Stan Weinstein's Stage Analysis

incrediblefx

Junior member
16 0
isatrader,

I like the concept of Stan and I find it very useful.
But I'm not an investor type so I probably trade only like a trader as described in his book.
I feel it takes too long for me to ride entire phase 2.
 

amiraljaberi

Newbie
2 0
Hi All,
This is my first post :)
I just finished the book and I found it very helpful.
I just got a question about Chapter 8 Long-term indicators such as Advance Decline Line indicator and Momentum index. I am using MetaStock and I can only find NSYE Advance/Decline line which is not useful for me as I use ASX Market.
So I was wondering if anyone successfully using these indicators ?

Thanks!
 

isatrader

Senior member
2,928 128
isatrader,
I like the concept of Stan and I find it very useful.
But I'm not an investor type so I probably trade only like a trader as described in his book.
I feel it takes too long for me to ride entire phase 2.
No worries incrediblefx, everybody has to trade the way that suits them personally. My focus at the moment is forward testing and studying the investor method. I'm trying to approach it as an in-depth study so that I can fully understand it and hence trade it properly. The majority of the information in the book is on the investor method, so although I plan to start testing the trader method very soon also, I feel that I need to spend more time trying to gather information on the trader first as it will require much more research time each day, which I don't currently have due to my work commitments at the moment.
 
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isatrader

Senior member
2,928 128
Hi All,
This is my first post :)
I just finished the book and I found it very helpful.
I just got a question about Chapter 8 Long-term indicators such as Advance Decline Line indicator and Momentum index. I am using MetaStock and I can only find NSYE Advance/Decline line which is not useful for me as I use ASX Market.
So I was wondering if anyone successfully using these indicators ?

Thanks!
Hi amiraljaberi, thanks for joining in. The Long-term indicators such as Advance Decline Line indicator and the Momentum index are meant to be used for secondary confirmation only. Don't worry too much about them, just check in with them from time to time to help add weight to your evidence on what stage the market is at. It doesn't matter that you are trading the ASX too much, as the correlation between the major markets is quite high. So although the ideal would be to use the advance decline data from the entire Australian market, you should get a relatively similar picture from the entire NYSE. But for the most accuracy in your case I'd try to find the advance decline data from the entire Australian market.
 

biggnick

Newbie
6 0
hey guys, quick question on buying. do you think that it is best to us a daily or weekly chart to time a buy crossing resistance?
 

isatrader

Senior member
2,928 128
hey guys, quick question on buying. do you think that it is best to us a daily or weekly chart to time a buy crossing resistance?
It depends on whether you are using the trader method or the investor method as the Stage 2 breakout point is the same whether you use a daily or a weekly chart. But focusing in on the daily chart after you've identified the stage and breakout level on the weekly chart is probably the best way to go if you are using the trader method. But if you are using the investor method you can stick to the weekly charts imo.
 

isatrader

Senior member
2,928 128
I opened a trade in Caterpillar (CAT) at 115.85 today, as it triggered my Stage 2 alert yesterday that I'd set up previously, but it didn't close well yesterday so I waited to see what the price action was like today before getting in. I've set my stop loss under the last significant low at 109.83. So am risking 2 x the 200 day average true range, which is 0.5% of my account. This is a trader position, not an investor one. Here's the charts
 

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atters88

Member
74 4
Hi Isa

I just wanted to thank you for what I think is the most valuable thread currently active n T2W. I bough Weinstein's book last week (I had known of it for years but had been put off by the cheesey cover). Its a very vuseful reminder that following simple price action is the easiest way to secure profits.

A lot of what Weinstein says echoes Justin Mamis's books "How to buy" and "when to sell" but these are even more dated and are also quite hard to find.

I don't want to distract from your analysis by posting my trades but Qualcomm is showing a continuation breakout at the moment.I went long a week ago. Volume initially looked encouraging but tailed ff quite quickly though which is a concern.

QUALCOMM Incorporated Stock Chart | QCOM Interactive Chart - Yahoo! Finance
 

isatrader

Senior member
2,928 128
Hi Isa

I just wanted to thank you for what I think is the most valuable thread currently active n T2W. I bough Weinstein's book last week (I had known of it for years but had been put off by the cheesey cover). Its a very useful reminder that following simple price action is the easiest way to secure profits.

A lot of what Weinstein says echoes Justin Mamis's books "How to buy" and "when to sell" but these are even more dated and are also quite hard to find.

I don't want to distract from your analysis by posting my trades but Qualcomm is showing a continuation breakout at the moment.I went long a week ago. Volume initially looked encouraging but tailed ff quite quickly though which is a concern.

QUALCOMM Incorporated Stock Chart | QCOM Interactive Chart - Yahoo! Finance
Hi atters88, thanks for posting and I appreciate the kind words. I've attached my charts of QCOM for you to help you relate to what you've seen in the thread. The Stage 2 breakout was on the 2nd February when it gaped above the last years high of 59.84 and it's performed fairly inline with the S&P 500 since then. Since the October low it's outperformed the S&P 500 by around 5%, the tech sector by just over 4% and is trading fairly inline with it's sub sector. The Mansfield relative strength is positive, but as you noted the volume has weakened since the breakout so is the one negative on the charts to watch currently imo.

