[isatrader]

Hi Isatrader

I am looking to take my first SW trade.
At what part of a stage is it "too late" to take an entry position?
For example in the case of Sports Direct:
I believe the shares would be classed as Stage 4a ?
The Relative Strength is decreasing and below the 52 week average
It is from a sector which appears to be in Stage 4a

So all appears good for a short

I don't think there is any close resistance

BUT have I missed the ideal entry?

Hi nitrader, I've marked up the sports direct chart for you and included the weekly ichimoku cloud to give you visual assistance of where the resistance is on chart.

You have missed the ideal entry, as it would have been on the 26th Sept 14 imo, at the close of 620.5, as that's when it made a strong weekly breakdown that also cleared the late 2013 range resistance, and also completed a one year head and shoulders pattern. There was an earlier breakdown attempt back in late July, however it didn't clear resistance and immediately reversed and so would be discounted. Note how the volume contracted significantly on the right shoulder as it moved back higher towards the 200 day MA and then stalled without being able to recover the 200 day MA, and then as it rolled over the volume began to build again on the down weeks.

The secondary ideal entry point would be on a pullback to test the breakdown zone. However, you don't always get the pullback entry option, and so the other next entry point would then be when it consolidates for a while and then makes the further continuation to new lows.

I hope that helps.

   

[nitrader]

ESNT.L - attempting a Stage 4A breakdown

I see that ESNT had a big drop today and over the last few days - is it better to wait for
a pullback now before placing an entry?

Andy

[isatrader]

I see that ESNT had a big drop today and over the last few days - is it better to wait for a pullback now before placing an entry?

I try not to give direct stock advice as I'm not qualified for that. But advice based on my experience is that you shouldn't chase once a stock has moved too far beyond the breakdown point in order to create at least a risk reward of 1 to 3. So what that means is that the investor or trader stop loss distance as defined in the book should be at least three time smaller than the potential target, which can be determined by using the swing method from the book or point and figure targets as I like to use. Risk management is key to successfully using the method, and like anything worth doing, it takes a lot of time and practice to learn the method effectively.

[nitrader]

Thanks - the method looks so easy in the book
but having problems getting an entry position on actual charts - will do some more reading!

Andy

[isatrader]

Thanks - the method looks so easy in the book
but having problems getting an entry position on actual charts - will do some more reading!

Andy

The shorting part of the method is especially difficult imo, as breakdowns move much quicker than breakouts. Personally I only trade long only using the investor method after years of experimenting with all parts of the method, as it suits my personality best, whereas as shorting is the short term traders domain that needs constant action, and hence requires a lot more screen time and excellent risk management.

One of the most important things to define is what are you - an investor or a trader? As you should focus on one only. Here's a good blog post from Mark Minervini, who is a successful trader that includes Weinstein's Stage Analysis methods in his trading model http://www.minervini.com/blog/index.php/...ock_market

[isatrader]

For the UK watchlist tonight - CSR.L, WIN.L, TEF.L

           


And for the short watchlist - WGB.L, QQ.L, BGFD.L, JETG.L, BNZL.L, ROR.L, FRP.L, BARC.L, RGS.L, AHT.L, BSY.L

                                           

[isatrader]

Although a lot of reversals today (short term low maybe?), however, the scans still only found candidates for the UK short watchlist again, which are - DODT.L, SOM.L, GDWN.L, GLE.L, PRZ.L, SIM.L

                       

[nitrader]

Many thanks