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Trading breakouts with stage analysis
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Trading breakouts with stage analysis

  #81 (permalink)
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isatrader View Post
Attached are the major charts for analysis. It was a reversal week for most of the charts, some at key support or resistance levels. So an interesting week ahead.

I would like to know which type of Indicator is the FORCE INDEX you use with a MA.......... becuase in Stockcharts is completely different:

Im trying to learn as mucho as i can with your graphics and Weinstein techniques.

Also i donde exactly from where the "Perfomance" comes from....... and normally i use divergenges with RSI or other Indicators.

Thanks.

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  #82 (permalink)
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I would like to know which type of Indicator is the FORCE INDEX you use with a MA.......... becuase in Stockcharts is completely different:

Im trying to learn as mucho as i can with your graphics and Weinstein techniques.

Also i donde exactly from where the "Perfomance" comes from....... and normally i use divergenges with RSI or other Indicators.

Thanks.

The force Index indicator I use is a custom variation of Elder's Force Index indicator which is widely available. It is simply a cumulative version of the indicator with a moving average overlaid to aid with entry and exit points. I don't believe that you can do it in Stockcharts.com because they don't have the ability to customise their indicators code. So you may need to use another charts package if you wish to create this indicator. Any decent end of day software program will have the ability to customise or you can try prorealtime.com which I know does have the ability to customise and is free for end of day charts.

The reason I've added this indicator to my charts is because volume is an integral part of the Weinstein method and I find the straight volume information isn't very clear. But I believe that my cumulative version of force index gives you a much better idea of the volume coming into or leaving a stock.

The Relative Performance indicator I use is simply a relative strength calculation of the stock versus the S&P 500. Chartmill have an explanation page on their site of how to calculate this which they call the Relative Strength Dorsey (RSD). Here's the link: ChartMill.Com | Articles on Technical Analysis Indicators and Screeners
Also on the same page is the explaination of how to calculate the Relative Strength Mansfield indicator. This is the Relative Strength indicator that is used in Stan Weinstein's charts throughout the book and is a combination of a moving average and the RSD indicator. I use this indicator also, but I only focus on whether it is above or below it's zero line and you can find it on my charts above the Relative Performance indicator. I call it the RS Mansfield Crossover and when it crosses above zero it is marked by a green line and when it crosses below zero it is marked with a red line. So it is very simple to see whether the stock is outperforming or under performing the S&P 500 at a glance.

Stan Weinstein's method requires you to look at the volume of stock when it breaks out and also the relative performance of the stock versus the market and it's peers. So I've customised my charts to make that the easiest for me to do, but that doesn't mean you have to use the same tools that I do, but if you are following the method, then you do need to look at the volume and relative strength (performance) versus the market in some fashion that makes it easiest for you to understand.

I'd recommend reading the book again at least once and really studying each section like you would for an exam. Take notes; do the quizzes at the end of each section, and try to build your understanding of the method up. Replicate Weinstein's charts from the book which is fairly simple as he has the Relative Strength Mansfield indicator which I gave the link for the calculation above and then the volume below that. That and a 30 week weighted moving average on a plain chart is all it is. So get that setup and see how you go to start with as that is all you need for the method.

"Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill" – Reminiscences of a Stock Operator.

Last edited by isatrader; February 18th, 2012 at 07:42 PM.
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  #83 (permalink)
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Major charts for analysis


Attached is the updated major charts for analysis. The US 30 year Treasuries is the key one for me to watch as the price is sitting exactly on the 30 week weighted moving average after a fairly lengthy consolidation period since the September 11 high. I'm rating it Stage 2B- now as it's right on the cusp of becoming Stage 3A if it breaks down and closes below the $140 level or it could pivot on the moving average breakout into a continuation move. However, it's given a few more negative signs on the weekly chart as the Mansfield relative strength has crossed into negative territory this week and the cumulative volume has moved below it's moving average for the first time since it crossed above it in March 2011 indicating that volume is beginning to slowly leave the 30 year Treasuries. Finally relative performance versus the S&P 500 has given a negative signal by moving below it's October low.

"Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill" – Reminiscences of a Stock Operator.
Attached Thumbnails
Trading breakouts with stage analysis-spx_weekly_17_2_12.png   Trading breakouts with stage analysis-ndx_weekly_17_2_12.png   Trading breakouts with stage analysis-gc_weekly_17_2_12.png   Trading breakouts with stage analysis-hg_weekly_17_2_12.png   Trading breakouts with stage analysis-cl_weekly_17_2_12.png   Trading breakouts with stage analysis-us_30yr_treasuries_17_2_12.png   Trading breakouts with stage analysis-ty_10yr_treasuries_17_2_12.png   Trading breakouts with stage analysis-dx_dollar_index_17_2_12.png  
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  #84 (permalink)
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isatrader View Post
Attached is the updated major charts for analysis. The US 30 year Treasuries is the key one for me to watch as the price is sitting exactly on the 30 week weighted moving average after a fairly lengthy consolidation period since the September 11 high. I'm rating it Stage 2B- now as it's right on the cusp of becoming Stage 3A if it breaks down and closes below the $140 level or it could pivot on the moving average breakout into a continuation move. However, it's given a few more negative signs on the weekly chart as the Mansfield relative strength has crossed into negative territory this week and the cumulative volume has moved below it's moving average for the first time since it crossed above it in March 2011 indicating that volume is beginning to slowly leave the 30 year Treasuries. Finally relative performance versus the S&P 500 has given a negative signal by moving below it's October low.

