Technical Analysis Lessons from Stan Weinstein.
In this article, the main focus will be on the best-selling book in technical analysis from Stan Weinstein “Secrets for Profiting in Bull and Bear Markets”, as well as his general teachings.
Not many things are known about his life. He likes to keep his private life, private.
Stain Weinstein holds a degree in economics, although he claims that he “put his degree on the side” during his career.
First published in 1988, the “Secrets for Profiting in Bull and Bear Markets”, has become a market classic in the field of technical analysis.
He is married and has three daughters.
Weinstein is famous for his “Stage Analysis”. Stan identified that historically, every asset follows the same price action cycle, and dived into four stages.
- Stage 1 — The price has been dropping for a while and finally builds up a base by following a sideways movement (consolidation) and by following the 200-day moving average. At this stage, negative news doesn’t affect the price as much. This stage is known as accumulation because this is the stage in which “smart money” is looking to build up positions. The overall sentiment is still bearish.
- Stage 2 — After moving sideways for a while, the volume starts growing exponentially, and the price breaks above the 200-day moving average and starts an upward movement. This is the ideal time for a trader/investor to open a position. This stage is known as “advancing”. The sentiment turns bullish.
- Stage 3 — At stage 3, the price creates another sideways movement accompanied by good news, which, again, does not really influence any price changes. The 200-day moving average follows the price into a sideways movement. This stage is known as “distribution”. the main difference from the first stage is that here the overall market sentiment is…