Stan Weinstein's Stage Analysis

isatrader

Senior member
2,954 129
For the watchlist from the Wednesdays scans of the US stockmarket - AAXN, EHTH, EVER, FLT, GDXJ, GOLD, JBLU, KBH, LX, PLG, SMAR, SWCH

Note: Gold and the Junior Miners are consolidating near their recent highs. Potential for a new breakout attempt.

The charts can be found at: Stocks Watchlist - 22nd January 2020

 

isatrader

Senior member
2,954 129
Weekend update of the major US stock market indexes and indicators. A weekly look beneath the surface of the US stock market, featuring the key market breadth charts for timing trading stocks and the stock market indexes, such as the NYSE Bullish Percent Index, the Advance Decline Line, the New Highs - New Lows etc and some custom breadth indicators of my own in order to determine what the "Weight of Evidence" is suggesting in terms of the US stock market direction and how to allocate your money.

This is done using the market breadth indicators that were highlighted in Chapter 8 of Stan Weinstein's Secrets For Profiting in Bull and Bear Markets Book – which was called: Using the Best Long Term Indicators to Spot Bull and Bear Markets.


Subscribe to the Stage Analysis YouTube Channel for all the latest videos here: Subscribe to the stageanalysis youtube channel
 

isatrader

Senior member
2,954 129

I've been keeping a written trading journal on stageanalysis.net since 2013, where I've documented all of my trades, warts and all. Which has helped me to learn from my mistakes, and has forced me to stick to my trading rules and avoid making impulsive trades that don't meet my risk requirements.

I trade mostly using the Stage Analysis method, which was made popular in the classic stock trading book – Stan Weinstein's Secrets For Profiting in Bull and Bear Markets. But I've read lots of other trading books over the years, and so have developed my own preferences and so don't follow a strict interpretation the method.

However, it does make up around 80% of how I trade, and was the reason I finally stopped losing money, and instead started to grow my account, as it helped me to focus on the quality of the trades that I was making, and changed the way I look at stock charts forever.

I currently trade two different types of account.

The first is a short term trading account, where I mostly make trade stocks listed in the US stock market, with an average holding time of around 1 to 2 months. Although I'll exit trades early if they don't behave as I was expecting.

The second is a longer-term investment account, where I trade in stocks and etfs. Although I'm more limited in what I can trade in that account as it's via special type of pension account that we have in the UK called a SIPP, which means a self-invested personal pension.

My trading style is mainly breakouts, and I focus on what is known in Stage Analysis as the Stage 2 Advancing Phase.

I favour stocks that are in their already in their advancing Phase, and had strong Stage 2 breakouts on heavy relative volume, which expanded as the stock rose, and then contracted on the pull backs.

I also look for a stock that has strong relative performance versus the market, which must be outperforming following the breakout.

It should also be clear of any near term resistance – by which I mean, it should be near to its 52 week highs, and not its 52 week lows.

As I'm looking to buy high, and sell higher instead of the buy low, sell high cliché that is consistently talked about in the financial media.

This is not the only criteria, as I also look at sector strength and lot more. But it is the core of the method and hopefully gives you a rough idea of how I trade.

But if you want to know more, you can read my entire journal from 2013 until today in the forum, called isa's SIPP Pension Journal, which can be found in the Members Threads section on the site.

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isatrader

Senior member
2,954 129
US MARKET BREADTH. Where Will the Market Go Next? Trading Using the ‘WEIGHT OF EVIDENCE’

With the market in pullback mode with multiple US Indexes dropping sharply and Treasuries and Gold breaking out in new Stage 2 continuations. I take a look beneath the surface of the US stock market, featuring the key market breadth charts for timing trading stocks and the stock market indexes, such as the NYSE Bullish Percent Index, the Advance Decline Line, the New Highs - New Lows etc and some custom breadth indicators of my own in order to determine what the "Weight of Evidence" is suggesting in terms of the US stock market direction and how to allocate your money.


