Stan Weinstein: secrets for profiting in bull and bear markets

[expensif]

I am thinking of buying this book. Although it is not very expensive i would like to hear your opinions on it before i buy it.

As I'm a newbie, i would like to know if a beginner has any use of it.
What kind of timeframes is it for? I'm interested in swing/position trading, would it suit me?

Have a nice day all!

 

[nine]

This is a good basis for learning trading (as is "Trading Day by Day" by Chick Goslin). Of the two I think that Stan's is more general and thus a better starting point. He covers both swing and longer term trading.

I wish that when I started trading I had read this book and no more ... and then started working to make his approach mine rather than exploring a lot of dead ends.

 

[expensif]

Thank you for your insights! As a matter of fact, I am thinking about buying both, weinstein's and "trading day by day". Guess I'll start with Weinstein's.

 

[Chorlton]

Thank you for your insights! As a matter of fact, I am thinking about buying both, weinstein's and "trading day by day". Guess I'll start with Weinstein's.

Hi All,

This seems like the right thread for my question.

Apparently, In the book "Secrets for Profiting in Bull and Bear Markets", Stan Weinstein breaks a stock's life cycle up into 4 phases and goes on to say that the most profitable time to buy a stock is at the end of phase 1 (basing / accumulation stage).

This leads me onto my question.

Does anyone on here who has either read this specific book (or others on the subject of the 4 phases of a stocks life cycle), actually incorporate these principles into their own trading strategy?

What I'm specifically interested in, is whether there are any traders/investors who concentrate on buying stocks during (or at the end of) the Accumulation stage (phase 1) and if so, how do you select these particular stocks???

Is it a case of fundamentals or can you select those stocks by using TA / Charting and again, if so, what patterns, indicators, etc, etc do you use?

The reason for my question is that on the face of it, I agree that the best time to buy would be at the end of the accumulation stage just prior to the stock being "marked up" and thus entering stage 2.

However, my concern is how to identify this stage. Surely, during the accumulation stage the SP would trend within a narrow range and volume would be probably average. If there were any big buy orders by institutions for example (and therefore large daily volume spikes), these could be easily hidden from the market by the MM's. Therefore, looking at a chart how would one differentiate between such a stock and basically one with little or no potential / market interest.

Sorry for the lengthy question & thanks in advance for any information,

Chorlton

 

[Jack o'Clubs]

Hi Chorlton,

I've got the book, but it's not one I've gone back to since reading it - in part because it's cheaply produced (charts hard to read on blotting-paper like pages) and a bit dated (just check out Mr Weinstein's mullet on the cover!) and other books cover similar ground.

I don't use the 4-stage cycle method, largely because as you suggest, in 'real life' it is very hard to see chart patterns as clearly differentiated as the examples in books such as these, but I've dug out the relevant section to answer your question as Weinstein might:

His first point is don't try and bottom-fish in the Stage 1 Basing area.

He recognises stocks moving into the Stage 2 'advancement' phase using three complementary measures: moving above a resistance line that can be drawn across the Basing area, moving above a 30-week MA, and a step up in volume. Confirmation is acheived by higher-lows on pullbacks (and pullbacks staying above a rising 30-wk MA) and higher-highs on advancements.

In terms of getting the right stocks, he performs similar analysis on sectors and will only look to buy in sectors which show bullish charts - basically he chooses the top-3 sectors and then goes through the stocks in the sectors - he's looking for similar patterns in the sectors as for stocks, ie a high rating will go to a sector just moving into its Stage 2, although he'll consider buying any Stage 2 sector if there aren't early stagers around.

There's obviously a bit more detail (it's a 300 page book after all!), but in a nutshell, that's what he does, including in reverse for shorting - all very simple. If I ever see a stock that fits the pattern I might try it!

 

[trendie]

hi Chorlton,

your description of Weinsteins method reminds me of wwatson1s (sp) thread here, where he seems to buy stocks that have been basing in narrow range, and then buys on upmove with increased volume.

wwatson1 also has a website, where he journals his trades. might be worth having a look at his posts ?

