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+--- Thread: Stage Analysis Beginners Questions (/Thread-Stage-Analysis-Beginners-Questions)
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RE: Beginners Questions - MalcolmSm1th - 2014-03-20
The way that I see it is that the stock has fallen below the Moving Average. It's time to sell. This is similar to the WalMart stock chart a couple of pages on.
So, I would say it's time to gt out and if the price rallies above 19 then it may be a signal to get back in again.
I do hope that you got in at about 14s last summer and, if so, you would have made about 30% on this one.
I could be wrong here, but this is my interpretation of selling.
- Malc
RE: Beginners Questions - pcabc - 2014-03-20
(2014-03-20, 09:07 PM)MalcolmSm1th Wrote: The way that I see it is that the stock has fallen below the Moving Average. It's time to sell. This is similar to the WalMart stock chart a couple of pages on.
I thought get out straight away applied to traders? I'm wondering whether I've been too agressive in getting out in the past as I got out of Greenking when hindsight showed I should have stayed in, but my calls on Diageo and SSE were correct. However, hindsight it not the game, being right more often than you are wrong, and accepting that you will occasionally be wrong appears to be the game to me. Interesting to see that your interpretation is more aggressive than mine.
Quote:So, I would say it's time to gt out and if the price rallies above 19 then it may be a signal to get back in again.Got in at 1458, however, it was one of my first trades using the book and it is of a relatively small size so unfortunately fees take a large bite out of that one unfortunately. However, I was expecting that as obviously smaller purchases mean more trades and more practice early on. As experience and confidence has grown I've upped the size of my purchases to reduce the effect of transaction costs.
I do hope that you got in at about 14s last summer and, if so, you would have made about 30% on this one.
Anyway, I've got a couple that are around 50% at the moment so I should not complain too much about fees... :-)
Given my track record I will have found somewhere else to put the funds before it hits the 1900 mark.
Quote:I could be wrong here, but this is my interpretation of selling.Thank you. I think this is useful as a calibration exercise.
- Malc
Pete
RE: Beginners Questions - isatrader - 2014-03-20
(2014-03-20, 08:52 PM)pcabc Wrote: Anyway, question about stops. I'm an investor. Keir (KIE.L) is currently below the MA30 and the recent minimum of 1681 is close to the previous minimum of 1670. The book states that it is OK for the price to drop below MA30 provided it is higher than the previous minimum and the MA30 is rising. Ref page 189.
On this basis I've put a stop in at 1669 - if it hits 1669 it has violated the previous correction low and the above statement means I should sell. Do I appear to have interpreted the book correctly?
The prices you have mentioned are different to my two data sources, which are ADVFN and Prorealtime, which have the previous significant weekly low at 1662 on Nov 22nd 2013, which I've marked a horizontal trendline from on the weekly and daily charts attached.
The investor stop loss should have been placed below the last significant swing low and the 30 week MA, and so it would have been quite far away initially as the 30 week MA was still down in the 1400s, but as time has gone on the 30 week MA has risen past the 1662 swing low, and so you would have been able to raise your stop right up close to the swing low, and would have given it a little bit of room and so imo it would have been placed below 1650, and possibly a little bit lower due to the 200 day MA being very close to that level, and so it would have just survived this weeks open and low of 1650 by the skin of it's teeth.
KIE.L moved into Stage 3A last week imo, with the retest of the swing low and break below the 30 week MA. It broke the swing low by a small margin but it rebounded from there at the start of the week and it's 200 day MA which also offered some support, and is now slightly above it. However, there has been a significant decline in it's technical attributes as it went from a score of 8 out of 9 to a 3 out of 9 in a single week, and so is definitely showing the signs of forming a Stage 3 pattern.
The book states on page 189 that: "...even if the stock slightly penetrates the MA along the way, you can still stay with it. However, this is only true if two important criteria are met. First, the MA must still be rising. And second, the prior correction low must not be violated."