Quick Links in the Video:
  • Time the US Stock Market Using the Market Breadth Indicators – Introduction (0:00)
  • Major Market Indexes – S&P 500, Dow Jones Industrial Average, Nasdaq 100 & S&P 600 Small Caps (1:12)
  • US Treasuries & Commodities – 7-10 Year US Treasuries, Gold, Crude Oil & Copper (2:57)
  • NYSE Bullish Percent Index & Percentage of Stocks Above Their 200, 150 & 50 Day Moving Averages Charts (4:59)
  • NYSE Advance Decline Line Charts (7:12)
  • US New Highs - New Lows Charts & Momentum Index (9:05)
  • Cumulative Point & Figure Breakouts - Breakdowns (10:04)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Relative Strength Table (10:58)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Line Chart and Overview Diagram (12:18)
 

isatrader

Senior member
2,954 129

This week saw a number of major stock market indexes attempt to breakout to new highs. However, only the Nasdaq indexes managed to breakout and hold to the end of the week. Whereas under the surface various market breadth indicators, like the NYSE Bullish Percent Index, and some of the NYSE Advance Decline Line indicator charts showed divergences with the price action, and so started to flash some warning signs that the move higher doesn't have the same level of participation as previously. And so suggests a more cautious strategy.

Subscribe to the Stage Analysis YouTube Channel for all the latest videos here: Subscribe to the stageanalysis youtube channel

Quick Links
  • Timing the US Stock Market Using the Market Breadth Indicators – Introduction (0:00)
  • Major Market Indexes – S&P 500, Dow Jones Industrial Average, Nasdaq 100 & S&P 600 Small Caps (0:57)
  • US Treasuries & Commodities – 7-10 Year US Treasuries, Gold, Crude Oil & Copper (2:40)
  • NYSE Bullish Percent Index & Percentage of Stocks Above Their 200, 150 & 50 Day Moving Averages Charts (4:10)
  • NYSE Advance Decline Line Charts (6:40)
  • US New Highs - New Lows Charts & Momentum Index (8:48)
  • Cumulative Point & Figure Breakouts - Breakdowns (9:43)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Relative Strength Table (10:19)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Overview Diagram (11:04)

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A regular look beneath the surface of the US stock market, featuring the key market breadth indicator charts for timing trading stocks and the stock market indexes, such as the NYSE Bullish Percent Index, the Advance Decline Line, the New Highs - New Lows etc and some custom breadth indicators of my own in order to determine what the "Weight of Evidence" is suggesting in terms of the US stock market direction and how to allocate your money.

This is done using the market breadth indicators that were highlighted in Chapter 8 of Stan Weinstein's Secrets For Profiting in Bull and Bear Markets Book – which was called: Using the Best Long Term Indicators to Spot Bull and Bear Markets.
 

isatrader

Senior member
2,954 129

Quick Links
  • Timing the US Stock Market Using the Market Breadth Indicators – Introduction (0:00)
  • Major Market Indexes – S&P 500, Dow Jones Industrial Average, Nasdaq 100 & S&P 600 Small Caps (1:03)
  • US Treasuries & Commodities – 7-10 Year US Treasuries, Gold, Crude Oil & Copper (3:30)
  • NYSE Bullish Percent Index & Percentage of Stocks Above Their 200, 150 & 50 Day Moving Averages Charts (5:38)
  • Definitions of the Current Market Breadth Status (8:05)
  • NYSE Advance Decline Line Charts (8:39)
  • US New Highs - New Lows Charts & Momentum Index (10:20)
  • Cumulative Point & Figure Breakouts - Breakdowns (11:04)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Relative Strength Table (12:29)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Overview Diagram (13:23)
Subscribe to the Stage Analysis YouTube Channel for all the latest videos here: Subscribe to the stageanalysis youtube channel

The major stock market indexes attempted to breakout to new highs again this week, but failed, and turned down to end the week near their lows. In contrast US treasuries made a Stage 2 continuation breakout to new highs, as did Gold on some reasonable volume, and the Gold miners. So I took a position in Gold in my pension account.

The NYSE Bullish Percent Index and Percentage of Stocks Above Their 200, 150 & 50 Day Moving Averages Charts continue to show divergences with the price action, with fewer stocks participating while the market makes new highs. This can often continue for a long while, but at some point with fewer and fewer stocks holding up the market, it will cause a problem.

