[isatrader]

I have had this thought bothering me and so I am going to ask it. I understand we have Stage 1, 2, 3, 4 but does EVERY stock go through an A & B eg. 2A then 2 then 2B. Does a stock ever skip a phase? Like going from 1B to 2, skipping 2A.

It's an important question and something I was confused about at first when I was introduced to the sub-stages. The answer is no, every stock does not go through an A and B stage. In fact, some stocks skip the major stages as well, as for example you don't always get a Stage 1 base, as a sharp short covering rally can sometimes get momentum and just make a V shape bottom and move straight from Stage 4 into a Stage 2 advancing phase. This would play out with the stock looking as if it's moving into Stage 1A, but then just continuing higher on buying momentum, and so no Stage 1 base would be present on the chart.

This is why I continue to emphasize that the most important thing to learn first is to be able to visually identify the Stages, as then if a sub-stage is very short or skipped altogether, you can quickly identify it and take action. As if it's at the other end of the scale and the stock you own is in Stage 2B (late in Stage 2) and then drops sharply into Stage 4A (early in Stage 4), without forming a Stage 3 top, then you need to make decisions more quickly about taking profits and whether to wait until your trailing stop loss is hit or not etc.

Apple (AAPL) is a really good example of this occurring, as it moved from being in Stage 2B at it's peak near 700 down for eight straight weeks into Stage 4A without forming a Stage 3 top.

So think about the A and B stages in a different way. "A" is early in the Stage, and "B" is late in the Stage - so use your judgement and remember that Stage 3 tops and Stage 1 bases especially, aren't always going to go through the full range.

I hope that make sense.