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RE: Beginners Questions - malaguti - 2014-03-04
Hi all, I wanted to start going through loads of charts to get an idea as to my ability to guage its stage.
I've attached a chart of the FTSE electricity sector as there are a few similar to this where there doesn't seem to be a discernable shift from stage 2 to 3 and then 4
Basically, is my analysis correct.
I would view this as still within a stage 3, mainly because the shift from stage 2 was far too sharp. The cloud was broken whilst the SMA was still going up. Had we been long, we would now have been stopped, so to move from a 2 to 4 seems too sudden.
Not unheard of I guess, but what's your take on this.
If you look at its constituents (just 2 fortunately) one is stage 2 and one is in stage 4 so a 3 would seem the best bet? Until something more concrete develops and leave this alone until such time...
RE: Beginners Questions - isatrader - 2014-03-04
(2014-03-04, 04:22 AM)malaguti Wrote: Hi all, I wanted to start going through loads of charts to get an idea as to my ability to gauge its stage.
I've attached a chart of the FTSE electricity sector as there are a few similar to this where there doesn't seem to be a discernible shift from stage 2 to 3 and then 4
Basically, is my analysis correct.
I would view this as still within a stage 3, mainly because the shift from stage 2 was far too sharp. The cloud was broken whilst the SMA was still going up. Had we been long, we would now have been stopped, so to move from a 2 to 4 seems too sudden.
Not unheard of I guess, but what's your take on this.
If you look at its constituents (just 2 fortunately) one is stage 2 and one is in stage 4 so a 3 would seem the best bet? Until something more concrete develops and leave this alone until such time...
Hi malaguti, I've marked up the chart of how I interpret the last five years. It's a big chart, as I only normally have two and half years in view on a weekly chart, as you can go through the Stages a few times in a couple of years. So five years is too long to look at on a weekly chart imo, and so I'd suggest using a monthly chart for time periods over 3 years in combination with a two to three year weekly chart. A daily chart used in combination with the weekly chart will also really help you define the Stages, as for example when you have a swing low below the 200 day MA, a breakdown below that is generally the Stage 4A breakdown point, although you do get earlier breakdowns too. But as a general rule, if it breakdowns below a significant swing low that's also below the 200 day MA, then it's very likely to be moving into early Stage 4A. Have a look at a daily chart of this for the last year with a 50 day MA and a 200 day MA on it, and you should be able to see what I mean.
Anyway attached is the marked up five year weekly chart with the technical attributes highlighted in green and red at the bottom to help make sense of it. So, I'd now suggest that it has just moved into Stage 1A, after a failed/short Stage 4A breakdown that wasn't ready yet due to a number of factors like major near term support. So it's improving, but it's in no mans land at the moment, and could go either way still.
It's a good example though that the Stages aren't always clean, and sometimes are brief and don't have time to fully develop, and that you need to look across multiple time frames, and consider the various technical attributes like the 30 week MA angle, volume, support and resistance levels etc.
RE: Beginners Questions - malaguti - 2014-03-04
(2014-03-04, 10:44 AM)isatrader Wrote:(2014-03-04, 04:22 AM)malaguti Wrote: Hi all, I wanted to start going through loads of charts to get an idea as to my ability to gauge its stage.
I've attached a chart of the FTSE electricity sector as there are a few similar to this where there doesn't seem to be a discernible shift from stage 2 to 3 and then 4
Basically, is my analysis correct.
I would view this as still within a stage 3, mainly because the shift from stage 2 was far too sharp. The cloud was broken whilst the SMA was still going up. Had we been long, we would now have been stopped, so to move from a 2 to 4 seems too sudden.
Not unheard of I guess, but what's your take on this.
If you look at its constituents (just 2 fortunately) one is stage 2 and one is in stage 4 so a 3 would seem the best bet? Until something more concrete develops and leave this alone until such time...
Hi malaguti, I've marked up the chart of how I interpret the last five years. It's a big chart, as I only normally have two and half years in view on a weekly chart, as you can go through the Stages a few times in a couple of years. So five years is too long to look at on a weekly chart imo, and so I'd suggest using a monthly chart for time periods over 3 years in combination with a two to three year weekly chart. A daily chart used in combination with the weekly chart will also really help you define the Stages, as for example when you have a swing low below the 200 day MA, a breakdown below that is generally the Stage 4A breakdown point, although you do get earlier breakdowns too. But as a general rule, if it breakdowns below a significant swing low that's also below the 200 day MA, then it's very likely to be moving into early Stage 4A. Have a look at a daily chart of this for the last year with a 50 day MA and a 200 day MA on it, and you should be able to see what I mean.
Anyway attached is the marked up five year weekly chart with the technical attributes highlighted in green and red at the bottom to help make sense of it. So, I'd now suggest that it has just moved into Stage 1A, after a failed/short Stage 4A breakdown that wasn't ready yet due to a number of factors like major near term support. So it's improving, but it's in no mans land at the moment, and could go either way still.
It's a good example though that the Stages aren't always clean, and sometimes are brief and don't have time to fully develop, and that you need to look across multiple time frames, and consider the various technical attributes like the 30 week MA angle, volume, support and resistance levels etc.
yes it is quite a messy chart best ones to learn from I guess.
thanks Isa, the movement past the 200 should have been the giveaway, and yet I'm seeing (being blinded by) a pullback to it rather than interaction with it. Easy to see how trends could be missed by being blinkered and not considering all possibilities
thanks again
RE: Beginners Questions - isatrader - 2014-03-04
(2014-03-04, 11:10 AM)malaguti Wrote: yes it is quite a messy chart best ones to learn from I guess.
thanks Isa, the movement past the 200 should have been the giveaway, and yet I'm seeing (being blinded by) a pullback to it rather than interaction with it. Easy to see how trends could be missed by being blinkered and not considering all possibilities
thanks again
It just takes time to get a handle on, but I'd definitely suggest having a multiple time frame chart setup with at least a weekly and daily chart side by side, as it makes identifying the Stages much easier. See attached weekly and daily example.
