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RE: Stage Analysis Beginners Questions - Lebo44 - 2021-05-29
Thank you, I read the book 3 or 4 times but I forgot to take notes from this short chapter. Maybe that's because his advice on diversification match perfectly my current methods.
So Stan recommends around around 10-15 stocks from few sectors. In special cases your portfolio could be more concentrated (5-6 stocks if the your working capital is small) or more diversified (but no more than 20 stocks).
RE: Stage Analysis Beginners Questions - pcabc - 2021-05-29
(2021-05-29, 02:38 PM)Lebo44 Wrote: Thank you, I read the book 3 or 4 times but I forgot to take notes from this short chapter. Maybe that's because his advice on diversification match perfectly my current methods.
So Stan recommends around around 10-15 stocks from few sectors. In special cases your portfolio could be more concentrated (5-6 stocks if the your working capital is small) or more diversified (but no more than 20 stocks).
The away I read that it is depends somewhat on the size of your portfolio on the number but not too many and do not buy too many from the same sector.
RE: Stage Analysis Beginners Questions - Lebo44 - 2021-05-29
The 4-th chapter contains some useful information that I haven't caught before. Let me quote the book:
"If it's acting fine, great, ride with it. But if it's lagging badly and acting poorly, lighten up on that position even if the sell-stop isn't hit. Move the proceeds into a new Stage 2 stock with greater promise."
It seems that the Stan's strategy is more active that I assumed before. He's not waiting for stop-losses or other clear signals to exit but instead jumping from one stock to another if he senses a stock is a laggard. I'm reviewing his recommendations from Global Trend Alert and most of them are laggards (if not losers). I would never beat the market if I stuck to his recommendations from the document and kept them for weeks or months. So instead there must be another element in the strategy that identifies lagging stocks.
Anybody has any thoughts or suggestions on this?
RE: Stage Analysis Beginners Questions - isatrader - 2021-05-29
(2021-05-29, 03:58 PM)Lebo44 Wrote: The 4-th chapter contains some useful information that I haven't caught before. Let me quote the book:
"If it's acting fine, great, ride with it. But if it's lagging badly and acting poorly, lighten up on that position even if the sell-stop isn't hit. Move the proceeds into a new Stage 2 stock with greater promise."
It seems that the Stan's strategy is more active that I assumed before. He's not waiting for stop-losses or other clear signals to exit but instead jumping from one stock to another if he senses a stock is a laggard. I'm reviewing his recommendations from Global Trend Alert and most of them are laggards (if not losers). I would never beat the market if I stuck to his recommendations from the document and kept them for weeks or months. So instead there must be another element in the strategy that identifies lagging stocks.
Anybody has any thoughts or suggestions on this?
Industry Group Relative Strength is critical, as well as the four major components of the method of Price action, Volume Increase, Relative Strength versus the S&P 500 and no near Resistance/ Plus never buy stocks that have had big Stage 4 declines. Focus on those that have only had brief a Stage 4 and recovered back to Stage 1 quickly. If Stage 4 decline is more than 6 months then avoid. So stick to stocks breaking out of big bases on a large volume surge (ideally the most volume on the chart). Minimum 6 months+ for bases, ideally longer, and that will weed out the laggards.
RE: Stage Analysis Beginners Questions - fabi470 - 2021-05-29
Hi David,
I always look at your weekly summarize of the best RS groups/sectors. It really helps me a lot. Thank you!
I wonder how to get these values. Do you calculate them by yourself? Do you use a service on the internet? Or is this a mysterious secret?
Would be nice to hear from you!
RE: Stage Analysis Beginners Questions - isatrader - 2021-05-29
(2021-05-29, 04:36 PM)fabi470 Wrote: Hi David,
I always look at your weekly summarize of the best RS groups/sectors. It really helps me a lot. Thank you!
I wonder how to get these values. Do you calculate them by yourself? Do you use a service on the internet? Or is this a mysterious secret?
Would be nice to hear from you!
I use Stockcharts SCTR score for each group and then copy and paste them into a google sheet each week which calculates the differences. So takes about 10 minutes or so each weekend. But a worthwhile exercise.
You can find similar things on other sites like finviz, barcharts, marketsmith, IBD etc.
RE: Stage Analysis Beginners Questions - Lebo44 - 2021-05-29
Interestingly, SCTR score puts more emphasis on the long-term (12-month RS) while IBD rank puts more emphasis on the short and mid-term (3-month and 6-month RS). But I don't think it will make much of a difference. Before I started using SCTR I was using my own indicator which was a simple combination of 3-month and 6-month RS (with weights of 60% and 40% respectively) while ignoring 12-month RS. But the ranks I got were very similar to SCTR. I don't know what conclusion we could draw from it
RE: Stage Analysis Beginners Questions - pcabc - 2021-05-29
(2021-05-29, 04:13 PM)isatrader Wrote: Industry Group Relative Strength is critical, as well as the four major components of the method of Price action, Volume Increase, Relative Strength versus the S&P 500 and no near Resistance/ Plus never buy stocks that have had big Stage 4 declines. Focus on those that have only had brief a Stage 4 and recovered back to Stage 1 quickly. If Stage 4 decline is more than 6 months then avoid. So stick to stocks breaking out of big bases on a large volume surge (ideally the most volume on the chart). Minimum 6 months+ for bases, ideally longer, and that will weed out the laggards.
I'd add that scanning for very strong volume can show up not many stocks with good volume if market breadth is weak and it picks up considerably when the breadth is stronger. So if you start screening this way when breadth is weak it can appear that few stocks follow the pattern set out in the book. Also, that stocks can rise strongly on no noticable volume increase confuses the issue as well.