The Advance Decline Line and New Highs, New Lows remain on bullish signal though, as does the Cumulative Point & Figure Breakouts minus Breakdowns chart.

So the current weight of evidence from the combined market breadth indicators signals a neutral + stance in my opinion. So a cautious strategy seems sensible currently, as the market is extended short term still, but that doesn't mean it can't still go higher again, as it's a bull market after all. But protect your account.
 

isatrader

Senior member
2,954 129
US Stock Market Breadth – Quickest 10% Decline From an All-Time High in History


Quick Links
  • Timing the US Stock Market Using the Market Breadth Indicators – Introduction (0:00)
  • Major Market Indexes – S&P 500, Dow Jones Industrial Average, Nasdaq 100 & S&P 600 Small Caps (0:10)
  • Relative Performance (2:23)
  • US Treasuries & Commodities – 7-10 Year US Treasuries, Gold, Crude Oil & Copper (3:30)
  • NYSE Bullish Percent Index & Percentage of Stocks Above Their 200, 150 & 50 Day Moving Averages Charts (5:49)
  • NYSE Advance Decline Line Charts (9:42)
  • US New Highs - New Lows Charts & Momentum Index (11:46)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Relative Strength Table (12:50)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Overview Diagram (13:22)
Subscribe to the Stage Analysis YouTube Channel for all the latest videos here: Subscribe to the stageanalysis youtube channel

This weeks moves in US stock market indexes and individual stocks confirmed what the market breadth indicators have been warning over the last month. However, the pullback has been much sharper than anyone could have predicted and so it looks like we've put in at least a medium term top imo, and not just a short term top, as there was a huge amount of technical damage done to the stock market indexes and individual stock charts, with almost half of the market having a breakdown of some kind this week. With stocks moving from Stage 2 straight into Stage 4. As many had closes well below their 30 week and 200 day MAs, and wiped out around half a years worth of gains or more.

So the question is, are we in for more selling, with a potential 1987 panic selloff after such dramatic falls in record time from the highs. Or are we near to a short term low that could produce a sharp bounce back in the stock market?

----------------

A regular look beneath the surface of the US stock market, featuring the key market breadth indicator charts for timing trading stocks and the stock market indexes, such as the NYSE Bullish Percent Index, the Advance Decline Line, the New Highs - New Lows etc and some custom breadth indicators of my own in order to determine what the "Weight of Evidence" is suggesting in terms of the US stock market direction and how to allocate your money.

This is done using the market breadth indicators that were highlighted in Chapter 8 of Stan Weinstein's Secrets For Profiting in Bull and Bear Markets Book – which was called: Using the Best Long Term Indicators to Spot Bull and Bear Markets.
 

isatrader

Senior member
2,954 129

Subscribe to the Stage Analysis YouTube Channel for all the latest videos here: Subscribe to the stageanalysis youtube channel

Quick Links
  • Timing the US Stock Market Using the Market Breadth Indicators – Introduction (0:00)
  • Major Market Indexes – S&P 500, Dow Jones Industrial Average, Nasdaq 100 & S&P 600 Small Caps (1:04)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Overview Diagram (4:12)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Relative Strength Table (5:28)
  • US Treasuries & Commodities – 7-10 Year US Treasuries, Gold, Crude Oil & Copper (6:55)
  • GOLD vs S&P 500 Ratio – 30 Year Chart (10:09)
  • US 10 Year Treasuries vs S&P 500 Ratio – 20 Year Chart (11:08)
  • NYSE Bullish Percent Index & Percentage of Stocks Above Their 200, 150 & 50 Day Moving Averages Charts (12:05)
  • NYSE Advance Decline Line Charts (15:40)
  • US New Highs - New Lows Charts & Momentum Index (17:03)
  • Cumulative Point & Figure Breakouts - Breakdowns Chart (19:13)
  • Overview of the Weight of Evidence (20:33)

The stock market saw another week of heavy selling, taking multiple indexes down to extreme levels, with liquidation type selling across the board, even in previous safe havens such as treasuries and spot gold. Although there was some respite with a strong relief rally on Friday at the end of the day, recovering around 10% in some of the major indexes.

