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+--- Thread: Stan Weinstein's Stage Analysis and Market Breadth - Technical Analysis (/Thread-Stan-Weinstein-s-Stage-Analysis-and-Market-Breadth-Technical-Analysis)
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RE: Stan Weinstein's Stage Analysis and Market Breadth - Technical Analysis - pcabc - 2020-03-21
Looking back at 1987 - 1991
I've zoomed in on my previous 20+ year breath chart to this period to see if the danger indications were false alarms that would whipsaw me out of investor positions - with the inherent cost implications, or whether they were good indications to get out.
Note, no new highs minus new lows data for this date.
1. Not apparent on this scale, but two weeks notice before the drop. Excellent.
2. The temptation, as we know what happened in October, is to state that this is a valid forewarning. It triggered after an initial price drop. Weinstein Momentum is flatish after a fall and slight recovery, % above the 200 day EMA is in the bullish area but has dipped from overbought (> 70%). To soon to know that price and the a/d line would diverge, the a/d line had not yet failed to make a higher high. Likely a reasonable call based on information presented.
3, 4 & 5. Index was going sideways at 4 & 5. Was 3 a good indication of that to come or a false alarm? The danger here is that these could just be artifacts of the calculations if you look closely at the Weinstein momentum perhaps the averages are not true at this point?
6, 7 & 8. The alert occurs on the day, i.e. after the end of day data has been collected on a 6% pullback, which is noteworthy in itself. 7 is well into stage 3 and 8 in stage 4. Really 6 trumps 7 and 8 as you should be out. However, I do note my aggregate indicator noting a few times to buy. Perhaps that would case a few whipsaws.
9 & 10. These are on the climb out from the crash. Knowing that we know now you'd want ot stay in here. The 150 day MA only turns up at 9. Are these false alarms?
With trader positions you'd be in and out quickly, I think on balance these danger indications would work for an investor. But I need to take care saying that, as of course I'm likely to be biased for my own breadth overall scoring system.
RE: Stan Weinstein's Stage Analysis and Market Breadth - Technical Analysis - pcabc - 2020-03-22
Danger indication, another zoom in, 2006-7
Another zoom in. Again not at a major crash to see if indications were false alarms or useful indications of deteriorating breadth:
1. Alert before an approximately 120-130 point drop, 9% drop peak to peak. Useful, but would need good execution / low costs to be better off than riding the whole pullback. However, considerably better than waiting until a few months later to sell.
2. Useful indication that things are about to get worse. This is the start of the stage 3 leading ot the stage 4 decline trhat includes the 2008 crash.
3. Spurious whipsaw?I'm not sure that it is foretelling the drop 6 weeks later. It seems to be minor noise in both the Momentum Index and the % stocks above their 200 day EMAs.
4. Rolling into stage 4, no surprises.
5. False alarm, or expected as breadth is improving, but not enough yet?
I think this is useful, I just need to use it correctly. I'm wondering if I need to add a filter that warnings are acted on only if asserted for 3 or more days to get rid of some of the whipsaws. But the indicator is designed to be fast and given 1987 and definitely recent events it needs to be. I think I won't mask the indicator but I will add a further flag if asserted for 3 days or more.
Stan Weinstein Stage Analysis and Market Breadth - isatrader - 2020-03-22
I've added a new post in the blog with the updated index charts, market breadth indicators and my commentary. See: https://www.stageanalysis.net/blog/21629/stock-market-indexes-update-market-breadth-charts-nearing-capitulation
RE: US Stock Market Breadth – Quickest 10% Decline From an All-Time High in History - malaguti - 2020-03-24
(2020-03-01, 08:35 PM)isatrader Wrote: This weeks moves in US stock market indexes and individual stocks confirmed what the market breadth indicators have been warning over the last month. However, the pullback has been much sharper than anyone could have predicted and so it looks like we've put in at least a medium term top imo, and not just a short term top, as there was a huge amount of technical damage done to the stock market indexes and individual stock charts, with almost half of the market having a breakdown of some kind this week. With stocks moving from Stage 2 straight into Stage 4. As many had closes well below their 30 week and 200 day MAs, and wiped out around half a years worth of gains or more.Hi ISA, at what point would you have said, the move from stage 2 to 4 would be
would you say it was a certain percentage below the 30sma/200 day? if so, what percentage would you give..
i ask only in that its a good barometer for potentially automating this scenario and being able to quantify this measure would be extremely useful
on the daily, its pretty clear we could say it was at 284, there was a momentary pull back to the 200 and then dropped
on the weekly, its not so obvious. possibly at 302 where the last major support was broken and being again x percent below the 30
maybe even the fact that it took out x number of weeks, would that have been a measure
welcome your thought process, even if there isnt necessarily a definitive answer
RE: US Stock Market Breadth – Quickest 10% Decline From an All-Time High in History - isatrader - 2020-03-24
(2020-03-24, 01:57 PM)malaguti Wrote: Hi ISA, at what point would you have said, the move from stage 2 to 4 would be
would you say it was a certain percentage below the 30sma/200 day? if so, what percentage would you give..
i ask only in that its a good barometer for potentially automating this scenario and being able to quantify this measure would be extremely useful
cheers
Generally I use the Weight of Evidence to try to determine the market stages as the indexes tend to lag. Primarily the NYSE and Nasdaq Composite Percentage of Stocks Above their 150 Day Moving Average is my main guide. Which is the 30 week moving average proxy.
