[isatrader]

Hello everybody,

I have a quick question.

On page 13 in his book, Stan writes that the 10-week MA is best for traders to use. On the next page however, he writes that no stock should be shorted when its above its rising 30-week MA. Does this mean that for a trader, this should be above its rising 10-week MA? And no stock is a buy when it's below it's 10-week MA?

I think you're getting yourself mixed up there with the MA's, as that doesn't mean that no stock is a buy when it's below it's 10-week MA, as it's referring to the 30 week MA and not the 10 week MA.

Basically when using the trader method and looking to go long the stock should ideally be above it's 10 week MA and also above a rising 30 week MA. And if looking to short then the stock should ideally be below it's 10 week MA and also below a declining 30 week MA.

So:
never go long a stock that's below a declining 30 week MA
and
never short a stock that's below a rising 30 week MA

Those simple guidelines will keep you out of a lot of bad trades.

For a more indepth roundup of what the method looks for see the Stage Analysis Breakout Quality Checklist thread.