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

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RE: Market Breadth Update - isatrader - 2014-03-30

(2014-03-30, 12:34 PM)pcabc Wrote: Not totally sure what you mean by 'have a plan' other than follow the book. I'm checking my progress daily, and given the larger than usual number of stop losses hit I'm I think I'll more reticent before re-investing the resulting cash. Can't think of another plan except 'sell everything'.

The book provides a lot of the answers, but there's always greys areas as it's not a rigid set of rules and focuses mostly on selling on stop losses and trendline breaks on the individual stocks. For example, if the market is in Stage 3, that doesn't mean sell every long you have as your individual stocks might continue in their Stage 2 advances, but it means the market is in a volatile sideways range, which can still go either way. And so it gives you warning that you should consider taking some profits on stocks you've made good gains on if they look extended and tightening up stop losses, as the stocks that do break down can have sharp declines as people exit a lot quicker than they enter, especially in momentum stocks that have had very strong Stage 2 advances and gotten extended.

So what I mean by have a plan, is follow the books guidance and make sure you know what you should do in the each scenario for your open positions.

A good quote from the book is: "Don't feel you have to be 100 percent invested at all times." i.e. having part of your portfolio in cash is a position too, and so you don't necessarily have to reinvest the cash from stopped out positions straight away, and can just hold on to your strongest positions with tighter stop losses so that you are protected from a Stage 4 breakdown, but can also still participate if it makes a fresh continuation. So by being partially in cash, you can take a step away from the market and watch from the sidelines for a while until the time is right again in the market and you start seeing fresh breakouts or continuations in the new leaders for the next Stage 2 phase.

RE: Market Breadth Update - MalcolmSm1th - 2014-03-30

I was thinking much the same this week as my profits for the year have dropped alarmingly. A month ago i had just touched 20% but now they are at 10%. Still beats the bank but it doesn't reach my target. At least they're up and in this first year I had made a lot of mistakes and at least I have learned from them.

Anywya, the recent theme of what are suggestions of a downturn in the market.

Because of my stops being hit I have only 29% invessted in the market at the moment. Aviva (AV. L) and Accsys (AXS.L)) were my sales last week which has made my wife's ISA account 100% cash now. Aviva went on a nosedive obviously because of the Budget and the announcement that one can look after one's own investments rather than have all the profits in an Annunity go to the insurance company and, hopefully, gets rid of one of the biggest frauds in the financial game.

So I was looking around this weekend for Sectors on the London exchange to invest in. Only four came up with good looking graphs. Financial Services, General Retailers, Support Services and Travel & Leisure. Okay, I admit that the insurance sectors still look good but after the Aviva thing last week I decided that it would be foolish to entertain that sector.

Of these four two of them appear to be interesting for different reasons. First the Support sector. I looked at the larger shares (those with EMS values of over 5k pounds, ie the liquid stocks) and most of those seem to be turning over. Atkins (ATK) may have hit a double top and is turning, Babcock (BAB) has fallen belw the 30 week MA with a large fall last week, Diploma (DPLM) which was kind to me has fallen below the MA and so on. I just feel that this sector is starting to turn.

I have shares, two lumps as it happens, in VP Plc (VP.) and these are going tomorrow as I think that they have run out steam and, as I say, I think that the sector is tired.

The upshot s that I have crossed off this sector even though I do like the look of DCC plc (DCC).

Poping over to the Travel & Leusure sector and there's all sorts of different Groups in here. The Travel part looks to be healthier than some parts of the Lesire for sure. As some of you know I have a strong interest in the horse racing world and so the Gambling sub-sector is interesting here. Look at the bigger quoted bookmakers: Ladbrokes (LAD), PAddy Power (PAP) and William Hill (WMH): all going down. The betting exchange, Betfair (BET) isn't doing well and its bigger rival, BetDaq is owned by Ladbrokes. As it happens I am moving my trade from Betfair to Betdaq slowly as I am getting cheesed off with BF. Some of the casinos and on-line gaming companies are going the same way.

