[isatrader]

Apologies for being late again, I can't seem to subscribe to the thread so missed this opportunity; but apart from seeing the logic in the answers the question as to whether the sector is in a stage 2 or stage 3 would depend on whether we could have been shorting this
Don't sell in a strong sector are the words
So our analysis has be on the sector chart and as Malcolm says, its stage 2 or a very early stage 3, but there's no indication of a flattening MA to suggest a 3 yet
Would we still be shorting this stock in this case?

No, this was not a good shorting candidate at the time, as although it was forming a Stage 3 top. It still had some resistance down to the $23 area, which can be seen clearer with the ichimoku cloud overlaid, but could also be seen just using the price from the mid 2012 consolidation range. As remember this stock had had a very strong but orderly Stage 2 advance over the previous year and a half and so would need a more time to work through the support before being shortable, as remember you only want to short the weakest stocks in the weakest sectors. AVD as you noted had a sector in a late Stage 2B / potential early Stage 3 phase, as it had made a lower swing high but still had a rising 30 week MA, and the market was also still reasonably strong in Stage 2B. So my point with this example was that even though it's in Stage 3B, it's not a good shorting candidate, and that investors that were still holding onto good gains from the Stage 2 advance would be very close to their stop loss if it hadn't already been hit on the earlier move into Stage 3A if they'd tightened up on the second lower high and so they should be considering exiting, as the risk of a breakdown was growing.