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How Stage Analysis can improve your Trading & Investing ๐๐
Thread๐งต
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Weinstein is a veteran technical trader who has over 50 years of experience and now works as an advisor for institutional investors.
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This book is incredibly well written and gets into the nitty-gritty of his processes in the markets.
https://t.co/VQB2EbDUOU
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Stage Analysis is used to identify the longer-term trend of a stock or index. There are 4 different stages ๐
The Basing Area, Advancing Phase, The Top Area, and Declining Phase.
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This stage occurs at the bottom of a longer term base or during the first primary base a stock forms after itโs IPO.
During this stage the stock is oscillating under a declining 30 week moving average.
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โ Buyers and sellers start to balance each other out
โ There is a volume dry up, signaling major selling has subsided
โ Volume will start to increase towards the end of the period without significant price concession
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This is the stage where we should be looking to take long positions in a stock or index. Buyers are now in control and the balance of power is now in line with demand.
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Investors should watch for the first breakout on volume just as the stock begins a new Stage 2 uptrend.
Investors can buy the breakout or the retest of the pivot point.
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Traders should look for bases within an existing Stage 2 uptrend and focus on breakouts on volume.
Intermediate term traders can also use investor buy points.
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โ Breakout above the resistance zone & 30 week MA on big volume
โ Post initial breakout, there is usually a retest of the breakout point
โ 30 week MA starts turning up shortly after the breakout
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Note how $PTON exhibited all of the key traits we are looking for to start a Stage 2: Advancing Phase.
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Note how massive volume came into the stock and solidified itself above the 30 week moving average, followed by a retest of the 30 week moving average and subsequent move higher.
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This stage occurs during longer-term bases in a stockโs lifecycle after a Stage 2 Uptrend. The stock is oscillating up and down around the 30-week moving average, showing there is no clear uptrend but also no clear downtrend.
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โ 30 week MA starts flattening out w/ price chopping above & below this line
โ Balance has returned between buyers & sellers, leading to sideways action
โ News/earnings are exciting, but we have to wait for a trend
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Clearly, buyers were met with equal force from sellers and price oscillated above and below the 30 week moving average.
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It is very normal to see many Stage 2's and Stage 3's in a row in a winning stock.
$SHOP is a great example of this โฌ๏ธ
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This stage occurs when sellers take control and outlast the buyers. Price will begin to trend below a declining 30 week moving average.
The big money is lost going/staying long in a Stage 4 decline.
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โ Price breaks below the bottom of the support zone
โ Don't need overwhelming volume to the downside to enter a Stage 4
โ No matter how the fundamentals appear, the price trend is all that matters
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The active trader/investor must take note of the slope of the 30 week moving average. Every time the 30 week moving average flattens itself out, the stock is set to make a trend decision.
Be ready to act if it enters either a Stage 2 or Stage 4.
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https://t.co/9BvJpXJ52m
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https://t.co/itFdReYCRE
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https://t.co/Q9MjxVAAgL
More from TraderLion ๐ฆ
More from Traderlion
The marketโs best investors have made millions from the simple saying:
โBuy right, sit tightโ
Sounds simple - but what does โbuying rightโ even mean?
Use TraderLion's 10-Step Ultimate Guide to buying right ๐
By the end of this thread, you'll know how to:
1. Build an objective list of buy criteria
2. Have 10+ real world examples to study
3. Increase your win rate.
4. Increase your profitability
Let's dive in!
Buy Rule #1: The General market must be in an uptrend.
3 out of every 4 stocks follow the market trend both to the upside and to the downside.
This means that if you are buying a breakout in a downtrend, it already has a 75% chance of failing!
It doesn't matter if the stock is in a leading group with an impressive RS line and strong fundamental story.
At the end of the day, market direction is the MOST important factor!
Here's an excerpt from How To Make Money In Stocks by stock market legend William O'Neil:
Here's another video by @richardmoglen that will help you determine if the stock market is in a downtrend:
https://t.co/shD5OjkP6s
Let's move on to #2.
โBuy right, sit tightโ
Sounds simple - but what does โbuying rightโ even mean?
Use TraderLion's 10-Step Ultimate Guide to buying right ๐
By the end of this thread, you'll know how to:
1. Build an objective list of buy criteria
2. Have 10+ real world examples to study
3. Increase your win rate.
4. Increase your profitability
Let's dive in!
Buy Rule #1: The General market must be in an uptrend.
3 out of every 4 stocks follow the market trend both to the upside and to the downside.
This means that if you are buying a breakout in a downtrend, it already has a 75% chance of failing!
It doesn't matter if the stock is in a leading group with an impressive RS line and strong fundamental story.
At the end of the day, market direction is the MOST important factor!
Here's an excerpt from How To Make Money In Stocks by stock market legend William O'Neil:
Here's another video by @richardmoglen that will help you determine if the stock market is in a downtrend:
https://t.co/shD5OjkP6s
Let's move on to #2.