However, we remain in a Stage 4 downtrend (for an explanation of the four Stages – see Stan Weinstein's classic book or visit the forum on stageanalysis.net, which has numerous examples to help learn the method), with only 7% of the stocks in the NYSE and 12% of stocks in the Nasdaq trading above their 200 day moving average, and only around 5% trading above their short term 50 day moving average.

The video also highlights some longer term charts, with 20 year charts of the NYSE Bullish Percent Index & Percentage of Stocks Above Their 200, 150 & 50 Day Moving Averages. Plus the 20 year chart of the US New Highs - New Lows to help give some context to where we are in comparison to other periods.

We may have put in a low, but also we might not have yet. As the extreme levels we are seeing in some of the market breadth charts were only seen around the end months of 2008. Which was a swing low, but not the ultimate low, which didn't come until 3 or 4 months later in March 2009. So although we've gotten to these breadth extremes much faster. We are probably in for a volatile ride for a while yet, with over 90% of stocks in Stage 4, as of this week, even with the bounce on Friday.

----------------

A regular look beneath the surface of the US stock market, featuring the key market breadth indicator charts for timing trading stocks and the stock market indexes, such as the NYSE Bullish Percent Index, the Advance Decline Line, the New Highs - New Lows etc and some custom breadth indicators of my own in order to determine what the "Weight of Evidence" is suggesting in terms of the US stock market direction and how to allocate your money.

This is done using the market breadth indicators that were highlighted in Chapter 8 of Stan Weinstein's Secrets For Profiting in Bull and Bear Markets Book – which was called: Using the Best Long Term Indicators to Spot Bull and Bear Markets.
 

isatrader

Senior member
2,954 129

Quick Links:
  • Timing the US Stock Market Using the Market Breadth Indicators – Introduction (0:00)
  • Major Market Indexes – S&P 500, Dow Jones Industrial Average, Nasdaq 100 & S&P 600 Small Caps (0:21)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Overview Diagram (3:52)
  • Sector Breadth: Percentage of Stocks Above Their 150 Day Moving Average – Relative Strength Table (5:10)
  • US Treasuries & Commodities – 7-10 Year US Treasuries, Gold, Crude Oil & Copper (5:51)
  • NYSE Bullish Percent Index & Percentage of Stocks Above Their 200, 150 & 50 Day Moving Averages Charts (7:45)
  • NYSE Advance Decline Line Charts (11:17)
  • US New Highs - New Lows Charts & Momentum Index (12:57)
  • Cumulative Point & Figure Breakouts - Breakdowns Chart (14:14)
  • Overview of the Weight of Evidence (15:45)
It was a strong week for the major stock market indexes with multiple stock index charts (including the S&P 500, DOW Industrials and the Nasdaq 100) all closing the week with a bullish engulfing candle pattern on the weekly charts. There were also positive moves in some of the short term Market Breadth charts, with NYSE Bullish Percent Index giving a Bull Alert Signal after its largest positive weekly move that I can remember. And some positives in the short term Advance Decline Momentum Index and McClellan Oscillator which both had breakouts from the their recent ranges back above their zero lines.

However, although there are some short term positives. The majority of medium and longer term market breadth indicators remain on bearish signals, with some like the percentage of stocks above their 150 day moving average at deeply oversold levels still. Which could take a while to resolve, as many stocks have fallen a long way below their moving averages in the past few weeks, and so there is a chance that the oversold state could remain in place for months before their is a medium to long term bullish signal – especially if stocks go into a choppy sideways phase from here.

----------------

A regular look beneath the surface of the US stock market, featuring the key market breadth indicator charts for timing trading stocks and the stock market indexes, such as the NYSE Bullish Percent Index, the Advance Decline Line, the New Highs - New Lows etc and some custom breadth indicators of my own in order to determine what the "Weight of Evidence" is suggesting in terms of the US stock market direction and how to allocate your money.

This is done using the market breadth indicators that were highlighted in Chapter 8 of Stan Weinstein's Secrets For Profiting in Bull and Bear Markets Book – which was called: Using the Best Long Term Indicators to Spot Bull and Bear Markets.
 
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