EDIT: his thread is "Im doing great"

 

[Chorlton]

Hi Chorlton,

I've got the book, but it's not one I've gone back to since reading it - in part because it's cheaply produced (charts hard to read on blotting-paper like pages) and a bit dated (just check out Mr Weinstein's mullet on the cover!) and other books cover similar ground.

I don't use the 4-stage cycle method, largely because as you suggest, in 'real life' it is very hard to see chart patterns as clearly differentiated as the examples in books such as these, but I've dug out the relevant section to answer your question as Weinstein might:

His first point is don't try and bottom-fish in the Stage 1 Basing area.

He recognises stocks moving into the Stage 2 'advancement' phase using three complementary measures: moving above a resistance line that can be drawn across the Basing area, moving above a 30-week MA, and a step up in volume. Confirmation is acheived by higher-lows on pullbacks (and pullbacks staying above a rising 30-wk MA) and higher-highs on advancements.

In terms of getting the right stocks, he performs similar analysis on sectors and will only look to buy in sectors which show bullish charts - basically he chooses the top-3 sectors and then goes through the stocks in the sectors - he's looking for similar patterns in the sectors as for stocks, ie a high rating will go to a sector just moving into its Stage 2, although he'll consider buying any Stage 2 sector if there aren't early stagers around.

There's obviously a bit more detail (it's a 300 page book after all!), but in a nutshell, that's what he does, including in reverse for shorting - all very simple. If I ever see a stock that fits the pattern I might try it!

Jack,

Thanks for the reply.

I've been tempted for a while to buy the book but was concerned that like most other trading books - (especially those that deal specifically with TA !!! ) that the subject discussed (in this case the 4 stages) would either be very difficult to interpret compared to what happens in reality, or that the important aspects would be simply skimmed over.

Reading through your post, it seems that in essence he trades Breakouts and uses increased Volume to confirm the move, and the higher highs / above 30MA as added confirmation to avoid false breakouts.

I was hoping that the book would offer a more useful & detailed insight in how to spot each stage (especially Stage 1) rather than apparently concentrating on when stage 2 begins & how he trades it.

Consequently, after reading your reply I don't think I'll now bother to purchase it but once again thanks for your comments.

btw. From memory can you think of any other books which also cover these 4-stages of a stocks life?

Thanks,

Chorlton

 

[Chorlton]

hi Chorlton,

your description of Weinsteins method reminds me of wwatson1s (sp) thread here, where he seems to buy stocks that have been basing in narrow range, and then buys on upmove with increased volume.

wwatson1 also has a website, where he journals his trades. might be worth having a look at his posts ?

EDIT: his thread is "Im doing great"

Thanks Trendie,

I'll check out his posts on here.

Out of all the different strategies I've looked at since I begun trading, I do feel that this concept of buying during an accumulation phase of a stock is worth persuing.

When I first started trading, I remember reading that the best way to make money was to buy stocks that were "out of favour" or that no one else wanted (or more to the point that no one "appeared" to want).

 

[Jack o'Clubs]

btw. From memory can you think of any other books which also cover these 4-stages of a stocks life?

Thanks,

Chorlton

The only other TA book that I have is the excellent 'Technical Analysis - Power Tools for Active Investors' by Gerald Appel (the guy who 'invented' MACD). He covers it briefly, although his discussion more specifically is about market rather than stock cycles, again principally using MAs. I really like the book, but if you're looking for something on the 4-stages, then this wouldn't fit the bill.

 

[dbphoenix]

These "stages" or variations of them are discussed in several traditional books on the matter, including Darvas' book, O'Neil's, Wyckoff's work, Dow's (see Hamilton). The only distinct difference in Weinstein is that he uses an MA, but a trendline can be used just as well, since an MA is simply a moving trendline.

All of this stuff can be purchased used for next to nothing, or found in the library.

 

[Baruch]

These "stages" or variations of them are discussed in several traditional books on the matter, including Darvas' book, O'Neil's, Wyckoff's work, Dow's (see Hamilton). The only distinct difference in Weinstein is that he uses an MA, but a trendline can be used just as well, since an MA is simply a moving trendline.

All of this stuff can be purchased used for next to nothing, or found in the library.

Read the two Darvas books, and you will learn a ton. And they are funny to read, too. O'Neil has borrowed a lot from Darvas. Wyckoff is OK, men very old fashion.