Stan Weinstein's Stage Analysis

forker · Jul 29, 2012, 9:14am

A lot going on in those charts

isatrader · Jul 29, 2012, 9:47am

Health Care, Consumer Staples, Utilities, Consumer Discretionary and Technology are all currently outperforming the S&P 500. Basic Materials continues to be the weakest sector. Below is the list in Mansfield relative strength order and I've attached the thumbnail charts.

lplate · Jul 29, 2012, 11:41am

Quote:

Originally Posted by isatrader

..... The recent Stage 2 continuation move in June has failed and it's pulled back into the large Stage 3 range that developed over the last year. The Mansfield relative strength has turned negative and cumulative volume has broken down. So a number of negatives for this stock, however, as lplate mentioned it's sector is strong, and is actually the strongest sector currently by the Mansfield ratings, which as we know, would rule it out as a shorting candidate as per Weinstein's methods guidelines.

So I would rate it as in Stage 3B currently, as to become Stage 4A it needs to either break straight down through the major support at $33, or make a swing low in the current range and then break below that.
.... I can't remember where it it is in the book, but I believe he mentioned that you can sometimes break the rules for an exceptional case, especially when the market is range bound to help partially hedge you portfolio. ....
currently as we're in the sideways chop of Stage 3 that you need to be looking for only the most outstanding picks. i.e. that are in the strongest sectors, have the best relative performance versus the market; are showing the volume characteristics and have a little or no resistance to work through. Basically, the cornerstones of the method. So if it's not an A+ candidate, then stand aside.

Thanks for your thoughts. I will offer a couple of thoughts:
1. there are places in Weinstein where the neckline might be a trendline, not a horizontal.
Alternatively, it may be that the Weinstein investor method is not in itself a good means by which to play stocks which are fast risers and sudden fallers. As you say, if it is not a short until it is about $30, then it will have already fallen by half from its high of around $60.
2. a sector contains stocks of very varying longevity and strength of fundamentals, especially NASDAQ stocks, so one logic may be that if a stock is falling within a strong sector, and within a rising stockmarket, then that could make it a particularly good shorting candidate (even if the reverse is more questionable).
Because of the diversity within a sector, it may then be that analysis of sectors is useful above a certain market cap, but below that level more subgroup analysys is needed, and we may decide to avoid investing below a certain market cap.
3. nevertheless as Rewardz shows, the Weinstein method puts you on alert that this stock definitely looks sick, and if you held this stock you would be very advised to prepare to sell, if you had not sold already.

PS thank you very much for the invaluable updates

isatrader · Jul 29, 2012, 12:16pm

Quote:

Originally Posted by lplate

1. there are places in Weinstein where the neckline might be a trendline, not a horizontal.
Alternatively, it may be that the Weinstein investor method is not in itself a good means by which to play stocks which are fast risers and sudden fallers. As you say, if it is not a short until it is about $30, then it will have already fallen by half from its high of around $60.

I agree with you on this, and I think QCOR would have only been a trader method pick based on it's Stage 2 continuation breakout in June above $46.84 and so a trader would have had a good chance to take profits before it pulled back. But, if they didn't, then they would have been stopped out by their trader stop which would have been around the $39 level.

Quote:

Originally Posted by lplate

2. a sector contains stocks of very varying longevity and strength of fundamentals, especially NASDAQ stocks, so one logic may be that if a stock is falling within a strong sector, and within a rising stockmarket, then that could make it a particularly good shorting candidate (even if the reverse is more questionable).
Because of the diversity within a sector, it may then be that analysis of sectors is useful above a certain market cap, but below that level more subgroup analysis is needed, and we may decide to avoid investing below a certain market cap.

Agreed, sub-sector analysis is very important as well, and you'll generally find some weak stocks even in the strongest sectors. One reason for this could be pairs trading by the hedge funds, or a dominant player in a certain sector taking the majority of the market share from it's competitors. I'm sure there are more examples you could think of a well.

I'd say sector analysis is a good secondary tool that is useful for confirming your individual stock picks and hence giving you confidence to hold them through their Stage 2 moves.

sarker · Jul 29, 2012, 7:16pm

Hi Istrader,

Im also a fan of Stans book. Did some trade in forex, got some good return. As I see, you are using this method from october 2011, Can pls tell me whats the success ration of your trade with this method and return percentage( if you want to disclose).what are the other confluences , you use to make it for sharp and more accurate( Saw you use, trendline,osilator etc).

