Stan Weinstein's Stage Analysis

I'm pleased with the results so far. The trades are outperforming the S&P 500 by a good margin and have made a good profit while the market has moved lower over the same period, which is really encouraging.

I was a little impatient with DUK today and got in fairly early in the day after the first pullback to the breakout point. So my entry price was 21.08, but it closed the day lower at 21.01, however, this is still a new weekly closing all time high. So I'll see where it takes me now. But I forgot to mention yesterday the nice 4.8% dividend, so it's certainly one I can hold on to if it goes to plan.

I also shorted SPD.L (Sports Direct) today at 207 as it made a Stage 4 breakdown yesterday and retested the break today. So my target on that one is 160.

Current Open Trades

Shorts
Silver
Sports Direct

Longs
Spectra Energy
Rolls Royce
Reynolds American
GBP/EUR
YUM Brands
Brown Forman Corp
Duke Energy

Below is the latest US 30 Year Treasuries chart which I believe is very important at the moment as it highlights the risk off trade. Price bounced off the trend line and and made a new weekly closing high and now looks set to test the September high this week. If it breaks out then the risk off trade would be back on and equities could sell off again. One thing to note is that volume was fairly light on lasts weeks move higher though.

Below is the charts

The weekly chart for Gold has moved into Stage 3 now, with price finding support this week at the 3 year trend line. Volume has been leaving Gold as you can see in the cumulative volume, but price is near the bottom of the Stage 3 range so there’s a possibility of a bounce soon. Especially as there a number of factors supporting Gold in the 1550 to 1600 area.

To become long term Stage 4 I’d personally want to see a close below the 3 year trend line and a move below 1535.

Here’s the chart

It's been a while since I looked at the AUDUSD weekly chart on 22nd September http://www.trade2win.com/boards/tech...ml#post1681978, but it has played out very closely with the stage analysis.

On the current chart the Stage 4 breakdown continues to work itself out with a succession of lower highs. The recent double bottom made it look like it might reverse course, but price has been held down by the trendline and the falling 30 week MA. Cumulative volume has now turned negative and relative performance vs S&P 500 is under performing. So it could get a move down to retest the recent low and support zone around 0.94 and if it closes down there then it would complete a large one year head and shoulder pattern which would signal a larger down move.

Attached is the latest weekly chart and also the previous chart from Sept 22 to compare.

like you i am pleased with my results so far. they would be better if i hhadn't done some numbskull trades, but i guess thats the learning curve. as of friday this portfolio was up 1 percent whilst the ftse was down about two percent so relatively better.
current trades are
long - img, oxig
short - essr , mjw, fosl, spd, spt, sthr, spotgold, safe.

am halfway through an interesting book on jesse livermore, and a few points spring to mind. trade in the direction of least resistence. at the moment this is sideways/slightly down in ftse100, and sideways in sp500, so i keep telling myself be patient dont jusp in to everytrade. take the best afterall its best to do 200 trades in a year averageing 500 quid profit per trade, rather than 300 trades averaging 300 pertrade...

I think one of the important things I've taken from the Livermore book that applies to the Weinstein method is evaluating continuation pivotal points, as these help you stay in through the entire Stage 2.

Quote from the page 77 of the book - How to Trade in Stocks by Jesse Livermore
"I define a Continuation Pivotal Points as a consolidation where the stock pauses in it's ascent, as a general sometimes pauses in a major assault to let his supply lines catch up to his troops and provide his men with a rest. It is usually a natural reaction of the stock. The prudent speculator, however, will carefully observe which way the stock will emerge from this consolidation, and not anticipate."

I highlighted the last sentence as I think it's important to take in.

Really nice example of the stages 2, 3 and 4 on the FTSE and DAX intraday charts today.

Also added the S&P 500 chart as is perfect today. Moving into Stage 1 now.

I've been searching through the strongest sectors and one that stands out is Tobacco, as it has 3 stocks on Stage 2 continuation breakouts. PM, RAI, & MO. Confirmation of other stocks in the same sector is one of the key components of Weinstein's method, so it is very encouraging to see as I'm already in RAI.

I don't want to take a new positions in MO yet because of my exposure in RAI, and also because the breakout point has been missed. But, I thought MO was interesting as it's had an increase in volume on the breakout and has started to outperform RAI, so it may actually be a better play. However, I intend to wait for the first major pullback for a Continuation Pivotal Point to form as that will give me a chance to raise my stop loss above breakeven on RAI if all is going to plan and free up capital to trade MO.

Here's the charts