The week moving average flattened out in and the stock began oscillating above and below the moving average. The week moving average also loses its upward slope and starts moving sideways. A base is simply a period where the stock moves mostly sideways instead of trending higher or lower. Week 6 video analysis most important thing to keep an eye on is when the overall market transitions into a Stage 4 decline.
Both gravity and fear bring things down in a hurry. Citigroup C broke down below the week moving average in the middle ofthen retested the week moving average and failed to move back above it in October While the stock moves Week 6 video analysis, most of the advance should occur above a rising 30 week moving average.
A long base will establish a more significant support level, and the ownership of the stock will transfer from weak hands to strong hands. Ford Motor F from the previous example broke out of its Stage 1 base on a big increase in volume and continued to trend higher above the 30 week moving average.
This creates a simple strategy to follow when trading the market. Since most stocks will be declining along with the rest of the market at that point it would be prudent to get out of long positions and stay conservative while the market declines. The stock will either breakdown into a Stage 4 decline after this stage, or after a consolidation break back into another Stage 2 advance.
The week moving average then began sloping downward and the stock began a long Stage 4 decline. The price of the stock moved above and below the flattened week moving average during this time.
For example you can use the week moving average as an area to trail a stop loss under. The reason is the stock can continue to be in the Stage 1 base for months to years at a time. Citigroup C formed a Stage 3 top in when the week moving average flattened out.
Stage Analysis of the Overall Market Since the majority of stocks rise and fall along with the rest of the stock market, it is very important to know the stage the major market indexes are in.
This is especially important since these formations usually lead to very extensive and long running advances. The longer the horizontal base the better.
Notice how the week moving average flattened out towards the end of the base. From the breakout point the stock continued to trend higher above the week moving average. Stage Analysis helps traders identify and stay invested in long term trends in the market.
The price action in the stock usually occurs much more above and below the flattened 30 week moving average than it did in Stage 2. The stock should also break above the week moving average during the breakout.
Stage Analysis is definitely not a system for day trading. Actions to be taken during each Stage are also discussed. Most stocks will trend along with the rest of the market. Actions to take in this stage: Whether the weekly price and the week moving average are trending higher, lower, or sideways determines the specific stage.
Without a big increase in volume the breakout is more vulnerable to being a false breakout, and the market moving back down into a Stage 1 base. Advancing stage The stock breaks out of the horizontal base and begins advancing over a period of time. When the overall market is in a Stage 4 decline, most stocks will also be in a Stage 4 decline and that is a period where a trader should play it safe instead of facing potentially devastating losses in the market.
Volume usually dries up initially in Stage 1, but can expand later in the base as more buyers come in. The week moving average begins a long slope downward. Stage Analysis Background Stage Analysis is a strategy for longer term trend trading.
Declining stage The stock breaks down below Stage 3 trading range and below the week moving average in Stage 4, and continues to decline mostly below the 30 week moving average. The basing in Stage 1 can go on for months to years Stage 2: This will validate the breakout into Stage 2 if the entire sector moves with the stock.
The price action in the stock usually oscillates above and below the week moving average while forming the horizontal base.
The breakout needs to occur on increased volume, otherwise it might not be sustainable. Basing stage The stock forms a long horizontal base on the chart. Your capital will be tied up in a stock that is going nowhere if the stock stays in Stage 1 for a long period of time.Remy Ma spoke on the Cardi B and Nicki Minaj altercation at Haper's Bazaar's New York Fashion Week party.
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