[isatrader]

I've marked up an up to date chart of the stock, which was AVD (American Vanguard) which is in the $DJUSCX (Specialty Chemicals) sector, and I've highlighted the point that it was at on the previous chart I showed for you to analyze with a vertical grey line, so you can see what happened next to the price and the relative performance and volume.

AVD was below a declining 30 week MA with around average volume for it. The relative performance was weakening below a flattening zero line, and it had formed some near term resistance with a number of lower highs and was testing the lows of the Stage 3 range which had been forming for six months. And hence it would be given a Stage 3B rating, which means late in Stage 3 as it had become increasingly toppy, and so if you were still in it then you should use rallies for at least partial selling at that Stage.

   

The sector chart was in Stage 2B- / Stage 3A, as it was still above a rising 30 week MA, although it had made a lower high, but had managed to hold from breaking down on a test of the swing low and had recovered back above the 10 week MA. Relative performance was rising, but below the zero line, and so whether a Stage 2 consolidation or the beginnings of Stage 3 it was in a neutral position until it either broke out to new highs or broke down below the swing low.

The S&P 500 chart was much more clear cut in Stage 2B, near to it's highs and still above strongly rising 10 and 30 weeks MAs.

So the final question was would you buy this stock? And so the answer is no, as the time to buy stocks for an investor is at the Stage 2A breakout point in May 2011 and on the initial Stage 2A pullback to test the breakout in August 2011. And for a trader the ideal time to buy is on the Stage 2 continuation breakout, and so as AVD was in late Stage 3B with deteriorating technicals; you wouldn't consider buying it at that Stage, as it breaks numerous items of Stan's Don't Commandments and most of all the fundamental rule of the method that you shouldn't buy stocks in Stages 3 or 4. Also, if you already held it you would be looking for an opportunity to sell your remaining holding on any rally before a potential breakdown into Stage 4.

Another perspective you would consider once you'd determined that the stock was in Stage 3B, is whether you should short it. And initially, it looks to have potential with it's deteriorating technicals, but one piece of the puzzle isn't quite there yet, as the support from the previous consolidation is still fairly recent and so becomes a source of resistance to any down move until it's cleared. This can be seen more clearly on the chart with the ichimoku cloud overlaid (which is a great way of highlighting the dynamic support and resistance zone), that shows that it's still trading in the resistance zone, and so would likely need more time for the resistance to weaken or a heavy volume sell off in order to break through early.

   

So lets look at the final up to date chart which shows that nine weeks later AVD broke down into Stage 4A, after first rallying back up to the declining 30 week MA and rolling over. Now almost a year later it's still in Stage 4 and has formed a much larger head and shoulders top, which if it makes a further Stage 4 continuation breakdown below the major support that's formed, it would move into a more serious Stage 4 decline with no support until around the mid teens, although that's quite old now.