(2013-12-11, 11:01 AM)isatrader Wrote: Coal has been one of the strongest sectors over the last five days, and there are a number of stocks already in Stage 2 advances which you should look at if you are interested in the sector, as the method is about buying the strongest stocks. But I thought I'd highlight that a few of laggard stocks are now in Stage 1 again, after failed Stage 1 bases in late 2012 - ANR, ACI and BTU.
Also, the sector chart Dow Jones US Coal Index ($DJUSCL) is also in Stage 1 currently, which can be traded by the KOL etf, although you'll note from the attached performance chart that it's tracking is not very accurate and it has underperformed the coal index by over 10% in the last 200 days.
So the Coal sector - which is the only negative Energy sub sector over the last year - looks to be making another attempt at basing, and so is an area to watch for a potential move into Stage 2, as the relative performance on the sector chart is much closer to it's zero line this time, and a Stage 2A breakout above the November swing high would also nudge it just above the weekly Ichimoku cloud resistance, which is much thinner here.
Great post, isatrader.
I think this is the stage that I am most interested in, the ones that are basing, making the stage 1's. Then we can just just watch and draw the pivotal points and wait for them to break and move to a stage 2/A.
Do you have any filters/rules for identifying basing stage 1 sectors/equites?
(2013-12-12, 12:31 AM)Tryst Wrote: I think this is the stage that I am most interested in, the ones that are basing, making the stage 1's. Then we can just just watch and draw the pivotal points and wait for them to break and move to a stage 2/A.
Do you have any filters/rules for identifying basing stage 1 sectors/equities?
I began that way as well, but something that I've realised more of recently is that I was ignoring the point about only trading the strongest and weakest stocks and sectors and was focusing too much on just looking for Stage 2A breakouts.
Stage 2A is the ideal time for investors to buy a stock, but it also needs to coincide with the market moving into Stage 1 / early Stage 2 in order to get the best results - i.e. late 2011 was the last example of that opportunity. So you should do less Stage 2A buying when the broad market has been in a long Stage 2 advance like currently and focus more on significant continuation moves and only a few A+ looking Stage 2A breakouts with all the key requirements of the method. As as a broad market Stage 2 advance continues, the focus on quality of your picks becomes more important.
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.
Stan states, more so in his latest Financial Sense news hour interview, about rotation being one of the key aspects of any bull market. So do you think he is more referring to rotating into stocks showing continuation patterns and less so stocks starting late in the bull market from stage 1 base?
Stan states, more so in his latest Financial Sense news hour interview, about rotation being one of the key aspects of any bull market. So do you think he is more referring to rotating into stocks showing continuation patterns and less so stocks starting late in the bull market from stage 1 base?
I think that logically he would be referring to rotation between the strongest sectors as that's what the method focuses on, as normal pullbacks /consolidations in stocks in strong stage 2 advances can last many months (social media might be a good recent example) during which time other stocks / sectors can take the lead, and occasionally new players can come on the scene. But the later in the market move they begin, the less chance they have of a sustained Stage 2 advance, as when the market rolls over, pretty much everything gets hit. But the late emerging leaders can become the sectors to watch out for at the start of the next major market Stage 2. Mark Minervini's book talks a bit about this subject.
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.