But you've picked an outperforming stock, in a strong sector only a little bit after it's breakout. So you're on the right track imo.
 

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amiraljaberi

Newbie
2 0
Hi amiraljaberi, thanks for joining in. The Long-term indicators such as Advance Decline Line indicator and the Momentum index are meant to be used for secondary confirmation only. Don't worry too much about them, just check in with them from time to time to help add weight to your evidence on what stage the market is at. It doesn't matter that you are trading the ASX too much, as the correlation between the major markets is quite high. So although the ideal would be to use the advance decline data from the entire Australian market, you should get a relatively similar picture from the entire NYSE. But for the most accuracy in your case I'd try to find the advance decline data from the entire Australian market.
Thanks Isa. Appreciate ur help.
 

isatrader

Senior member
2,928 128
I was reminded today by a friend of a watchlist pick that I've been following for a few months in the Oil & Gas Producers sector. Premier Oil (PMO.L) is very close to a Stage 2 breakout this week and made a new high today, but pulled back from it quickly. So instead of entering straight away, I've setup a buy stop order for the 448 to 448.50 range with my broker so that I get in if it pivots and moves higher again in the coming days.

I think PMO.L is a great example of stage analysis and some people might argue that the Stage 2 breakout has already occurred back in January when it broke above the 3 month range and 384.10 high that formed between October and December. However, the range formed below the 30 week simple MA, so is not a valid Stage 1 imo, as the price needs to form a high above the 30 week MA. I personally use the 30 week weighted MA on my charts as I mentioned before, which is a bit more sensitive to recent prices so the 384.10 high was slightly above that, but the Oct to Dec range was a 4B range imo. So the January move up to the previous resistance level around 450 and small pullback has now set it up to be able to breakout into Stage 2 imo if it can close the week above 446.90

Here's the charts
 

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theblackmamba

Active member
106 3
i havent posted much here recently as a) for some reason it hasnt sent me email updates of new posts, and b) i have deviated from classic weinstein to a much shorter term version with a few tweeks..
re volume - for 95percent of my trades in uk i ignore volume as its not really representative. we have things like delayed trades etc etc etc, so it doesnt give a true reflection, and as isa said the uk mkt is much more illiquid than usa.. on a share like gkp which im in it is valid as the volumes can be very high..
 

isatrader

Senior member
2,928 128
i havent posted much here recently as a) for some reason it hasnt sent me email updates of new posts, and b) i have deviated from classic weinstein to a much shorter term version with a few tweeks..
re volume - for 95percent of my trades in uk i ignore volume as its not really representative. we have things like delayed trades etc etc etc, so it doesnt give a true reflection, and as isa said the uk mkt is much more illiquid than usa.. on a share like gkp which im in it is valid as the volumes can be very high..
GKP is a great example as the volume increased on the initial breakout to 300 and then contracted in the two week pullback following that before breaking out again on stronger volume to push up above 450, so it made 123% gain from the stage 2 breakout at 201.5 in late Dec/early Jan and is currently still up 82.7% at 368.25.

UK banks is another area that has decent volume, so can be looked in the proper way. The UK banking sector (^NMX8350) is currently in Stage 1A.
 

isatrader

Senior member
2,928 128
Palladium (PA) Update

Palladium (PA) was one of the first charts I marked up in the thread back in September 2011 (Here's the link to the post: http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-2.html#post1681460) when I noted the Stage 4 breakdown when it crossed below 700 after making a large Stage 3 top for most of 2011 up until that point. I still follow the precious metals every week and yesterday they all made moves into new sub-stages, but I want to focus on Palladium first as the Stage analysis is the clearest.

Palladium's stage 4 reached the measured move target of 550 within 3 weeks of it's breakdown and then consolidated below the 30 week WMA until January when it finally broke higher again to retest the 700 breakdown level for the first time and move into Stage 1A. It formed a short term top and pulled back towards the 30 week WMA and previous support in the 680-690 range over the last few weeks. However this week has seen some volume return and it's had three up days which have pushed it to a new high and confirmed the new Stage 1 for me.

It has a lot resistance to work through to reach the previous high of 858, but it's making the right moves to go higher again and reach a new Stage 2. So might be of interest to the more short term traders on the thread. Silver is making similar moves and is back in Stage 1A, but I'll mark up that chart when I have some more time.

Attached is the marked up Palladium chart
 

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isatrader

Senior member
2,928 128
I got filled on my Premier Oil trade at 448.01 at the open today. However, that was because the market maker opened the stock above the breakout level and it immediately moved back towards yesterdays close, so I'm not impressed with the entry particularly. This is the liquidity problem with UK stocks that we talked about before as it's easier for market makers do outsized moves on the open to soak up orders due to the lower volumes in the stocks and why I tend to trade UK stocks less as it makes placing limit and stop loss orders more difficult.