So of those two criteria, only one - the rising 30 week MA - was met in the case of KIE.L, as the swing low was violated at the beginning of this week. So imo the stock is in Stage 3A, and if your stop loss survived the piercing of the swing low, I'd now reset below the 1650 low that occurred below the 200 day MA this week and let it play out. As although it's moved into Stage 3A, that doesn't necessarily mean it will breakdown into Stage 4, and could rebound still. Which if it does rebound higher again, then the method recommends in Stage 3 that you should become more aggressive with your sell stop and raise it above the MA. See page 184-185 for reference.
I hope that helps, and I've just seen that you've done another post while I writing this. Well done on the excellent gains that you've had using the method so far.
RE: Beginners Questions - pcabc - 2014-03-21
Quote:The prices you have mentioned are different to my two data sources, which are ADVFN and Prorealtime, which have the previous significant weekly low at 1662 on Nov 22nd 2013, which I've marked a horizontal trendline from on the weekly and daily charts attached.
I'm using my own database which gets its data from Yahoo!, Yahoo's charts and also Stockopedia. None of these plot the days range, so I think that is the likely reason for the difference.
Quote:The investor stop loss should have been placed below the last significant swing low and the 30 week MA, and so it would have been quite far away initially as the 30 week MA was still down in the 1400s, but as time has gone on the 30 week MA has risen past the 1662 swing low, and so you would have been able to raise your stop right up close to the swing low, and would have given it a little bit of room and so imo it would have been placed below 1650, and possibly a little bit lower due to the 200 day MA being very close to that level, and so it would have just survived this weeks open and low of 1650 by the skin of it's teeth.
I think I was not brave enough originally - I believe I ought to have put the original stop somewhere near 1100 but I put it nearer the MA30. I can see a stop going in in November at the time of the low with a value of about 1480 - but as an investor I don't see another opportunity to raise it unless the late January dip to around 1800 counts as a good time to raise the stop. I think you are saying that is where a stop should go - I think we're agreeing, but you are the experienced one.
Looking at what I actually did I put a stop in mid Feb at 1570 - that does not tie in very well with our conversation above - it is too high for Nov 13. 18 Mar I put one in at 1619. Not quite sure what that was based on - perhaps I was squinting at a small chart late at night. So it looks like I mistakenly failed to recognize the late Jan dip as a place to move the stop up the thirty week MA - or maybe that is just a difference of opinion. However, with such a rapid advance followed by a flattish shape to the chart well above the 30 week MA there is a lot of space to loose much of the profit.
Quote:KIE.L moved into Stage 3A last week imo, with the retest of the swing low and break below the 30 week MA. It broke the swing low by a small margin but it rebounded from there at the start of the week and it's 200 day MA which also offered some support, and is now slightly above it. However, there has been a significant decline in it's technical attributes as it went from a score of 8 out of 9 to a 3 out of 9 in a single week, and so is definitely showing the signs of forming a Stage 3 pattern.
I'll need to read up on the scoring system. Certainly the shape of the chart, the approach this week close to the Nov swing low, rang alarm bells for a potential stage 3. However, given my understanding the problem is that I might not go to the stage 3 stopping process until after it has done such a move as over the last few days. Phrased another way - without a lower low or a 'toppy' shape I should not yet be using such an aggressive stopping scheme?
Quote:The book states on page 189 that: "...even if the stock slightly penetrates the MA along the way, you can still stay with it. However, this is only true if two important criteria are met. First, the MA must still be rising. And second, the prior correction low must not be violated."As my data is different to yours I see now why I did not see the penetration of the previous low met and you did.
So of those two criteria, only one - the rising 30 week MA - was met in the case of KIE.L, as the swing low was violated at the beginning of this week...
Quote:I hope that helps, and I've just seen that you've done another post while I writing this. Well done on the excellent gains that you've had using the method so far.
