[isatrader]

I have not been posting lately...
While doing some screening of sectors and stocks, I came along WIX in the Internet sector.
I think it is preparing for a stage 2 breakout after a large base...
Price objective $33.5.

Hi Amedee, it has some potential for the future, but it is still in Stage 1 currently and not showing good relative strength, as it's under performing below a decline zero line. So imo it would need to breakout above $22.50 on volume to move in Stage 2A from where it is currently.

   

[isatrader]

A few for the US watchlist from the weekend scans - DGI, EGBN, DK, ABTL, BIO

                   

[Amedee]

I have not been posting lately...
While doing some screening of sectors and stocks, I came along WIX in the Internet sector.
I think it is preparing for a stage 2 breakout after a large base...
Price objective $33.5.

Hi Amedee, it has some potential for the future, but it is still in Stage 1 currently and not showing good relative strength, as it's under performing below a decline zero line. So imo it would need to breakout above $22.50 on volume to move in Stage 2A from where it is currently.

I agree that $22.50 is the breakout although there was a earlier breakout @21 that didn't work out (alhough it is perhaps a healthy pull back!?).
On the other hand, entering @18.33 gives a SL with low risk. Perhaps for a first partly position. I don't agree fully about the relative strength. I see a basing area on the P&F relative strength (trend) chart (WIX vs SPXEWI).
This is how I look at it (+ = pos, - = neg):
+ Sector Internet is improving (bullish percent is bull confirmed, positive trend of stocks in sector is on bull alert, the amount of stocks whose RS chart is in a column of rising Xs in this sector is improving...)
+ Sector is moving up in the sector bell curve
+ Sector still unfavored but improving
+ Sector ranks #12 out of the 40 DWA sectors
+ P&F price chart broke the blue dotted bullish resistance line or BRL (normally acts like a brick wall!)
+ Since breaking that BRL, we saw higher bottoms on the trend chart
+ Large base forming at the level of $17-17,5
   
+ Price objective horizontal count P&F chart = (18*0.5*3)+14.5 = $41,5
+ Price objective vertical count P&F chart = [(7*0.5)+(2*1)]*3 + 17=$33.5
+ Default RS chart WIX vs SPXEWI is bottoming. A faster RS chart shows a basing area and buy signals
+ The one box reversal chart on stockcharts shows a large base and full fulcrum @21. Actually on a pull back.
   
- After the $21 breakout, the stock didn't continue to rise on the P&F chart. This indicates possible weakness in the fulcrum pattern
- If the stock falls below $18, it shows weakness.
* Stoploss traders $16.89 (IR = 8%) , stoploss investors $13.81
* When one waits for the breakout @22.50, I think a good stoploss is $19.61 (IR = 13%)
In other words, I think this is worth partial buying. My reward to risk is between 10 and 16, depending on the price objective I use (see my buy decision tabel).
   
Imagine a portfolio of $100.000:
   

Questions
- Can somebody post a sector chart for Internet as mentioned in Weinstein's book page 78? I do have the information but it is all P&F based. I would like to make a comparison...
- Doesn't the former breakout @21 qualify for a stage 2 breakout? Not enough volume perhaps...

[isatrader]

I agree that $22.50 is the breakout although there was a earlier breakout @21 that didn't work out (alhough it is perhaps a healthy pull back!?).
On the other hand, entering @18.33 gives a SL with low risk. Perhaps for a first partly position. I don't agree fully about the relative strength. I see a basing area on the P&F relative strength (trend) chart (WIX vs SPXEWI).
This is how I look at it (+ = pos, - = neg):
+ Sector Internet is improving (bullish percent is bull confirmed, positive trend of stocks in sector is on bull alert, the amount of stocks whose RS chart is in a column of rising Xs in this sector is improving...)
+ Sector is moving up in the sector bell curve
+ Sector still unfavored but improving
+ Sector ranks #12 out of the 40 DWA sectors
+ P&F price chart broke the blue dotted bullish resistance line or BRL (normally acts like a brick wall!)
+ Since breaking that BRL, we saw higher bottoms on the trend chart
+ Large base forming at the level of $17-17,5

