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Stan Weinstein's Stage Analysis and Market Breadth - Technical Analysis - Printable Version

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RE: Stan Weinstein's Stage Analysis - Tryst - 2014-03-17

(2013-02-25, 12:07 AM)isatrader Wrote: Definitions of the Stages and Sub-stages

Stage 1A Start of a base. Needs much more time.
Stage 1 Basing Phase. May begin accumulation.
Stage 1B Late in base-building phase. Watch for breakout.

Stage 2A Early in uptrend stage. Ideal time to buy aggressively.
Stage 2 Advancing Stage.
Stage 2B Getting late in uptrend.

Stage 3A Looks as if a top is starting to form. Be sure to protect holdings with a close stop.
Stage 3 The Top Area. Start to reduce positions.
Stage 3B Has become increasingly toppy. Use rallies for at least partial selling.

Stage 4A Stock has entered Downtrend Stage. Close out remaining positions.
Stage 4 The Declining Stage. Avoid on the long side.
Stage 4B Late in downtrend. Much too soon to consider buying.
Stage 4B- Although not yet “officially” in Stage 1A, stock has now seen its low for the cycle.

Additional ratings
(A) Early in that Stage.
(B) Late in that Stage.
(+) Outstanding pattern in that Stage.
(–) Unexciting pattern in that Stage.

Hi Isatrader, I have a question on stage 2B / stage 3A, which relates to continuation moves/patterns in the middle of a stage 2 move. Are continuation patterns classed as stage 2B, potentially forming into a stage 3A until a breakout of the continuation is made to the upside, from which it then becomes a stage 2A again and stage 3A is taken off the table. Is that how this area of the stage analysis evolves and is classified?

If we take the chart below, of TW. (Taylor Wimpey) it was forming a stage 2B, it was starting to build a continuation pattern or reversal pattern, since it was looking like a ascending triangle (a continuation pattern), but also it could have been a double->triple top (a reversal pattern), in which case the formation of the pattern would have been the whole stage 3 and a confirmation of a triple top would have lead to a Stage 4A.

   

Hope I have made myself clear, if not, let me know.

RE: Stan Weinstein's Stage Analysis - isatrader - 2014-03-18

(2014-03-17, 11:58 PM)Tryst Wrote: I have a question on stage 2B / stage 3A, which relates to continuation moves/patterns in the middle of a stage 2 move. Are continuation patterns classed as stage 2B, potentially forming into a stage 3A until a breakout of the continuation is made to the upside, from which it then becomes a stage 2A again and stage 3A is taken off the table. Is that how this area of the stage analysis evolves and is classified?

Continuation patterns aren't necessary classed as Stage 2B, as they occur throughout the Stage 2 advance, as you'll often get multiple smaller continuations within a Stage 2 advance. The B rating simply means "Late in that Stage", so you have to use your judgement based on the length of the time it's advanced. But if you go back to page 18 of the book, Weinstein refers to his investing time frame as up to 12 months, so a simplistic time reference for Stage 2B could be 8 months or longer, but I prefer to use the continuation moves as a guide personally, and so I'd say roughly anything after the second significant continuation move in Stage 2 would be classed as Stage 2B. But that's just my opinion from my experience of the method.

I've attached a rough diagram below to demonstrate what I mean.

   

One technique I use to help differentiate a Stage 2 consolidation pattern with the beginnings of a Stage 3 pattern is to look at the technical attributes of the key moving averages and the relative performance. So for example if the consolidation is forming way above a still strongly rising 30 week MA with still strong relative performance, then it's more likely to make a continuation move, as it still has the momentum, and the technicals will still be in the green. But if the consolidation is forming closer to the 30 week simple MA, and makes a close below the 30 week "weighted" MA, which then turns negative, and relative performance is weakening too, and momentum begins to wane, then I'd consider it as moving into Stage 3A.

So for example with your TW.L example, the technical attributes weakened significantly in September when it closed below the 30 week MA for a single week, and so it moved into Stage 3A. However, it managed to move above the 30 week MA again and consolidated until the new year, before it managed to breakout into a new continuation move, which made some headway for a few months, but looks to be stalling now, as it's fallen back to the retest breakout level for a second time.

RE: Stan Weinstein's Stage Analysis - Tryst - 2014-03-19

great clear reply, Isatrader.

Do you have two of the same types of moving averages on your charts? a 30 week set as simple, and another 30 week set as weighted?

RE: Stan Weinstein's Stage Analysis - isatrader - 2014-03-19

(2014-03-19, 12:47 AM)Tryst Wrote: Do you have two of the same types of moving averages on your charts? a 30 week set as simple, and another 30 week set as weighted?

No, I like to keep the main charts as clean as possible, and so I only have the simple MA visible, and I instead have the weighted MA set up as an indicator bar on my technical attributes (SATA) chart, and on the major index charts that I show each week. It's the strip under the price that has green and red bars on main chart, and the second strip down on the SATA chart. See attached examples.

RE: Stan Weinstein's Stage Analysis - Tryst - 2014-03-20

Thanks

I do remember that indicator you gave me the code for actually...

---

a=WeightedAverage[30](close[0])
b=WeightedAverage[30](close[1])

IF a < b THEN
Result=1
ELSE*
Result=0
ENDIF
Return Result AS "Week30WMA_Falling"

---

Although the red/green bars on my chart are not exactly reflecting the MA on the chart.

Will the following refer to whatever time frame the chart is based on?
WeightedAverage[30]

RE: Stan Weinstein's Stage Analysis - isatrader - 2014-03-20

(2014-03-20, 12:34 AM)Tryst Wrote: Will the following refer to whatever time frame the chart is based on?
WeightedAverage[30]

Yes, it will be the 30 bar average of whatever time frame the chart is set to. So only use it on the weekly chart.

S&P 500 Cumulative P&F Breakouts - Breakdowns - isatrader - 2014-03-22

Attached is the exclusive S&P 500 Cumulative P&F Breakouts - Breakdowns charts.

There was 30 breakouts and 13 breakdowns this week in the S&P 500, which takes the total for March to 106 breakouts and 31 breakdowns so far.

Advance Decline Breadth Charts - isatrader - 2014-03-22

Attached is the updated Advance Decline Breadth Charts, including the cumulative AD line, momentum index, cumulative AD volume line, 10 Day AD oscillator and the McClellan Oscillator and Summation Index.