Stan Weinstein's Stage Analysis

isatrader

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#1
I started this thread for a place for people to discuss Stan Weinstein's method of stage analysis, as I read his book "Secrets for Profiting in Bull and Bear Markets" from 1988 in late 2010 and was very impressed with his four stage breakout method. For those that haven't read the book and are medium to long term position traders, then I recommend that you do, but there's a free article in the T2W archives from 2006 that's a good basic starting point. Here's the link: Articles - Stage Analysis - finding the 'breakout' shares | Trade2Win.

The thread itself has also now developed into a huge free resource, and has links to multiple interviews that Stan Weinstein has done, and has hundreds of examples of the different stages. The discussion has been in-depth at times and has covered a number of the grey areas from the book as well as focusing in detail on all aspects from the book.

I'm interested to see how other people apply his methods and hope for a serious discussion of what's going on the markets and individual stocks using his stage analysis method.

Below is a number of quick links to some of the most useful content in thread, which I will update as the thread develops, so that the best quality information is easily accessible for everyone.


Definitions of the Stages and Sub-stages

Stage 1A Start of a base. Needs much more time.
Stage 1 Basing Phase. May begin accumulation.
Stage 1B Late in base-building phase. Watch for breakout.

Stage 2A Early in uptrend stage. Ideal time to buy aggressively.
Stage 2 Advancing Stage.
Stage 2B Getting late in uptrend.

Stage 3A Looks as if a top is starting to form. Be sure to protect holdings with a close stop.
Stage 3 The Top Area. Start to reduce positions.
Stage 3B Has become increasingly toppy. Use rallies for at least partial selling.

Stage 4A Stock has entered Downtrend Stage. Close out remaining positions.
Stage 4 The Declining Stage. Avoid on the long side.
Stage 4B Late in downtrend. Much too soon to consider buying.
Stage 4B- Although not yet “officially” in Stage 1A, stock has now seen its low for the cycle.

Additional ratings
(A) Early in that Stage.
(B) Late in that Stage.
(+) Outstanding pattern in that Stage.
(–) Unexciting pattern in that Stage.




Examples of the Stages

Over the course of doing this thread there have been multiple examples of the all the stages posted and they can be seen on every page if you take the time to go through the entire thread. However, to view the specific examples created using the Global Trend Alert (GTA) newsletters that Weinstein's firm does for institutional investors. Go to the following pages:

Stage examples from the March 2005 GTA
http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-3.html#post1698054

Stage examples from the March 2012 GTA
http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-41.html#post1804190


Stage Analysis Study Guide - Questions and Answers
The purpose of the Study Guide is to help people learn to identify the Stages and to emphasize the importance of a full analysis taking into account the various technical attributes that we look to for guidance in determining the Stages i.e. price action in relation to the 10 and 30 week moving averages, volume, relative performance versus the market and the sector, support and resistance zones etc. Here's the link: http://stageanalysis.net/forum/showthread.php?tid=47


Stage Analysis Breakout Quality Checklist
The checklist is a step by step guide to the technical attributes that you should be looking for when trying to identify a Stage 2A breakout with A+ potential. Here's the link: http://stageanalysis.net/forum/showthread.php?tid=54


Interviews

Audio interviews with Stan Weinstein
Stan Weinstein | FINANCIAL SENSE

Video Interview from the day of the 1987 Stock Market crash
Black Monday - Part 2 - Nightly Business Report Oct.19, 1987 - YouTube


Reading

Global Trend Alert example - March 2005
http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis.html#post1675626

Extract from Stan Weinstein's interview in the "Technically Speaking" book
http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-89.html#post2037672

Stage Analysis Forum
The forum is the place for people who trade or invest in stocks using Stan Weinstein's method of Stage Analysis and has daily watchlists for UK and US stocks, market breadth and multiple stage analysis examples, learning tools and much more. Here's the link: http://stageanalysis.net/forum/index.php


Frequently Asked Questions

FAQ: How to create the Mansfield Relative Strength Indicator:
http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-121.html#post2137398

Beginners Questions
Here's the link: http://stageanalysis.net/forum/showthread.php?tid=11

To be updated.....Chart software; chart set up; 30 week simple moving average or weighted moving average - as on the Mansfield charts in the book; entry points; sub stages; trader or investor approach; stock scanners, importance of volume, sector analysis, using the method with products other than stocks; weight of evidence approach, momentum index, advance decline, new high new low, head and shoulders patterns in Stage 1 and Stage 3; swing target method; drawing trendlines; theory of contrary opinion; forest to the trees approach; ....I will write this section properly with links to the appropriate posts when I have some free time.