Thanks in advance.

isatrader · Jul 30, 2012, 5:03am

Quote:

Originally Posted by sarker

Hi Istrader,

Im also a fan of Stans book. Did some trade in forex, got some good return. As I see, you are using this method from october 2011, Can pls tell me whats the success ration of your trade with this method and return percentage( if you want to disclose).what are the other confluences , you use to make it for sharp and more accurate( Saw you use, trendline, osilator etc).

Thanks in advance.

Hi sarker, my forward test period was between late October and early March and I slightly outperformed the S&P 500 over the period, although I made a number of mistakes as I was still at the early stages of learning the method and so the results were subjective as another person would have made different picks and would have been more or less impulsive with exits etc. A fair few of trades shouldn't have been exited at all and would still be open today if I'd have followed the method completely faithfully.

The method isn't a rigid set of rules and so everyone will have different results as they will pick different stocks, but I found that it got me into stocks at a good time and that of the 23 trades I had 17 wins and 6 loses, and the biggest winners were 3 times bigger than my biggest losses. So it was a reasonable start, but as it's a long term method I can't tell you much else yet, as it will take years to build up a big enough sample of trades to be relevant to anyone else. All I can say is that I'm encouraged by it and that I'd find it hard to invest in any other way now, as whenever I look at a chart, I determine it's stage and make a decision to whether it's worth further analysis.

sarker · Jul 30, 2012, 7:53am

Thanks Istrader for the reply.

Feeling good after hearing from you. In the trading , entry isnt problem but good entry is a problem. If I compare, good entry and good exit, then good exit is the most tough one.

As it is along term trading, so it will be better to trail the profit and adding position in the pullback.When I enter on trade with this method,then I added position when it creates a new high or cross the recent Higher High and Close some some added position when it breaks a lower High. It means , I make more trade on a long trade, As I'm a full time trader.

isatrader · Aug 5, 2012, 8:35am

Here's the updated Futures RS table and the attached are the thumbnail charts in order of relative performance. Soybean Meal is still the top performer and Orange Juice is the worst.

Jul 29, 2012, 9:14am	#417
forker Legendary Member Member Since Jul 2008 1,227 Posts	Re: Stan Weinstein's Stage Analysis A lot going on in those charts

Jul 29, 2012, 9:47am	#418
isatrader Legendary Member Member Since Oct 2010 2,760 Posts	US Industry Sectors Health Care, Consumer Staples, Utilities, Consumer Discretionary and Technology are all currently outperforming the S&P 500. Basic Materials continues to be the weakest sector. Below is the list in Mansfield relative strength order and I've attached the thumbnail charts. Attached Thumbnails __________________ 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. Last edited by isatrader; Jul 29, 2012 at 12:22pm. Reason: Sub-sectors not updated properly in my software. Attempting to fix the problem

Jul 29, 2012, 7:16pm	#421
sarker New Member Member Since Oct 2009 2 Posts	Re: Stan Weinstein's Stage Analysis Hi Istrader, Im also a fan of Stans book. Did some trade in forex, got some good return. As I see, you are using this method from october 2011, Can pls tell me whats the success ration of your trade with this method and return percentage( if you want to disclose).what are the other confluences , you use to make it for sharp and more accurate( Saw you use, trendline,osilator etc). Thanks in advance.

Jul 30, 2012, 7:53am	#423
sarker New Member Member Since Oct 2009 2 Posts	Re: Stan Weinstein's Stage Analysis Thanks Istrader for the reply. Feeling good after hearing from you. In the trading , entry isnt problem but good entry is a problem. If I compare, good entry and good exit, then good exit is the most tough one. As it is along term trading, so it will be better to trail the profit and adding position in the pullback.When I enter on trade with this method,then I added position when it creates a new high or cross the recent Higher High and Close some some added position when it breaks a lower High. It means , I make more trade on a long trade, As I'm a full time trader.

Aug 5, 2012, 8:35am	#424
isatrader Legendary Member Member Since Oct 2010 2,760 Posts	Futures Relative Performance Here's the updated Futures RS table and the attached are the thumbnail charts in order of relative performance. Soybean Meal is still the top performer and Orange Juice is the worst. Attached Thumbnails __________________ 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.

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