+ Price objective horizontal count P&F chart = (18*0.5*3)+14.5 = $41,5
+ Price objective vertical count P&F chart = [(7*0.5)+(2*1)]*3 + 17=$33.5
+ Default RS chart WIX vs SPXEWI is bottoming. A faster RS chart shows a basing area and buy signals
+ The one box reversal chart on stockcharts shows a large base and full fulcrum @21. Actually on a pull back.

- After the $21 breakout, the stock didn't continue to rise on the P&F chart. This indicates possible weakness in the fulcrum pattern
- If the stock falls below $18, it shows weakness.
* Stoploss traders $16.89 (IR = 8%) , stoploss investors $13.81
* When one waits for the breakout @22.50, I think a good stoploss is $19.61 (IR = 13%)
In other words, I think this is worth partial buying. My reward to risk is between 10 and 16, depending on the price objective I use (see my buy decision tabel).

Imagine a portfolio of $100.000:


Questions
- Can somebody post a sector chart for Internet as mentioned in Weinstein's book page 78? I do have the information but it is all P&F based. I would like to make a comparison...
- Doesn't the former breakout @21 qualify for a stage 2 breakout? Not enough volume perhaps...

I don't disagree with the analysis, but remember we are talking about Weinstein's method on here exclusively, and so my point was that it breaks the rules of the method currently and would need to show numerous technical improvements to become what the method considers an A+ buy candidate.

For example it breaks a number of Stan's Don't Commandments (page 129 in the book) which Stan says you should never violate. As firstly, it closed back below it's 30 week MA last week, which breaks the Don't Commandments. It had poor volume characteristics on the initial breakout attempt, and is not even at a breakout point currently, so breaks the Don't Commandments. It is showing poor relative strength currently, as the relative performance is below the zero line still, and has been declining below it for the last three months while the market has broken out. So it's not showing the strong out performance required for the method currently. Another rule break is that it is still below heavy near term resistance as it's still in Stage 1 - see weekly Ichimoku cloud for visual on this. And finally the last commandment it breaks is to not guess a bottom, as the method says you must buy on breakouts above resistance, whereas it's currently closer to breaking down than breaking out.

So imo it breaks 5 of the 9 Don't Commandments currently, which means it's too early to consider if you are following the methods rules, but one to watch for if the technicals improve. Obviously, if you are not following the methods rules, then sure it has a low risk reward and is attempting to base in Stage 1 still after a failed weak volume Stage 2A breakout attempt in November, which saw it fall back into Stage 1 once more, and redefined the top of the Stage 1 range at 22.50.

But the reason I commented on the post is to highlight to anyone new to the method, that it's earlier than the methods entry points and hopefully I've explained why in this post.

So my intention is not to disparage you if you have taken it as a trade. I'm just highlighting that it breaks the methods entry rules in it's current position for anyone newer to the method reading this so that they can learn the method. But it wouldn't take much for it to improve technically, and so makes a good watchlist candidate for when it does. But for the time being it gets a Stage 1- rating imo, unless it can break above the short term downtrend line and make a weekly closing higher high, at which point it would be more suitable for partial accumulation buying under the methods rules.

   

   

[isatrader]

- Can somebody post a sector chart for Internet as mentioned in Weinstein's book page 78? I do have the information but it is all P&F based. I would like to make a comparison...

Attached is the weekly internet sector chart

[isatrader]

A few for the US long watchlist -

LGND

   


TNAV

   


DVAX - second Stage 2A breakout attempt in recent months after initial weak / failed breakout in January, with strong volume today, but still under near term resistance. Clearer skies above $22, but near to 52 week high levels.