Miscellaneous

Buying Reference - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-2.html#post1692514

Point and Figure Charts - Free resources to help learn P&F charting
Point & Figure Charting - ChartSchool
Dorsey PnF University


ISA's Charts

Precious Metals
(GC) Gold (13 Dec 2012 - Stage 1) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-86.html#post2033926
(SI) Silver (22 Dec 2012 - Stage 4 continuation within major Stage 1 range) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-91.html#post2040102
(PA) Palladium (21 Jan 2013 - Stage 2A) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-101.html#post2057256

Commodities
(CCI) Continuous Commodities Index (21 Jan 2013 - Stage 1) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-101.html#post2057492

US Treasuries
Latest stage analysis
US 30 Year Treasuries (8 Apr 2013 - Stage 1A) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-119.html#post2109046
Archive
US 30 Year Treasuries (22 Nov 2011 - Stage 2B) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-5.html#post1727942
US 30 Year Treasuries (16 Sep 2012 - Stage 3A) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-67.html#post1967674
US 10 Year Treasuries (16 Sep 2012 - Stage 3)- http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-67.html#post1967674
US 30 Year Treasuries (1 Feb 2013 - Stage 4) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-107.html#post2066920

Stocks and ETFs
Apple (AAPL) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-83.html#post2030646
AIG (AIG) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-68.html#post1969468
Reynolds American Inc (RAI) (26 Nov 2011 - Stage 2 Continuation) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-6.html#post1730724

Indexes
Archive
S&P 500 (6 Nov 2011 - Stage 1A) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-5.html#post1716128

Forex
EURGBP (26 Nov 2011 - Stage 4A) - http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-6.html#post1730478

I hope you enjoy the thread and please participate if you are using Stan Weinstein's method.
 
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isatrader

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#2
Attached is a pdf of his Global Trend Alert advisory service newsletter from March 2005 that he did (still does?) for Institutional Investors. I'm not sure if this is still going but it supposedly cost institutions $40,000 a year for the service and shows various charts of stocks and markets at the different stages and analysis of them, which I think helps to see, as it helps you to identify the stages he talks about in the book on some actual charts.
 

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isatrader

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#4
Attached is my weekly chart for the Dow 30 using the method. I have added a red/green indicator to show visually when the 30 week weighted moving average is going up or down and also a cumulative version of Elder's force index with a moving average to help me interpret the volume data at a glance.

The chart looks to me to be in stage 4 currently, with the possibility that it is in early stage 1. The volume data is a way off giving a new buy signal yet as it's far below it's moving average so my interpretation is that we have a while to go yet before the next buy signal and so should be defensive for the time being.

Does anyone interpret the stage any differently?
 

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isatrader

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#5
Here's another chart that's in a different stage. Silver looks to be in stage 3 currently, as the 30 WMA went flat briefly. But it is a great example of a powerful stage 2 rally from a big stage 1 base that you would still be in using the Weinstein method, as the stop loss placement would have moved you up gradually and by my interpretation your stop loss would now be at point D which is below $37.
 

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isatrader

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#6
Palladium is an interesting chart to me. It was a strong stage 2 performer during most of 2009 and 2010 with a stage 3 consolidation in the summer of 2010 before breaking out and continuing the stage 2 bull. It has now been in a stage 3 consolidation for almost a year and has failed to recapture the February high.

Relative strength vs the S&P 500 has been weakening, but it is still outperforming by 42% since the July 2010 S&P 500 low. However, it is under performing the market by -5% since the August 2011 low.

Where it goes from here, I'm not sure? But using stage analysis I'm looking to sell a break below the stage 3 channel or buy a breakout above the previous high on strong volume. I think that any breakout move could be quite strong as it has been consolidating for so long, but that the risk certainly looks to the downside at the moment although there is good support between $40 and $60 if it does fall.
 

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isatrader

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#7
US Dollar Stage Analysis

The US Dollar gave a buy signal a week ago as the 30 week MA turned up for the first time in over a year and the price closed above the stage 1 consolidation high on increasing volume. So are we entering a fledgling stage 2 for the Dollar index? Or will it fall back in to the stage 1 range and be a false breakout?
 