Quiz Question#3 - isatrader - 2014-03-05
Attached is three stocks making Stage 2A breakouts. The charts are weekly and daily, and each is at the close of the week. So assuming that the overall market and group action of the stocks was positive:
- Which of the following stocks would you buy? Give reasons concerning the various technical attributes that we look for. i.e. Price action, Moving averages, Volume, Relative performance, near term Resistance etc.
- Rank the stocks in order of best to worst? Give reasons.
Mystery stock#2
Mystery stock#3
RE: Beginners Questions - malaguti - 2014-03-05
(2014-03-05, 10:16 AM)isatrader Wrote: Attached is three stocks making Stage 2A breakouts. The charts are weekly, and each is at the close of the week. So assuming that the overall market and group action of the stocks was positive:
- Which of the following stocks would you buy? Give reasons concerning the various technical attributes that we look for. i.e. Price action, Moving averages, Volume, Relative performance, near term Resistance etc.
- Rank the stocks in order of best to worst? Give reasons.
well chart 2 has broken out with healthy volume whereas the other two haven't, its relative strength has just broken through its average but importantly near term resistance looks quite weak. It would appear to have broken through any resistance whereas chart 1 looks like a minefield nearby.
MAs are similar on all, so to the relative strength so the differentiating factors would seem to be volume and resistance
So I would buy 2, and in order of preference I'd be looking at 2, 1 and 3
thats my take on it anyway!
Quiz Answer#3 - isatrader - 2014-03-05
(2014-03-05, 10:16 AM)isatrader Wrote: Attached is three stocks making Stage 2A breakouts. The charts are weekly and daily, and each is at the close of the week. So assuming that the overall market and group action of the stocks was positive:
- Which of the following stocks would you buy? Give reasons concerning the various technical attributes that we look for. i.e. Price action, Moving averages, Volume, Relative performance, near term Resistance etc.
- Rank the stocks in order of best to worst? Give reasons.
Attached is the marked up charts for the three mystery charts for Quiz Question#3.
Chart #1 was Chesapeake Energy (CHK) in March 2013, which was making a Stage 2A breakout. However, there were a few problems to note in that firstly the most important attribute was missing - an expansion of volume on the breakout week - which was well below average and hence would have been a big negative against it.
The second problem visible is that it was still quite close to near term resistance which was around one year old, and so it had not yet had sufficient time for it to be significantly less important yet, as can be seen better if you view the attached chart below with the ichimuko cloud overlaid on the price, as it was only just clearing the resistance cloud.
The final issue of note is that the Stage 1 base was still relatively small at only roughly seven months or so. Which wouldn't have been a problem if the breakout had had very strong volume, as it's bigger than some Stage 1 bases that are successful, but remember that the bigger the base, the bigger the eventual move in most cases when a stock breaks out of it to new highs on exceptional volume.
Chart #2 was Navios Maritime (NM) in March 2013, which was making a solid Stage 2A breakout, with more than 2x the average volume and relative performance moving above a flat zero line which it had hugged for a while.
The base was well developed at just over a year, and it was clear of significant resistance which can be seen on the ichimoku chart below, and also the volatility had contracted during the base especially in the last 8 weeks or so before the Stage 2A breakout, where it got into a very tight range. So it was a strong candidate for a Stage 2A buy with all the key technical attributes in place.
Chart #3 was Jet Blue Airways (JBLU) had a similar chart to NM, but with a few slight differences. Firstly the key ingredient was once again missing, as volume was only slightly above average on the breakout - which is not enough. Relative performance was fairly strong above a flat zero line and it was also clear of most of it's resistance, except for it hadn't yet closed above 2012 high, which it was quite close to. And it had a good one year base which had also seen a contraction of volatility. So it was a reasonable candidate, but needed an expansion of volume.
So going back to the original questions of what would you buy and in what order would you rank them. NM would be the correct choice to buy, as it was the only one with all the key attributes that we look for, and imo you should never compromise, as good candidates with all the key attributes come along all the time, you just have to find them. And the order would have been 1. NM, 2. JBLU, and 3. CHK.
Below is the charts as they are now, with some notes of how their Stage 2 advances have progressed over the last year so that you can compare them in detail.
RE: Beginners Questions - malaguti - 2014-03-06
This question is on the pullback method..
I've attached the FTSE350 sector beverages, after going through potentials and then went to an individual stock within the sector..and came up with Sab which is looking identical to the sector, falling relative strength compared to FTSE350 (spx would be the same if not worse)
If my analysis is correct beverages, and Sab have broken down into stage 4 and is now at the pullback stage, on declining volume compared to the breakdown which is all per the book. The stage 3 has lasted for exactly a year, so a nice topping period, but with no topping pattern.
so if everything is as I think, we should be looking for our low risk entry...and this is where the book doesn't really expand upon.
Is there anything that we would look for, possibly on the daily chart? Do we wait for the angle of the 10 to move down.
any advice on this setup..does look like a classic one
I've also attached the daily, which looks like a stage 1 so would a similar approach to the weekly method be the best bet?
thanks all