Stage Analysis Video Training Course

Blog

Market Breadth

“If I could impress on you one fact, it would be that at least 75 percent of the risk in any stock is associated with the market and sector. If the overall market is not supporting higher prices, very few stocks you own, if any, will do well.”
Thomas J. Dorsey – Point and Figure Charting

Being able to identify the four Stages visually on individual stock charts is a crucial skill when using the Stage Analysis method. However, the major stock market index charts, such as the S&P 500, the Dow Jones Industrial Average, and the Nasdaq 100, are all just averages of the stocks within them, and are also distorted by the weighting of stocks.

For example, currently the top 10 stocks in the Nasdaq 100, make up 54% of the weighting. So over half of the Nasdaq 100s price action is determined by just 10% of the stocks. Therefore, you could have a scenario where 90% of stocks in the index are in Stage 4 declines, but the index chart could still look reasonably healthy in Stage 2, as the top 10 stocks are still in Stage 2 advances and holding the index up.

This is where market breadth indicators come into play. As they give you an unbiased look at what’s really going on under the surface of the stock market, and so can help you to determine the actual Stage that the market index is in.

There are many different data sources that you can use to get market breadth information, and each have their own strengths and weaknesses. But in the Stage Analysis method, no market breadth information is used in isolation. Instead, we use what is known as the Weight of Evidence approach, where all of the different market breadth information is combined to determine the overall strategy that should be used, and so can help you to determine whether you should be using a more cautious strategy or a more aggressive one.

Stan Weinstein was famous for using over 50 different indicators to determine the Weight of Evidence. But retail investors shouldn’t be put off, as you can achieve a similar effect by using a much smaller, core set of market breadth indicators, to create your own Weight of Evidence.

Stage Analysis Members Video – 21 December 2022 (56mins)

The Stage Analysis members midweek video discussing Gold, Silver & The US Dollar, the S&P 500 & Nasdaq 100 Equal Weight Comparisons, short-term market breadth indicators and the US watchlist stocks in more detail with live markups of the individual stocks and group themes.
Read More

IBD Industry Groups Bell Curve – Bullish Percent

The IBD Industry Groups Bell Curve shows the distribution of the 200 IBD Narrow Industry Groups on a point and figure buy signal, plotted as a bell curve and includes the data tables of the 200 groups in relative strength order and the position changes over the last 1, 2 and 4 weeks.
Read More

Stage Analysis Members Video – 11 December 2022 (1hr 5mins)

The Stage Analysis members weekend video discussing the market breadth charts to determine the weight of evidence, IBD industry group bell curve – percentage above 30 week MA and the bullish percent, industry groups relative strength, market indexes, and the US watchlist stocks in detail on multiple timeframes.
Read More

IBD Industry Groups Bell Curve – Bullish Percent

The IBD Industry Groups Bell Curve declined by -6.50% this week, dropping back into the lower half of the Stage 1 zone (between 40% and 60%). The amount of groups in Stage 4 increased by +22 (+11%), and the amount of groups in Stage 2 decreased by -31 (-15.5%), while the amount groups in Stage 1 or Stage 3 increased by +9 (+4.5%).
Read More

S&P 500 Update and the US Stocks Watchlist – 6 December 2022

The S&P 500 closed below its short-term 21 day EMA and also the horizontal Volume Point of Control (VPOC) today, as it tested towards the lows of the two most recent swing lows and the early November swing high. But found a small amount of support in the final few hours to close off of the low of the day and just above the recent swing low.
Read More