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isatrader

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#8
good post !but i think i should keep the link and then read it when i am free .because it is difficult to understand some content in the articles ,so it will spend more time ! anyway thanks for your posting !(y)


Thanks zutou, is good to see someone is reading my posts. :cheers:

Weinstein's method is very simple and I'm currently rereading his book for the third time to help me fine tune my understanding of the 4 stages, so that I can be more confident with my application of it in my own trading.
 

isatrader

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#9
Palladium Update

Updating my previous post that showed Palladium was in a year long stage 3 formation. It has today broken down below the stage 3 channel. The 30 week moving average is also falling and relative strength vs the S&P 500 has turned negative. So I now consider it to be in the early part of stage 4 if I am interpreting Weinstein's method correctly.

I've used the spot data as it's more accurate and marked out the various stages on both the weekly and daily chart, which shows the stage 3 consolidation in more detail.
 

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isatrader

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#10
AUDUSD Stage analysis

I think Stan Weinstein's Stage Analysis can be used on any instrument and I've been looking at currencies recently and the AUDUSD chart stood out to me as moving into a new stage 4 over the last few weeks. However, there is significant resistance in the 0.96 to 1.00 range it’s now in, so if the stage 4 plays out as I expect then it could see a pullback towards the 30 week MA and previous support around the 1.02 to 1.04 range before trying to break down further. So there should be another chance to get in around that level for less risk.
 

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isatrader

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#11
Gold stages

I thought it would be good to focus on gold today after it's steep two day fall. I've marked up the daily, weekly and monthly chart to try and get a bigger picture look at the move.

On the daily chart it looks brutal and the stage 3 head and shoulders pattern has broken down violently into stage 4. The sell off appears to involve liquidation selling, so it might not get the usual pullback before dropping further.The swing rule gives me a measured price target of 1585 for this move down on the daily chart.

The weekly chart is interesting as price has pulled back to the 30 week moving average, which is the seventh major pullback since the start of the weekly stage 2 gold bull run in January 2009. So will it manage to bounce here again? I think it could, as the 30 week MA is still moving higher at the moment although it has flattened a little this week, but it's still in stage 2 at the moment I think.

Gold has had an amazing stage 2 run on the monthly chart for almost 10 years. It broke out into stage 2 in February 2002 and the 30 week MA only only broke down once in 2008 before turning positive again and continuing higher. The price has been this extended from the 30 week MA twice before in 2006 and 2008 and both led to a year or so of consolidation. Could this be what is starting again now?

Gold is a great example of how the method can work on multiple time frames and I intend to explore this further on intraday charts as well.

Attached is the charts
 

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Aug 17, 2011
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#12
I'm starting this thread for a place for people to discuss Stan Weinstein's method of stage analysis.

I read his book Secrets for Profiting in Bull and Bear Markets from 1988 earlier this year and was very impressed with his four stage breakout method. For those that haven't read the book there's an article in the T2W archives from 2006 that's a good starting point. Here's the link

Articles - Markets - Equities - Stage Analysis - finding the 'breakout' shares | Trade2Win

I'd be interested to see how other people apply his methods and get a discussion going on the markets and individual stocks using his stage analysis method.
Hi,

I am in the same situation here. I just read the book and now i am getting prepared to make some analysis before i will invest the money.
I am going to keep looking at this post and i will try to also give a feedback. What are the markets do you prefer for your analysis ?
 
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isatrader

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Oct 20, 2010
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#13
I am in the same situation here. I just read the book and now i am getting prepared to make some analysis before i will invest the money.
I am going to keep looking at this post and i will try to also give a feedback. What are the markets do you prefer for your analysis ?
Thanks vali83. I look at stocks and commodities mainly for my analysis as it seems to work the best for these. I'm going to focus on Stocks from the FTSE 350, S&P 500 and Nasdaq 100 and Commodities like precious metals, base metals and some of the softs like coffee, soybeans and sugar etc.
 

isatrader

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Oct 20, 2010
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#14
Buying Reference

I wrote the buying guide from the "refining the buying process" section in my journal, but thought it would be useful to post here as well, as it is the checklist of what the book says to look for when buying:

Buying Reference
  1. What is the major trend of the market overall
  2. What groups/sectors look the best technically
  3. Create a watch list of the stocks from the sectors identified that have bullish patterns but are currently in a trading range. Make a note of the breakout price level of each.
  4. Narrow the list by discarding the stocks/commodities that have overhead resistance nearby.
  5. Narrow the list further by discarding the ones with the worst relative performance versus the general market (I use the latest major low in the S&P 500 as my baseline for this).
  6. Put buy-stop orders on for half the position on the few stocks/commodities that meet the buying criteria.
  7. If volume looks promising on the breakout and then contracts on the pullback towards the initial breakout level, then buy the remaining half of the position.
  8. If volume doesn't increase enough on the breakout then sell on the first rally. If it doesn't manage to rally and falls back below the breakout point then dump it immediately.
 
