Stan Weinstein's Stage Analysis

This is a discussion on Stan Weinstein's Stage Analysis within the Technical Analysis forums, part of the Methods category; Can you explain why you used an expoenntial moving average instead of a simple moving average, and what the differences ...

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Old Nov 24, 2011, 1:34am   #43
 
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Re: Stan Weinstein's Stage Analysis

Can you explain why you used an expoenntial moving average instead of a simple moving average, and what the differences of the two are?
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Old Nov 24, 2011, 12:14pm   #44
 
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Re: Stan Weinstein's Stage Analysis

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Originally Posted by kwang2311 View Post
Can you explain why you used an exponential moving average instead of a simple moving average, and what the differences of the two are?
In the book he talks about the 30 week moving average (MA) in all of his basic examples. However, the Mansfield charts that he used for all the actual examples used a 30 week weighted moving average. Which is important as it is more sensitive to the recent prices, whereas a simple moving average gives an equal weighting to all the prices over the last 30 weeks.

I used an exponential MA in the stockcharts chart example, as they don't have a weighted MA, but it is the closest they have to it.

So if you can, use the 30 Week Weighted Moving Average. As that is what he was looking at in the book.
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Old Nov 25, 2011, 12:32pm   #45
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Re: Stan Weinstein's Stage Analysis

Hi isa,
I've read Stan's book numerous times now, and must admit it is brilliant. Over the last year or so I have been fiddling with shorter timeframes, but have come to the conclusion that my attempts boil down to "account death by a 1000 cuts!" So I am now following a more faithful Stan methodology, and so far with some good success. I use my own software to calculate the 30 week weighted moving average as per Stan's reference Mansfield charts.

Cheers!
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Old Nov 25, 2011, 12:44pm   #46
 
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Re: Stan Weinstein's Stage Analysis

isatrader started this thread Hi leonarda, good to see you're using his method as well. Feel free to contribute to the thread with your own charts if you'd like to.

I agree about the shorter time frames. I think the reason for it not being suitable for very short term trading is that volume is so important to the method, and on an intra-day basis it is less significant. So I'm trying to trade it to the letter, using weekly and daily charts only.
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Old Nov 26, 2011, 2:51am   #47
 
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EURGBP Stage Analysis

isatrader started this thread I stumbled upon an interesting chart today, and thought I'd mark it up as I think it shows a lot of promise for a long term sell. The EURGBP chart has formed a large stage 3 top over the last 3 years or so after a huge Stage 2 run up of around 3000 points in 2007 and 2008.

The price broke down last year to give a Stage 3 low point below the 30 month moving average. This gave a pivot point for a 5 year trendline, which held over the last year until it was breached in September. Price has bounced around that trendline for the last 3 months, but it looks like the sell side is winning as it's not been able to get back above the trendline this November and was sharply rejected when it tested it again this week.

Volume on forex isn't the same as stocks, so I can't use the crucial volume part of the method faithfully on this chart. So I use my backup of cumulative volume at the bottom with a moving average to determine the conviction of the move. Which seems strongly negative as cumulative volume is near the low, but price hasn't fully broken yet - so there is a negative divergence.

The 30 month moving average has turned down for the last 3 months and the weekly chart has moved in early Stage 4A. So I'm looking to sell this with an initial swing target at 81, but hopefully it will eventually take that out as well and continue lower. But as I'm using a monthly chart for this, it could take a very long time to play out.
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Old Nov 26, 2011, 7:15pm   #48
 
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RAI - Reynolds American Stage Analysis

isatrader started this thread Reynolds American (RAI) looks like a good candidate for a Stage 2 continuation buy. Volume looks good on the breakout, with a contraction in volume on the pullback to the breakout level. Relative strength vs the S&P 500 is positive and the 30 week moving average is rising.

If you took a trade here then I think the stop loss level is below the recent low and the 30 week moving average. Somewhere below 37.50 seems sensible or even below 37 for a bit of extra room but you'd need a smaller position size to accommodate the extra space.
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Old Nov 26, 2011, 8:23pm   #49
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Re: Stan Weinstein's Stage Analysis

for anyone who is interested ProRealTime free charts (daily and above) have the mansfield relative strength indicator built in
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