Which brings to me Playtech (PTEC). This has just dropped below the weekly 30MA and is in the same group and the other fallers. Four weeks ago it has had a fall with large volume and then three more losing weeks all at more volume than usual. It is now at a recent resistance level and if it drops further on Monday then I may go short, i.e. lay, this stock.

But what about my longs? When VP goes tomorrow I will be left with only Fisher James (FSJ) which is doing well for me and the price chart is still going well, Circle Oil (COP) is in a 2A stock and Ideagen (IDEA) is looking like a Stage 2 position.

And that's it. My long positions are getting fewer and fewer, i.e. down to three, and I am having doubts about the market at the moment. I see the FTSE rising and nothing happening to my stocks and I so feel that it's starting to froth a little.

I have nine stocks on my shortlist to look at this week to see how things go but I am considering getting more into shorting stuff over the near future.

Apologies for the long message but this just came out in a deluge because I just read above similar to what I have been thinking and I thought that I would share my opnion.

- Malc
This is the chart of Playtech which I am thinking could be a short

[Image: Playtech-20140330.png]

And these are on my shortlist for the longs which I will look at again tomorrow.

[Image: 20140330-shortlist.png]

- Malc

RE: Market Breadth Update - isatrader - 2014-03-30

(2014-03-30, 02:23 PM)MalcolmSm1th Wrote: Which brings to me Playtech (PTEC). This has just dropped below the weekly 30MA and is in the same group and the other fallers. Four weeks ago it has had a fall with large volume and then three more losing weeks all at more volume than usual. It is now at a recent resistance level and if it drops further on Monday then I may go short, i.e. lay, this stock.

It looks a good candidate for a short as has just made a Stage 4A breakdown at the close this week, although still some near term support to clear around 650 zone. But the technical attributes have dropped to a 1 out 9, so it's technical setup is certainly very weak and suggests it will breakdown further imo.

RE: Market Breadth Update - MalcolmSm1th - 2014-03-30

Thanks for your thoughts on this. They are much appreciated as ever and it must worry you when you're in agreement with me like this.

Malc

US Industry Sectors Breadth - isatrader - 2014-03-30

Below is the data table for the Percent of Stocks Above 150 Day Moving Average in each sector which I've ordered by relative strength, with the highest to the lowest percentage in each sector. Also attached is the visual diagram of the 9 sectors and the NYSE Percentage of Stocks above their 150 day Moving Averages line chart.

[Image: attachment.php?aid=8758]

RE: Market Breadth Update - pcabc - 2014-03-31

Quote:And so it gives you warning that you should consider taking some profits on stocks you've made good gains on if they look extended and tightening up stop losses, as the stocks that do break down can have sharp declines as people exit a lot quicker than they enter, especially in momentum stocks that have had very strong Stage 2 advances and gotten extended.
I may have overcooked the stop losses a little as I set a tight stop loss under what looks like a mini-head and shoulders on Entertainment One (ETO.L). Set it early this morning and it promptly hit it in the afternoon. However, this share has done well for me and I have banked (without checking) > 30% so can't complain. Though I have been an investor the stop I placed to my eyes looks like a reasonable traders stop loss. Therefore, though the book states that you should choose a plan and stick with it I'd assume 'tightening your stops' means 'switch to aggressive trader type stops'.

I must admit I'm feeling a bit like I should not have set such a tight stop as this share has done good for me. But that is perhaps emotion, and the signs are stating caution.

I have a couple of funds and a couple more shares (which I can't put stop losses on) which I am monitoring very closely, I'd not be surprised if one or even all stopped out this week.

S&P 500 / Index and Equity Options Ratio - isatrader - 2014-04-05

Attached is the updated S&P 500 / Index and Equity Options Ratio charts

Advance Decline Breadth Charts - isatrader - 2014-04-05

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.