about Expedia:

"Expedia (EXPE-OTC-58.56) is tracing out a major Stage 3 top pattern. Do selling on a close below 58 (as that would move EXPE into Stage 4A)." May 2013 Global Trend Alert - 4/26/13

So, it's looks like what I said above was inline with his Stage Analysis of it, although he's got the 4A breakdown point slightly above mine at 58. But it's good to see my analysis of the Stages was close to his at least.

Well done!

[RUTrading]

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?

isatrader, thanks for sharing this, Mr. Weinstein is defiantly a great guy, always willing to share his knowledge. I notice the question on Stage 1 buying before stage 2A was not answered. A pity. So he still uses “gut feel” to decide on stages. I am still going to try find a way not to use my "gut feel" and the answer about volume helps one step closer in doing just that.

[isatrader]

Thanks for the good feedback on the Q&A with Weinstein. I think it mostly confirmed what we'd already assumed with regards to volume being less important nowadays, but still necessary for those A+ picks. And the breakout entry points being on a closing basis now for investor positions and not buy-stop orders anymore, due to the large number of false breakouts that occur these days.

It is also good to know that the sub-stages don't have any definite rules, and are just a judgement call on whether it's early or late in the stage as we had been doing. But the surprising answer was that he thinks we should use the adjusted data for charts, which then changes support and resistance levels. I'm not totally convinced on that one, and so will continue to look at both personally, plus I don't have any choice with the ProTA charts as they only use the unadjusted data.

I'm very pleased that he took the time to reply, even though they were only concise answers. But I doubt he'll do it again for a good while. Maybe I'll try again in a year or so...

[isatrader]

The S&P 500 Cumulative P&F Breakouts - Breakdowns chart reached new highs again this week as there was a total of 64 breakouts and only 2 breakdowns during the week. So the bulls remain firmly in control by the measure currently.

[isatrader]

Attached is the updated volatility breadth charts which mostly stay in bullish territory for another week, except for the longer term bullish percent ratio chart which still has crossed it's 50 day MA yet.

[isatrader]

Attached is the updated Advance Decline Breadth Charts, including the cumulative AD line, momentum index, cumulative AD volume line, 10 Day AD oscillator, NYSE Volume Advancing / Volume Declining Ratio and the McClellan Oscillator and Summation Index