[isatrader]

Woo Hoo! That was a stock I just put on the watchlist today to keep track of. I'm starting to figure this out! But I'm confused. My chart on ProRealTime is showing a price almost $3 higher than the 30 MA and a resistance from over a year ago at $10.20. It appears on mine to have already broken above the 30 MA. Is the breakout you are referring to the $10.20 mark that the chart is calling "horizontal minor resistance"?

You've just discovered the major issue with ProRealTime historical data as the data is not adjusted for splits and dividends like it is on stockcharts, and so you get different resistance levels. We asked Stan a few years ago about what data to use, and he said adjusted data, so hence why I prefer stockcharts personally and pay for it's data, but they do have free charts too. So I'd suggest using ProRealTime's scanner, but make sure you double check the charts elsewhere like with stockcharts to make sure the historical levels have been adjusted so that you aren't basing decisions on the wrong levels.

If so, my thought based on the investor method is placing a buy-stop-limit at $10.25 and $10.50 respectively. My sell stop would be all the way back at $7.75. Seems like a big drop but unless there is another pullback before breaking out of resistance, that's the last pullback to reference. Am I on the right track?

You need to assess the historical and recent volatility of a stock to determine it's normal range of movement when considering stop losses, as for example with a 200 day ATR of 0.525 this stock is the equivalent of a wild beast, as that's 5.5% a day movement on average over the last 200 days of trading. So position sizing methods are something you should research which are not in the book, as a 20% move for a sub $10 pharma stock is very different to a 20% move in a large cap like IBM. So take the time to learn properly before jumping into wild stocks, as risk management is critical to long term sucess.

[StageAnalysis]

One for the watchlist - BABA, which is in the early part of Stage 1 and showing some signs of life.

       

[isatrader]

RDCM - Attempting to make a Stage 2 continuation breakout after a year of consolidation

           

[mongoose1969]

What are your thoughts on BANX? It looks like they are in consolidation since May and trying to make a move. I've been trying to figure out their subsector to look at how that is performing. Again, still trying to learn the charts but it looks like it's trying to head in the right direction.

   

[isatrader]

What are your thoughts on BANX? It looks like they are in consolidation since May and trying to make a move. I've been trying to figure out their subsector to look at how that is performing. Again, still trying to learn the charts but it looks like it's trying to head in the right direction.

I've attached the weekly ichimoku chart, which gives a visual representation of the overhead resistance.

   

Resistance is one of the four critical components to the Stage Analysis method, and also the most overlooked, as it's often ignored by people when they see the other components are in place i.e. Price Action, Volume and Relative Performance. But my studies over the years into what makes an A+ candidate for the method have shown me that it's critical to the methods success, and so shouldn't be ignored imo.

So my solution for a quick visual test to help to determine where the historical resistance is and the amount if time needed when considering potential Stage 2A breakouts is to use the weekly ichimoku cloud, as it's an excellent way of seeing resistance, and so until a stock is trading above it's weekly cloud, it's still working through a headwind of resistance, and so can't be an A+ candidate. And at the end of the day, as an investor you only want to be trading stocks that have A+ potential setups, as anything less will increase the chance of failure or simply produce mediocre returns. And the methods about finding stocks that can produce exceptional returns.

So learn to look for the exceptional, and be harsh and discard anything that doesn't meet the full criteria. It doesn't mean that a stock might not turn out to be an A+ candidate if it doesn't have the full criteria at the intial Stage 2A breakout. But you've always got to consider the opportunity costs of any investment that you make, as it's money that you then can't put into another stock later that shows more potential.

For additional information of what to look for A+ candidates I created the Stage Analysis Breakout Quality Checklist thread. So read through that and see if what you are looking at matches those requirements.

[mongoose1969]

What are your thoughts on BANX? It looks like they are in consolidation since May and trying to make a move. I've been trying to figure out their subsector to look at how that is performing. Again, still trying to learn the charts but it looks like it's trying to head in the right direction.

I've attached the weekly ichimoku chart, which gives a visual representation of the overhead resistance.



Resistance is one of the four critical components to the Stage Analysis method, and also the most overlooked, as it's often ignored by people when they see the other components are in place i.e. Price Action, Volume and Relative Performance. But my studies over the years into what makes an A+ candidate for the method have shown me that it's critical to the methods success, and so shouldn't be ignored.