Aug 17, 2011
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#16
Thanks vali83. I look at stocks and commodities mainly for my analysis as it seems to work the best for these. I'm going to focus on Stocks from the FTSE 350, S&P 500 and Nasdaq 100 and Commodities like precious metals, base metals and some of the softs like coffee, soybeans and sugar etc.
i see you are using a nice tool. Can you tell which one is it?
Untill now i've been using Freestockcharts.com and stockcharts.com, but from the images you posted i might like your tool better

Thanks
 

isatrader

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#17
i see you are using a nice tool. Can you tell which one is it?
Untill now i've been using Freestockcharts.com and stockcharts.com, but from the images you posted i might like your tool better

Thanks
It's a paid for end of day software program called ProTA Gold for the Apple Mac. I like it, but you have to import your data etc, which obviously you don't have to on the free charts services. Here's the link: ProTA: Mac OS X Stock Market Charting and Technical Analysis Software
 

isatrader

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#18
Gold Analysis follow-up

I previously looked at gold on the 24th September on the thread. Here's the link: previous Gold post 24th Sept

The stage 2 bull run is still intact currently, as even though the sell-off was extreme, it has so far managed to bounce around the 30 week MA as it has done before in the last two years. The moving average is still rising, but I think it’s too soon to raise the stop loss from the previous low below 1500 on the weekly chart.

On the daily chart the measured move price target of 1585 was reached, but gold is in stage 4 on the daily chart, so for me there is nothing to do as yet, as the goal is to buy in early stage 2 which looks a while away at the moment.

Relative strength vs the S&P 500 is fairly flat.

Daily volume is very negative still, and weekly volume has pulled below the moving average.

Below is the updated chart.
 

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isatrader

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#19
Stage Analysis

I've been looking in-depth at the Global Trend Alert newsletter from March 2005 that I attached in post 2 on the thread here: http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis.html#post1675626

I think this gives an important update to the book, as the book was written 23 years ago and he's clearly refined the system a little bit since then. For example, the four stages now have extra definitions with A, B, + and - symbols. So you now have a Stage 2B, and if the technical pattern is outstanding it is labelled 2B+

Here's the definitions of the stages from the newsletter

Stage 1A - Start of a base. Needs much more time.
Stage 1 - Basing Phase. May begin accumulation.
Stage 1B - Late in base-building phase.Watch for breakout.

Stage 2A - Early in uptrend stage. Ideal time to buy aggressively.
Stage 2 - Advancing Stage
Stage 2B - Getting late in uptrend. Watch carefully. But still a hold.

Stage 3A - Looks as if a top is starting to form. Be sure to protect holdings with a close stop.
Stage 3 - The Top Area. Start to reduce positions.
Stage 3B - Has become increasingly toppy. Use rallies for at least partial selling.

Stage 4A - Stock has entered Downtrend Stage. Close out remaining positions.
Stage 4 - The Declining Stage. Avoid on the long side.
Stage 4B - Late in downtrend. Much too soon to consider buying.

Additional ratings
(A) Early in that Stage.
(B) Late in that Stage.
(+) Outstanding pattern in that Stage.
(–) Unexciting pattern in that Stage.

Below is the simple diagram from the newsletter to give the descriptions above some context.
 

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isatrader

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#20
Another thing that I think is really useful about the Global Trend Alert newsletter pdf, is that it has all the S&P 500 stocks marked up with their stages from the 25th February 2005. I think this is great as you can go back in your own charting package to that date and get a much better idea of the various stages and hence become better at identifying them. As the charts in the book were very small and the print quality wasn't great. So I think this will really help my understanding of the stages.

On that date the Stage Ratings Overview had the following:

Stage 1 - 8%
Stage 2 - 58%
Stage 3 - 18%
Stage 4 - 16%

So you should have around 40 examples of Stage 1, 290 examples of Stage 2, 90 examples of Stage 3, and 80 examples of Stage 4 to look at. I plan to create a spreadsheet and go through them one by one to create my own reference guide so that I can use them to identify my charts in the future.