RE: Stage Analysis Beginners Questions
(2021-05-29, 04:13 PM)isatrader Wrote: Industry Group Relative Strength is critical, as well as the four major components of the method of Price action, Volume Increase, Relative Strength versus the S&P 500 and no near Resistance/ Plus never buy stocks that have had big Stage 4 declines. Focus on those that have only had brief a Stage 4 and recovered back to Stage 1 quickly. If Stage 4 decline is more than 6 months then avoid. So stick to stocks breaking out of big bases on a large volume surge (ideally the most volume on the chart). Minimum 6 months+ for bases, ideally longer, and that will weed out the laggards.
I'd add that scanning for very strong volume can show up not many stocks with good volume if market breadth is weak and it picks up considerably when the breadth is stronger. So if you start screening this way when breadth is weak it can appear that few stocks follow the pattern set out in the book. Also, that stocks can rise strongly on no noticable volume increase confuses the issue as well.