I combine this with the major sectors with my sector breadth visual diagram which has a scale up the side.
I take the average percentage from all of them, and then use the following scale:
Stage 1 & 3 are generally in the 40-60% range
Stage 2 is above 60%
Stage 4 is below 40%
This was a major part of the reason that I was suggesting a short term top in early February as the average was in the 50%-60% range, while the market was attempting to make new highs, and hence should have been in the high 60% to 70% range at least, which is normal in a strong bull advance.
See my sector breadth visual from the weekend of the 28th February and the current one
RE: US Stock Market Breadth – Quickest 10% Decline From an All-Time High in History - malaguti - 2020-03-24
(2020-03-24, 02:11 PM)isatrader Wrote:(2020-03-24, 01:57 PM)malaguti Wrote: Hi ISA, at what point would you have said, the move from stage 2 to 4 would be
would you say it was a certain percentage below the 30sma/200 day? if so, what percentage would you give..
i ask only in that its a good barometer for potentially automating this scenario and being able to quantify this measure would be extremely useful
cheers
Generally I use the Weight of Evidence to try to determine the market stages as the indexes tend to lag. Primarily the NYSE and Nasdaq Composite Percentage of Stocks Above their 150 Day Moving Average is my main guide. Which is the 30 week moving average proxy.
I combine this with the major sectors with my sector breadth visual diagram which has a scale up the side.
I take the average percentage from all of them, and then use the following scale:
Stage 1 & 3 are generally in the 40-60% range
Stage 2 is above 60%
Stage 4 is below 40%
See my sector breadth visual from the weekend of the 28th February and the current one
Perfect, love that answer! Thank you
RE: US Stock Market Breadth – Quickest 10% Decline From an All-Time High in History - malaguti - 2020-03-24
(2020-03-24, 02:20 PM)malaguti Wrote:(2020-03-24, 02:11 PM)isatrader Wrote:(2020-03-24, 01:57 PM)malaguti Wrote: Hi ISA, at what point would you have said, the move from stage 2 to 4 would be
would you say it was a certain percentage below the 30sma/200 day? if so, what percentage would you give..
i ask only in that its a good barometer for potentially automating this scenario and being able to quantify this measure would be extremely useful
cheers
Generally I use the Weight of Evidence to try to determine the market stages as the indexes tend to lag. Primarily the NYSE and Nasdaq Composite Percentage of Stocks Above their 150 Day Moving Average is my main guide. Which is the 30 week moving average proxy.
I combine this with the major sectors with my sector breadth visual diagram which has a scale up the side.
I take the average percentage from all of them, and then use the following scale:
Stage 1 & 3 are generally in the 40-60% range
Stage 2 is above 60%
Stage 4 is below 40%
See my sector breadth visual from the weekend of the 28th February and the current one
Perfect, love that answer! Thank you
whats your take on individual stocks..take my recent investment SSON
there is no doubt it missed the transition from 2 to 3. there was a stop loss which got hit at 1258, but from a stage analysis. where would we have said we're possibly at 4?
I'm wondering in this example, we have 2 recent stop losses (1239) being taken out. thats possibly a good starting point
what do you think?
RE: US Stock Market Breadth – Quickest 10% Decline From an All-Time High in History - isatrader - 2020-03-24
(2020-03-24, 05:02 PM)malaguti Wrote: whats your take on individual stocks..take my recent investment SSON
there is no doubt it missed the transition from 2 to 3. there was a stop loss which got hit at 1258, but from a stage analysis. where would we have said we're possibly at 4?
I'm wondering in this example, we have 2 recent stop losses (1239) being taken out. thats possibly a good starting point
what do you think?
A close below a significant swing low on the weekly chart. Multiple weeks below the 200 day moving average is one I look out for as well, as most Stage 4 breakdowns occur below the 200 day MA or while moving through it if breaking down from higher. A breakdown below the weekly ichimoku cloud is also a good guide I've found. As well as the point where the 30 week MA turns lower. But it's generally not just one factor, as multiple things like these need to be present.
So with SSON the close on the 27th below the 200 day would have been a strong warning if it hadn't already hit the investor stop loss, which it should have imo. Then the follow through on the next day would have been the official Stage 4A point I think, as it had lost -16% or so in a week on heavy volume, broken through a swing low, and was well below the 200 day MA, and the 30 week MA had also turned down etc.