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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 - isatrader - 2013-08-31
(2013-08-31, 12:34 AM)theory6453 Wrote:(2013-08-29, 03:55 PM)isatrader Wrote: With the US markets beginning to look like they could be moving into early Stage 3 soon, I thought it would be a good time to post Chart 7-13 from Chapter 7 of the book as a reminder, which shows the ideal short sale entry points and general pattern as a number of stocks are beginning to break down into Stage 4.
That actually brings up a question I had about the overall markets being in Stage 1 or 3... The book maintains that one should mainly take long positions with the occasional short when the overall market is in Stage 2 and vice versa when the overall market is in Stage 4... but what types of positions/setups should we be looking for in transitional phases such as Stage 1 or 3? If we do move into a Stage 3, I realize that we should keep an eye on our long positions to move our stops up so that they get stopped out and we keep our profits. But what sort of setups should we be looking for in these transitional phases? And what would be the distribution (if I'm looking to have 6 positions, do I take 3 long and 3 short when in Stage 3).
Apologize if this question has already been asked/answered or if it's addressed in the book and I haven't gotten to it yet (i'm about 3/4 done with the book currently). I could be over-thinking this again. I'm sure there's no concrete answer to the question but I just want to get people's feedback as to what they would be looking for when the overall US market is in Stage 3.
Thanks,
I haven't done my full weekend update yet, so the following is just from a quick look at the charts.
NYSE Composite - Stage 2B-/3A
S&P 500 - Stage 2B
Dow Industrials - Stage 3A
Nasdaq Composite - Stage 2B
Russell 2000 - Stage 2B
The market breadth charts are very important in times like this imo, as they are leading indicators of what's going on the market. One of the key ones to watch with Stage Analysis is the $NYA150R - NYSE Percentage of Stocks above their 150 day (30 Week) Moving Averages, as the 30 week moving average is a key component of the method, and when stocks are above their 30 week moving, they are mostly in Stage 1 or 2, and when they are below it they they are mostly in Stage 3 or 4. And we know from an old book interview with Weinstein that this is the closest indicator to Weinstein's proprietary Stages surveys that he does in his Global Trend Alert Newsletter every month and has a good correlation with it.
Currently this broke below the 50% level this week and closed the week at 49.31% of stocks in the NYSE above their 150 day (30 Week) Moving Averages, and has been gradually weakening since May. So with that in mind, I think it's safe to assume that the broad market is now in early Stage 3 even if all the major averages charts are not, as the breadth indicators have mostly turned negative including the long NYSE Bullish Percent Index, which moved to defense and closed below the key 70% level this week.
With regards to your question of the balance of trades to take when the market is moving into Stage 3, I've not come across a definite answer for traders, other than it's very important to only pick the very best A+ type situations on the long and short side as it's a stock pickers market during Stage 3. So you have to be more cautious, and play both sides if you are trader, as moving into Stage 3 doesn't always mean a move to Stage 4 is certain, as a lot of the time it will make a continuation move higher and resume Stage 2. So assess your individual positions stages, be sure to protect holdings with a close stop and be cautious with the quality of any new positions you take imo.
NYSE Percentage of Stocks above their 150 Day (30 Week) Moving Averages chart
RE: Market Breadth Update - isatrader - 2013-08-31
Attached is the NYSE Bullish Percent Index and the NYSE long, medium and short term moving average breadth charts.
The NYSE Bullish Percent Index
The long term NYSE Bullish Percent Index ($BPNYA) reversed back into a column of Os today, and is now on Bear Confirmed status.
NYSE Percentage of Stocks above their 200 Day, 150 Day and 50 Day Moving Averages P&F charts
NYSE Percentage of Stocks above their 200 Day, 150 Day and 50 Day Moving Averages line charts
US Industry Sectors Breadth - isatrader - 2013-08-31
The sector breadth continued to fall this week, and now all 9 sectors are on a sell signal with basic materials and utilities both below the 50% level.
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.
Advance Decline Breadth Charts - isatrader - 2013-08-31
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.
New Highs New Lows - isatrader - 2013-08-31
Attached is the New Highs / New Lows charts
Volatility Breadth Charts - isatrader - 2013-08-31
Attached is the updated volatility breadth charts
S&P 500 Cumulative P&F Breakouts - Breakdowns - isatrader - 2013-08-31
Attached is the exclusive S&P 500 Cumulative P&F Breakouts - Breakdowns charts, which is firmly below the 20 day moving average which I use as a signal line. So it's on a sell signal currently.
There was 12 breakouts and 23 breakdowns this week, which takes the total for the month of August to 68 breakouts and 79 breakdowns.
Major Stock Indexes Update - isatrader - 2013-08-31
Attached is the updated major equity index charts and relative performance table.
US Stock Indexes
European Stock Indexes