Thank you. Appreciated. Unfortunately those are only the highlights as I've been using this method since last summer and some of the funds especially have not done quite as well. My portfolio is nowhere near those values. However, I think time is the magic ingredient to help that. The few losses I have made since reading the book have been small.
Cheers,
Pete
RE: Beginners Questions - isatrader - 2014-03-21
(2014-03-21, 01:42 AM)pcabc Wrote: I think I was not brave enough originally - I believe I ought to have put the original stop somewhere near 1100 but I put it nearer the MA30. I can see a stop going in in November at the time of the low with a value of about 1480 - but as an investor I don't see another opportunity to raise it unless the late January dip to around 1800 counts as a good time to raise the stop. I think you are saying that is where a stop should go - I think we're agreeing, but you are the experienced one.
I did actually mean the November low still, as the January low would be be debatable as to whether the investor stop could be raised, as you aren't allowed to raise to the next swing low until there's a continuation breakout or the 30 week MA begins to flatten, which neither happened in this case, and so the November swing low is the maximum it could have been raised to currently imo.
But one thing I learnt from some additional study that I've done on the stop loss positioning in the Elite section of the site using examples from the Global Trend Alert Newsletter that Weinstein does, is that the investor stop loss can be raised more frequently than the book suggests, as long as it stays below the significant swing low and the 30 week MA. And so, in this case it could have been raised from the 1400s placement in November gradually up to just under 1650 as long as it stayed below the 30 week MA. I haven't got clarification from Weinstein on this, and it's something I intend to ask directly. But my research of his GTA examples suggest that it is the case, as there were multiple examples in his newsletter of the investor stop loss still under the swing low, but having been moved up with the 30 week MA.
(2014-03-21, 01:42 AM)pcabc Wrote: I'll need to read up on the scoring system. Certainly the shape of the chart, the approach this week close to the Nov swing low, rang alarm bells for a potential stage 3. However, given my understanding the problem is that I might not go to the stage 3 stopping process until after it has done such a move as over the last few days. Phrased another way - without a lower low or a 'toppy' shape I should not yet be using such an aggressive stopping scheme?
It had a lower low, and is making a toppy shape - possible left shoulder and head visible on chart, and price well below the 30 week MA, plus other deteriorating technicals like the relative performance significantly weakening and close to it's zero line. So it is certainly very likely it's in early Stage 3A, which Weinstein defines as: "Stage 3A - Looks as if a top is starting to form. Be sure to protect holdings with a close stop."
So if it is in Stage 3A, then you should be considering a more aggressive stopping scheme from now on with it, as it's no longer behaving like a Stage 2 stock should and so you need to protect your gains.
RE: Beginners Questions - pcabc - 2014-03-21
Quote:But one thing I learnt from some additional study that I've done on the stop loss positioning in the Elite section of the site using examples from the Global Trend Alert Newsletter that Weinstein does, is that the investor stop loss can be raised more frequently than the book suggests, as long as it stays below the significant swing low and the 30 week MA. And so, in this case it could have been raised from the 1400s placement in November gradually up to just under 1650 as long as it stayed below the 30 week MA. I haven't got clarification from Weinstein on this, and it's something I intend to ask directly. But my research of his GTA examples suggest that it is the case, as there were multiple examples in his newsletter of the investor stop loss still under the swing low, but having been moved up with the 30 week MA.Ah-ha. So it is reasonable for investors to raise a stop under a rapidly rising MA30 provided it is no higher than that previous low. That looks like a compromise between the investors way and the traders way in the book. That would seem to provide an extra comfort zone on several of the stocks I have bought - if the stock rises with no signficant dip the stop can end up 20% away. To be honest need to gain a bit more experience here.
RE: Beginners Questions - AzzMcD - 2014-03-24
Hi All
What a great resource! I have been looking for something like this for years. Has given me the confidence to get back in, thank you.
I was previously in the market, not really knowing what I was doing, however, it seemed like enough when my stops go us out before the GFC. Did not really make any money though.....