@isatrader

Are you using the Pristine Trading Method as they use stage analysis.

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  #85 (permalink)
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@isatrader
Are you using the Pristine Trading Method as they use stage analysis.

No, I'm forward testing Stan Weinstein's Stage Anaylsis method from his 1988 book Secrets for Profiting in Bull and Bear Markets.

"Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill" – Reminiscences of a Stock Operator.
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Current Open Trades

A reasonable week for the portfolio as it rose 0.25% which was only a little bit less than the S&P 500's 0.33% gain, so it was fairly in line with the broad market. I've added more cash recently and doubled the size of the test portfolio account. Which is still very small, but I think a gradual build up is the sensible way to go as I get more confident with the method and I can see the potential from my results so far of this becoming my main trading method. But I want to take my time to learn and give it the time it needs.

With the new cash injection into the account and my growing understanding from my studies over the last year, I'm now able to move onto the next phase of my test, which is to test the short term trader method alongside the investor method. There is a lot less information in the book on the trader method as the main focus is the longer term investor method, and there's a lot more discretionary elements, but the entry points are the same, so I'll be basing it on what information I have to work from.

I added two new trades this week to the portfolio. Caterpillar (CAT) was added on 2/22/12 at 115.85 and Premier Oil (PMO.L) was added on 2/24/12 at 448.01. CAT made a Stage 2 breakout to a new high, whereas PMO.L moved into early Stage 2 by breaking above it's recent high and back into last years resistance range.

PMO.L adds a much needed trade from the energy sector, but as CAT falls under industrials I've now got four in that sector and need some more diversification into the other sectors where I'm under weight. Basic Materials is my next likely sector pick, but I'm considering playing copper directly if it makes a Stage 2 breakout above $4. The other sectors that I have no exposure to are Health Care and Financials. Health Care is in much better shape than Financials so that would likely be where I'd look following Basic Materials.

Current Trades
Entry DateTickerDescriptionSectorLong/ShortEntry PriceCurrent PriceEntry StageCurrent StageATR(200) Percent
10/27/11SESpectra EnergyXLUL29.331.7092A24.30%
11/1/11RR.LRolls RoyceXLIL678.85810.072A27.48%
11/25/11RAIReynolds AmericanXLPL40.0641.242A21.74%
11/27/11GBP/EURPound / Euro-L1.163601.18061122.10%
12/9/11YUMYum brandsXLYL58.2665.532A26.01%
12/16/11DUKDuke EnergyXLUL21.0821.09220.04%
1/17/12ADPAutomatic Data ProcessingXLIL55.1353.802A2A-1.34%
1/18/12^NDXNasdaq 100XLKL2403.22601.62A24.53%
1/20/12UNPUnion PacificXLIL112.45112.642A20.07%
2/14/12GBPUSDPound / US Dollar (Hedge)-L1.568231.589814B-4B-1.96%
2/22/12CATCaterpillarXLIL115.85115.972A2A0.04%
2/24/12PMO.LPremier OilXLEL448.01448.962A2A0.08%

"Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill" – Reminiscences of a Stock Operator.
Attached Thumbnails
Trading breakouts with stage analysis-cat_weekly_24_2_12.png   Trading breakouts with stage analysis-pmo_weekly_24_2_12.png   Trading breakouts with stage analysis-open_trades_charts_24_2_12.png   Trading breakouts with stage analysis-open_trades_24_2_12.png  

Last edited by isatrader; February 24th, 2012 at 07:57 PM.
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  #87 (permalink)
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US Industry Sectors

Attached is the latest US Industry Sector charts for analysis

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"Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill" – Reminiscences of a Stock Operator.
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Stan Weinstein Latest Interview

Here's the link to the latest interview given by Stan Weinstein: Technician Stan Weinstein: Outlook for Stock Market Remains Positive; Bullish on Gold As Well Also, Ryan Puplava with the Market Update and Rob Bernard with the Fixed Income Report | James J Puplava CFP | FINANCIAL SENSE that someone on my discussion thread found. The interview starts after 10 minutes or so of the recording.

"Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill" – Reminiscences of a Stock Operator.
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  #89 (permalink)
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Major charts for analysis

Attached is the updated major charts for analysis. Crude Oil (CL) was the out performer last week with a breakout move up to almost $110. Treasuries were fairly flat again and continue to hover around the 30 week WMA which is flattening out and would likely turn down if the price broke below the recent range for a few weeks. Gold is another interesting chart as it made a continuation short term breakout within it's huge range since last summer, however in the short term it has resistance at 1800 to break through, but to become a longer term buy again it needs to close above last years high around 1925 as Stan mentioned in the interview lplate found.