So my solution for a quick visual test to help to determine where the historical resistance is and the amount if time needed when considering potential Stage 2A breakouts is to use the weekly ichimoku cloud, as it's an excellent way of seeing resistance, and so until a stock is trading above it's weekly cloud, it's still working through a headwind of resistance, and so can't be an A+ candidate. And at the end of the day, as an investor you only want to be trading stocks that have A+ potential setups, as anythink less will increase the chance of failure or simply produce mediocre returns. And the methods about finding stock that can produce exceptional returns.

So learn to look for the exeptional, and be harsh and discard anything that doesn't meet the full criteria. It doesn't mean that a stock might not turn out to be an A+ candidate if it doesn't have the full criteria at the intial Stage 2A breakout. But you've always got to consider the opportunity costs of any investment that you make, as it's money that you then can't put into another stock later that shows more potential.

For additional information of what to look for A+ candidates I created the Stage Analysis Breakout Quality Checklist thread. So read through that and see if what you are looking at match those requirements.

And the learning continues

[mongoose1969]

What are your thoughts on BANX? It looks like they are in consolidation since May and trying to make a move. I've been trying to figure out their subsector to look at how that is performing. Again, still trying to learn the charts but it looks like it's trying to head in the right direction.

I've attached the weekly ichimoku chart, which gives a visual representation of the overhead resistance.



Resistance is one of the four critical components to the Stage Analysis method, and also the most overlooked, as it's often ignored by people when they see the other components are in place i.e. Price Action, Volume and Relative Performance. But my studies over the years into what makes an A+ candidate for the method have shown me that it's critical to the methods success, and so shouldn't be ignored imo.

So my solution for a quick visual test to help to determine where the historical resistance is and the amount if time needed when considering potential Stage 2A breakouts is to use the weekly ichimoku cloud, as it's an excellent way of seeing resistance, and so until a stock is trading above it's weekly cloud, it's still working through a headwind of resistance, and so can't be an A+ candidate. And at the end of the day, as an investor you only want to be trading stocks that have A+ potential setups, as anything less will increase the chance of failure or simply produce mediocre returns. And the methods about finding stocks that can produce exceptional returns.

So learn to look for the exceptional, and be harsh and discard anything that doesn't meet the full criteria. It doesn't mean that a stock might not turn out to be an A+ candidate if it doesn't have the full criteria at the intial Stage 2A breakout. But you've always got to consider the opportunity costs of any investment that you make, as it's money that you then can't put into another stock later that shows more potential.

For additional information of what to look for A+ candidates I created the Stage Analysis Breakout Quality Checklist thread. So read through that and see if what you are looking at matches those requirements.

Isatrader,

I've read through your thread and set up that indicator. I want to be sure I'm looking at the cloud the way I'm supposed to. Is the goal to make sure the cloud is not as "thick" above the price like it looks with BANX? As I look at something like RDCM, the cloud is actually under the price trend. I guess I need an assist with what I'm supposed to be looking at with that cloud.

[isatrader]

I've read through your thread and set up that indicator. I want to be sure I'm looking at the cloud the way I'm supposed to. Is the goal to make sure the cloud is not as "thick" above the price like it looks with BANX? As I look at something like RDCM, the cloud is actually under the price trend. I guess I need an assist with what I'm supposed to be looking at with that cloud.

A thick cloud above the current price is bad, as it shows a lot of potential resistance. The ideal is to have a Stage 2A breakout occur above the cloud. For simplicity sake, above the cloud is good, below the cloud is bad. Thick cloud is heavy resistance and thin cloud is light resistance. However, ichimoku is an extremely complicated subject, and I believe there's more than ten volumes of books by the creator of it to explain it's use. So we are only looking at a small fraction of it, as like Stage Analysis it's a complete trading method of it's own.

Stockcharts have a explaination page that should help you understand it's basic uses here: http://stockcharts.com/school/doku.php?i...moku_cloud

But in terms of Stage Analysis I just use only the cloud part for visualising potential resistance, as it speeds up manual scans of stocks which are necessary when using Stage Analysis.