[marry123]

Hi Isa,

I did not buy BOS.TO (attached) but for educational purposes would the proper entry longs have been in April of 2018 right when price broke above the SPX price line AND volume was much greater than average (on weekly) AND price just broke above the 30 MA around low 10 (or would one needed to have waited for a break of resistance of around 12.80 where the top blue horizontal line is to enter long-double top around April and then July around 12.80 zone)?

I am also not clear as to the second entry long (this April) when price again broke above the SPX price line on very large volume on weekly AND price broke above the 30 MA (roughly low 8 entry long)? Or would one needed to have waited for price to break above the double top resistance around 10 (bottom blue horizontal resistance line)? 

Is it wrong to just buy as long as price breaks 30 MA that is not falling AND price breaks above the SPX price line on above average weekly volume even though there is resistance above? I would have bought under these conditions and not waited for price to break above resistance of around 12.80 in 2018 and around 10 this month.


Thanks for your view.

For me there should never be any near term resistance to deal with. See 96-97 in the book about "The less resistance the better", as it really is a critical component of the method and is ignored at your peril.

In the case of BOS.TO in 2018 it wouldn't have been high on the list of candidates at its Stage 2A breakout point, as on the actual breakout week the broad market was struggling in Stage 3. And hence you would have been focusing on only the very highest quality stocks at that time that met all of the key requirements, of which BOS.TO didn't.

BOS.TO had only made a small four month base after the initial Stage 1 basing attempt had failed. And so on the Stage 2A breakout it was only just moving back into that higher base zone, and not to new six month highs as we'd ideally like to see as a minimum to be clear of near term resistance.

The volume did come in on the following weeks however, and it did manage a 40% rally before the pullback brought it all the way back and it failed completely. But I think you should be able to see from the chart below that it would not have been an A+ candidate at the time, and so you would have likely moved on to better quality setups.



As to today. We are in Stage 4 in the stock market indexes, and so the method says that you shouldn't be going long any stocks unless they are showing exceptional characteristics. See Stan's Don't commandments on page 129. Rule No.1 is: Don't buy when the overall market trend is bearish.

Thanks Isa, I very much appreciate the education. Yes, I am not looking long stocks given the spx is in stage 4. What do you make of QQQ breaking above its 30 MA on the weekly (quite the moves in AMZN and TSLA)? I guess this is probably not meaningful until the SPX and DJIA also follow above their 30 MAs.