A few newbie questions
- Anyone in Australia? I am and would like to see other thoughts on the market down here.
- I have used Incredible Charts before, any thoughts on this? Seems like the MA's etc are easy enough to set up - if I'm doing it right (which I do not know as I have never had anyone to bounce things off).
- Does anyone make any money doing this? Sorry if that's a bit blunt, however, if the answer is yes then I can learn and apply, if the answer is no then I can invest my time & money elsewhere, make sense? :-)
Thanks again for the resource, looking forward to the journey,
Azz
RE: Beginners Questions - isatrader - 2014-03-25
(2014-03-24, 11:45 PM)AzzMcD Wrote: Hi All
What a great resource! I have been looking for something like this for years. Has given me the confidence to get back in, thank you.
I was previously in the market, not really knowing what I was doing, however, it seemed like enough when my stops go us out before the GFC. Did not really make any money though.....
A few newbie questions
- Anyone in Australia? I am and would like to see other thoughts on the market down here.
- I have used Incredible Charts before, any thoughts on this? Seems like the MA's etc are easy enough to set up - if I'm doing it right (which I do not know as I have never had anyone to bounce things off).
- Does anyone make any money doing this? Sorry if that's a bit blunt, however, if the answer is yes then I can learn and apply, if the answer is no then I can invest my time & money elsewhere, make sense? :-)
Thanks again for the resource, looking forward to the journey,
Azz
Hi AzzMcD, welcome to the site.
I think your the first Australian we've had on the board, although it's a very diverse bunch from all over the world. The majority however are from the UK and the United States and so they are the stocks that I focus on the most, but I do look at some other countries as well, so would be happy to discuss any Australian stocks with you that have Weinstein's methods requirements.
Incredible Charts is not something I've used, so I can't help you with that other than it's very important that it has the capability to be able to setup the relative performance versus the market indicator, which could be called various names like price comparison, relative strength etc. But see the post on the front of the site here: http://stageanalysis.net/reference/how-to-create-the-mansfield-relative-strength-indicator/558 on how to set it up.
The charting software I use for US stocks is stockcharts.com and for UK stocks and international stocks I use prorealtime.com, which is free for end of day charts, and I know it has Australian stocks available, as I just tested it in it's scanner. So if you use that then there's various info on here about how to set it up and some of the scans I use, and it has some easy how to videos on it's site to get you started. But whatever chart software you use it's important to get the charts setup in a similar way to the book so that you can learn to identify the stages.
The money question. Yes, I can only speak for myself and the people that have told me their progress, but you can certainly make money from Weinstein's method. I've outperformed the market over the last year quite well and was up over 43% a few weeks ago, although I've pulled back to about +25% from the pullback in the last week or so, which you can see from my trading journal in the subscriber section of the site if you need proof. But basically I wouldn't waste my time running the site and posting the watchlist charts each day if the method didn't work, as I only charge a miniscule fee for the subscriber section so that I can cover the running costs of the site. But the purpose of the site is create a collaborative environment where we all trade using the same method and hence can share our research and ideas and help each other learn to be better.
Also Weinstein wouldn't still be running his service to institutional investors for $60,000 a year if the method didn't work, as the service has been running since the 1980's. That was one of the initial things that made me think that there must be something to it. So I set out in 2011 to begin a deep study of the method, and created the original thread on T2W here: http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis.html to try and find other people using the method.
So I'd recommend once you've read the book, to go through the entire T2W thread and then go through the threads on here and by then you should have a fairly solid understanding of the method, as we've discussed the vast majority of things from the book over the last three years and found interviews, excerpts from books etc. The basics of the method are farily simple and you will learn them quickly, but it will take time to learn the method in-depth and how to apply them properly. But for me personally, it's definitely been a worth while effort as I think it's one of the very best methods of investing from the years of research that I've put in to learning it.
I hope that helps