Stage Analysis Study Guide - Questions and Answers

#1

Stage Analysis Study Guide - Questions and Answers

The purpose of this Study Guide will be to help people learn to identify the Stages and to emphasize the importance of a full analysis taking into account the various technical attributes that we look to for guidance in determining the Stages i.e. price action in relation to the 10 and 30 week moving averages, volume, relative performance versus the market and the sector, support and resistance zones etc.

So before we start with the questions, lets have a look at the standard weekly and daily charts that I show and define all the various parts so that we are all speaking the same language.

       

Now that you understand what everything is on the weekly and daily charts, the next thing is to recap what the ideal entry points are for the two major parts of the method:

Key requirements of the investor method for Stage 2A breakouts

  1. Price Action - price above a flattening or rising 30 week moving average
  2. Relative Performance - strengthening and ideally above the Mansfield Zero Line (Relative Performance 52 week MA)
  3. Volume - ideally two times the average volume or greater on the Stage 2A breakout week. The book specifies two times the four week average, but I prefer a smoother and longer term average, and so use the 52 week average on my charts, as it tends to be a bit stricter than the four week average and is cleaner on the chart.
  4. Support / Resistance - little or no heavy near term resistance.
For Stage 4A breakdowns the reverse of the above conditions should be true, but volume is less important.

   

The above chart is an edited example from Chart 3-1 on page 60 of the book and shows the ideal entry points for the investor method. The entry point marked with an "A" shows the breakout into early Stage 2A, and the entry point marked with an "B" shows the secondary lower risk entry point on the initial pullback within Stage 2A. To learn more about the investor method start by reading Chapter 3 in the book, and the various resources on the Stage Analysis forum.

Key requirements of the trader method for Stage 2 continuation breakouts
  1. Price Action - price above a rising 30 week moving average
  2. Relative Performance - above the Mansfield Zero Line (Relative Performance 52 week MA)
  3. Volume - ideally at least three times the average daily volume on the breakout day and also two times the four week average or greater on the Stage 2 continuation breakout week
  4. Support / Resistance - little or no heavy near term resistance.
For Stage 4 continuation breakdowns the reverse of the above conditions should be true.

   

The above chart is Chart 3-3 from page 62 of the book and shows the ideal entry point for the trader method. The entry point marked with an "A" shows a Stage 2 continuation move. To learn more about the trader method start by reading Chapter 3 in the book, and the various resources on the Stage Analysis forum.

Let's begin the Q&A...

isatrader

Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill – Reminiscences of a Stock Operator.


Messages In This Thread
Stage Analysis Study Guide - Questions and Answers - by isatrader - 03-04-2014, 03:18 PM
Quiz Question#1 - by isatrader - 03-04-2014, 04:36 PM
Quiz Answer#1 - by isatrader - 03-04-2014, 04:39 PM
Quiz Question#2 - by isatrader - 03-04-2014, 04:43 PM
Quiz Answer#2 - by isatrader - 03-04-2014, 04:46 PM
Quiz Question#3 - by isatrader - 03-05-2014, 09:24 AM
Quiz Answer#3 - by isatrader - 03-05-2014, 05:32 PM
Quiz Question#4 - by isatrader - 03-14-2014, 03:10 PM
Quiz Answer#4 - by isatrader - 03-17-2014, 01:55 PM

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