Article Stage Analysis – finding the ‘breakout’ shares

T2W Bot

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Dec 19, 2004
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#1
A study by Alan Saunders of ShareHunter.com on the successful share selection techniques promulgated by Stan Weinstein in his best selling book ?Secrets for Profiting in Bull and Bear Markets?
Most trading systems that I come across are given to using too much jargon or gobbledegook and are complicated  – unnecessarily so in my opinion. And that is why I appreciated ? and now benefit from ? the brilliant simplicity of Weinstein?s ?Stage Analysis? approach to the buying and selling of shares.
?STAGE ANALYSIS? is straightforward, simplified, technical analysis.
There is nothing new in using technical analysis (TA) to identify shares for investment yet the truth is that TA is considered by many private investors as akin to black magic. But it need not be confusing or complicated and can, of itself, identify real potential winning shares.
All of the ?fundamental? information about a company, its products, its market share, its dividend policy, its management and, when...
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Jack o'Clubs

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Sep 7, 2005
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#3
Quite a good article, although my problem with the Weinstein book is that markets or stocks rarely look like the perfect examples always given of the four-stage cycle. e.g is the weekly FTSE chart at the moment in Stage 2 or entering Stage 3? And how would one have interpreted May, when the market fell through its 30-period MA? Was that the start of a Stage 3 move, and if so would you have stayed out of the market since then (thus missing some quite nice gains?).

Also, given the timescales implied (analysis is from weekly, not daily charts), I kept thinking of Pascal's maxim: Man's unhappiness stems from his inability to sit quietly in a room. The article talks about the problems of over-trading, but trading at this glacial pace brings its own challenges!
 

dbphoenix

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Aug 24, 2003
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#4
Jack o'Clubs said:
Quite a good article, although my problem with the Weinstein book is that markets or stocks rarely look like the perfect examples always given of the four-stage cycle. e.g is the weekly FTSE chart at the moment in Stage 2 or entering Stage 3? And how would one have interpreted May, when the market fell through its 30-period MA? Was that the start of a Stage 3 move, and if so would you have stayed out of the market since then (thus missing some quite nice gains?).
The article's fine as far as giving a general overview of Weinstein, which in turn is a general overview of "stage analysis" (all of this, with the exception of Weinstein's use of the 150dma, is Wyckoff's work). But, as you point out, getting down to the details of putting this information into practice and making money with it is another matter. At the very least, one must have some sort of definition of trend, trend change and trend reversal in order to make the necessary real-time decisions.

For instance, using your example of the FTSE, it never broke its trendline, and even though it did drop below its 150dma, it never dropped below the last swing low. Therefore, there was no reversal. The primary choice, then, became to wait or to exit (or at least lighten up), but not to short.

Also, given the timescales implied (analysis is from weekly, not daily charts), I kept thinking of Pascal's maxim: Man's unhappiness stems from his inability to sit quietly in a room. The article talks about the problems of over-trading, but trading at this glacial pace brings its own challenges!
Keep in mind, though, that the lives of people who trade off weekly charts do not revolve around trading; they aren't sitting in front of their screens all day long obsessing over every tick. Directly translating EOD and EOW strategies such as Weinstein's and Darvas's to intraday trading is its own challenge.

Db
 

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Nov 20, 2006
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#5
I liked this article. Of course in real world not everything is easy and it's often difficult to find clear stages. But the idea is good to shape the long term scenario. Could be good also to decide when hedge or not a long only portfolio
 

Splitlink

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Nov 18, 2001
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#8
dbphoenix said:
Keep in mind, though, that the lives of people who trade off weekly charts do not revolve around trading; they aren't sitting in front of their screens all day long obsessing over every tick. Directly translating EOD and EOW strategies such as Weinstein's and Darvas's to intraday trading is its own challenge.

Db
Yes, that was the first important point to strike me. There is a difference between the kind of trader being addressed in his article and those daily and intraday traders mostly posting here.

I do both types and I must say that longer term trading is the most profitable, the least work intensive and the backbone of my own strategy.

I cannot tell when the next big "crash" is going to come, so cannot advise those with a few thousand to go out and buy shares in the New Year, but I have been in shares since the mid sixties and have ridden several setbacks- the oil scare of the seventies, now a distant memory and, of course, the 1987 one-- but I would advise a youngster with a few thousand to invest for his pension enhancement and not speculate in looking for Holy Grails in the futures markets.

I haven't read past page 1, yet, I read more slowly these days! But I intend to, I'm never too young to learn something.

Happy and Prosperous NewYear.

P.S. I'm not 87,yet. Just 74!

Split
 
Apr 19, 2013
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Just remember to keep it simple! While your fussing with all of your technical date, I just look and trade or leave for the day! WOW, what a simple concept.