   

[isatrader]

BPOP - Stage 2 continuation attempt from large volatility contraction pattern

[Amedee]

I don't disagree with the analysis, but remember we are talking about Weinstein's method on here exclusively, and so my point was that it breaks the rules of the method currently and would need to show numerous technical improvements to become what the method considers an A+ buy candidate.

For example it breaks a number of Stan's Don't Commandments (page 129 in the book) which Stan says you should never violate. As firstly, it closed back below it's 30 week MA last week, which breaks the Don't Commandments. It had poor volume characteristics on the initial breakout attempt, and is not even at a breakout point currently, so breaks the Don't Commandments. It is showing poor relative strength currently, as the relative performance is below the zero line still, and has been declining below it for the last three months while the market has broken out. So it's not showing the strong out performance required for the method currently. Another rule break is that it is still below heavy near term resistance as it's still in Stage 1 - see weekly Ichimoku cloud for visual on this. And finally the last commandment it breaks is to not guess a bottom, as the method says you must buy on breakouts above resistance, whereas it's currently closer to breaking down than breaking out.

So imo it breaks 5 of the 9 Don't Commandments currently, which means it's too early to consider if you are following the methods rules, but one to watch for if the technicals improve. Obviously, if you are not following the methods rules, then sure it has a low risk reward and is attempting to base in Stage 1 still after a failed weak volume Stage 2A breakout attempt in November, which saw it fall back into Stage 1 once more, and redefined the top of the Stage 1 range at 22.50.

But the reason I commented on the post is to highlight to anyone new to the method, that it's earlier than the methods entry points and hopefully I've explained why in this post.

So my intention is not to disparage you if you have taken it as a trade. I'm just highlighting that it breaks the methods entry rules in it's current position for anyone newer to the method reading this so that they can learn the method. But it wouldn't take much for it to improve technically, and so makes a good watchlist candidate for when it does. But for the time being it gets a Stage 1- rating imo, unless it can break above the short term downtrend line and make a weekly closing higher high, at which point it would be more suitable for partial accumulation buying under the methods rules.

Thanks for the comments Isatrader. I don't feel disparaged ;-) I had to look for the meaning of that word because I didn't know it. Learning every day...

You are right to point out that we are talking about Weinstein's method exclusively. I am mixing the P&F fulcrum strategy (fortunately that isn't a bottom guess) with Weinstein's method. And indeed, Weinstein wouldn't consider WIX a A+ stock.

As you know, P&F doesn't deal with volume because they believe it's all in the price (supply and demand). When volume picks up, price picks up...

Anyway, I like your comments, because it confronts me with Weinstein's do's and don'ts. And because I also believe in his method, I aim to combine P&F and Weinstein. And this discussion can be interesting for other members...

Some advantages could be:
1. The red dotted bulllish support lines and blue dotted bearish resistance lines: normally, they act like brick walls. In other words, they give very clear and important information about the change of trend.
   
2. the measurement of relative performance/strength. There is a very interesting work of Clay Allen CFA about P&F relative strength charts. It's called 'Winning the performance game'. If you google on it, you can probably download it for free.
As Weinstein's writes (pg 109): "One week the relative strength can be positive, while the next week it is negative. The true picture forms only over a period of time". In other words, the trend of the RS is important.
And that's a advantage of the P&F RS charts. But I also notice it on the RS measurement of stockcharts.
On both charts one can see that the RS is bottoming. Measuring WIX vs the equal weighted SPX (SPXEW) is even clearer in my opinion.
In other words, could we refine the RS reading for a quicker entry? I think so. And perhaps that could be a advantage if we don't face any opportunity costs?

   
P&F RS WIX vs SPXEWI (3.25% scale)

   
Stockcharts RS measurement WIX vs SPXEWI and vs SPX

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BPOP - Stage 2 continuation attempt from large volatility contraction pattern

BPOP = bank sector > I was looking at the (bank) sector index and the sector RS vs SPXEWI.
They don't look good. Do you agree this sector is underperforming?
   
Left price chart of bank sector index, right RS of bank sector vs SPXEWI