The S&P 500 made an attempt to reach last years high last week and fell just short on Friday of reaching it. However, it did make another higher high and lower low on the weekly chart, as did the Nasdaq 100. So although the short term correction/consolidation seems likely, the price action is yet to confirm it. Stan mentioned in the interview a break of the 1340 level for a short term correction to occur and until then price action is still positive. So I'm watching for either a breakout to a new high or a pullback into the lower 1300's on the S&P 500.

Copper (HG) made a nice pivot last week off of the $3.70 support from the October 2011 short covering rally high. It's forming a small Stage 1 range above that support level between $3.70 and $4.00 and I'm looking for a Stage 2 breakout above the $4.00 level to get long again personally.

Finally, the Dollar Index (DX) made a move down towards it's trendline support this week and closed very close to it with the daily price making it's lowest close since November 2011. This is an important one to watch this coming week as if it continues lower then the commodities such as Gold and Copper will get a further boost, but if it reverses it could aid the bears desperate for a correction.

So a very key week ahead as a lot of the charts are at critical support and resistance levels. Remember to follow the price action and not your opinion.

"Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill" – Reminiscences of a Stock Operator.
Attached Thumbnails
Trading breakouts with stage analysis-spx_weekly_24_2_12.png   Trading breakouts with stage analysis-ndx_weekly_24_2_12.png   Trading breakouts with stage analysis-gc_weekly_24_2_12.png   Trading breakouts with stage analysis-hg_weekly_24_2_12.png   Trading breakouts with stage analysis-cl_weekly_24_2_12.png   Trading breakouts with stage analysis-us_30yr_treasuries_24_2_12.png   Trading breakouts with stage analysis-ty_10yr_treasuries_24_2_12.png   Trading breakouts with stage analysis-dx_dollar_index_24_2_12.png  
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  #90 (permalink)
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Current Open Trades


I had a good week this week and finished 0.78% higher week on week and outperformed the S&P 500 by 0.5% which only managed 0.28% this week. However, I noticed some changes in the portfolio this week with the four stocks that were just above breakeven last week moving to negative territory. So my gain was down to only a few trades mainly including Rolls Royce, YUM, Nasdaq 100 and GBP/EUR - which is slightly concerning me as I need to manage my risk and currently nearly 25% of the profit is coming from Rolls Royce. This would have been slightly less if I'd taken a full position size in YUM which is the second best performer, but I was being cautious when I entered it as it needed a bigger stop loss, so I used a smaller position size to compensate and it hasn't pulled back so there's been no opportunity to complete the position so far.

So my question to myself here is, do I need to change anything? I think I need to spend some time over the weekend reviewing the individual charts and then doing some broader research as well including looking at the breadth charts to refocus again and feel confident in the trades I have.

Anyway, enough rambling for now. Here's the trades table and the individual charts so I can review them.

Current Trades
Entry DateTickerDescriptionSectorLong/ShortEntry PriceCurrent PriceEntry StageCurrent StageATR(200) %Grade
10/27/11SESpectra EnergyXLUL29.331.4592A23.86%A+
11/1/11RR.LRolls RoyceXLIL678.85822.062A28.13%A+
11/25/11RAIReynolds AmericanXLPL40.0642.032A22.90%A+
11/27/11GBP/EURPound / Euro-L1.163601.19935124.41%A+
12/9/11YUMYum brandsXLYL58.2666.242A26.60%A+
12/16/11DUKDuke EnergyXLUL21.0821.0222-0.21%D
1/17/12ADPAutomatic Data ProcessingXLIL55.1354.422A2A-0.72%E
1/18/12^NDXNasdaq 100XLKL2403.22644.52A25.52%A+
1/20/12UNPUnion PacificXLIL112.45110.8392A20.61%E
2/14/12GBPUSDPound / US Dollar-L1.568231.583724B-1A1.41%B
2/22/12CATCaterpillarXLIL115.85112.412A2A-1.14%F
2/24/12PMO.LPremier OilXLEL448.01435.692A2A-1.00%F

"Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill" – Reminiscences of a Stock Operator.
Attached Thumbnails
Trading breakouts with stage analysis-se_weekly_2_3_12.png   Trading breakouts with stage analysis-rr-l_weekly_2_3_12.png   Trading breakouts with stage analysis-rai_weekly_2_3_12.png   Trading breakouts with stage analysis-gbpeur_weekly_2_3_12.png   Trading breakouts with stage analysis-yum_weekly_2_3_12.png   Trading breakouts with stage analysis-duk_weekly_2_3_12.png   Trading breakouts with stage analysis-adp_weekly_2_3_12.png   Trading breakouts with stage analysis-ndx_weekly_2_3_12.png   Trading breakouts with stage analysis-unp_weekly_2_3_12.png   Trading breakouts with stage analysis-gbpusd_weekly_2_3_12.png  

Trading breakouts with stage analysis-cat_weekly_2_3_12.png   Trading breakouts with stage analysis-pmo-l_weekly_2_3_12.png   Trading breakouts with stage analysis-open_trades_2_3_12.png  
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