Weinstein Stage 1

miguel216

Does anyone know the screener configuration?
Weinstein Stage 1, please send me the parameters

markd

Weinstein's analysis depends on a sequence, or pattern, of events that occur over time, and not individual indicators crossing a threshold value. The scan engine is really designed for indicators, not patterns. Patterns vary too much in length between events and magnitude of price changes to be as reliable as indicator scans. Pattern scans will catch some valid patterns but also return a lot junk, while missing valid patterns that don't quite fit the scan.

That said, you can play around with looking for chart states that are characteristic of Stage 1.

For instance,

[exchange is NASD]

//The 52 week channel is at a 75 week high (there is buyer interest)

and [weekly Upper Price Chan (52) = weekly max(75, weekly Upper Price Chan(52))]

//The 52 week channel is equal the 52 week channel 13 weeks ago (price has been taking a break)

and [weekly Upper Price Chan(52) = 13 weeks ago weekly Upper Price Chan(52)]

//Price is above the 30 week MA (there has been enough buying to keep price off the lows, so price is in a range, not making new lows )

and [weekly close > weekly sma(30, weekly close)]

// The 30 week MA is rising, so the range hasn't cause loss of momentum

and [weekly sma(30, weekly close) > 3 weeks ago weekly sma(30, weekly close)]

I just made this up off the top my head after going back to Weinstein's book, and I haven't tested it, so you will probably want to fool around with the parameters. I'm guessing with the current market state you won't find too many hits. Tech or pharmaceuticals are probably the happiest hunting grounds.

Again, you may get some valid Weinstein patterns, but you are sure to get junk as well, maybe all junk, or maybe no hits at all. Test it out by back-dating the scan start date to maybe a year ago and see what that picks up. The results charts will be as of today, not the back-dated scan date, so you can see (with say a 15 month chart) which ones worked out and which didn't.

Also, you could pick some known winner charts (like NVDA) and see where Weinstein's stage 1 might have been in effect. Then see if you can get the scan to pick it up, or tweak the scan until it does.

lmkwin

Stage 1 follows Stage 4. Stage 4 is the downtrend stage. In Weinstein texts and discussions he uses the 30 week SMA for analysis along with other criteria. I believe, simply put:

In Stage 1 the price moves above and below the 30MA with the 30 going sideways for a period. (consolidation/transition)
In Stage 2 the price moves above and rarely gets below the 30MA from above. 30MA is moving up.
In Stage 3 the price moves above and below the 30MA with the 30 going sideways for a period. (consolidation/transition)
In Stage 4 the price moves below and rarely gets above the 30MA from below. 30MA moving down

One thing about the transition Stages, 1 and 3, is that the price can move briefly above and below rigid Price Channels.

I've found using Stochastics or PPO to be a pretty good guide on the stages.

Using a Weekly Full Stochastic 30,3,3 the stages fall into basic categories based on where they are vs where they were. You can use Fast or Slow Stoch as well.

Generally weekly Stochastic K% above the 50 level is Stage 2 or Stage 3. Stochastic K% below 50 is Stage 1 or Stage 4.

On the chart below the vertical green lines are where the StochK was above 50, indicating that the stock is in Stage 2 (advancing) or Stage 3 (consolidating AFTER Stage 2). The red lines are where the StochK moved below 50 into Stage 4 (declining) or Stage 1 (consolidating AFTER Stage 4).



Something that I put on all my line charts is the Zigzag indicator. This will draw a line connecting the high/low movements that exceed a fixed percentage of your choosing. The Solid Black Zigzag is set at 10%. You can visually see the higher and lower highs and lows pretty easily using the Zigzag. An uptrend is defined by higher highs and higher lows. A downtrend is defined by lower highs and lower lows. A consolidation will usually show as a disruption in that pattern. So in an uptrend, a lower low or lower high 1st appears, that is usually a sign that consolidation has started or is occuring.

You can use the Stoch in a scan. Stage 1 occurs AFTER Stage 4, so the StochK is below 50 for a period of time. As you can see, from the chart above, the QQQ had limited periods where it spent considerable time below 50 in the bullish period on the chart. Late 2008 to early 2009 and basically a year early 2022 to early 2023.

The bottom panel on that chart shows a Price Performance RS for QQQ:VTI. Notice how the Full Stochastic overlay can be used as well on the RS relationship. StochK below 20 and above 80 indicate new RS lows or highs for the period, as well as the line movement showing increasing or decreasing RS momentum.



Here's a shorter period of the chart with a Zigzag at 5% I also show the RSI 5 on the stoch panel and it can be used very similarly to the stochK with a RSI rising over 50 idea for entries in Stage 1 and 2 and possibly Stage 3.
The blue dashed line is a Zigzag set at 25% and the gold line is the 30SMA. The blue horizontal lines are Gerrald Appel's "magic numbers".

As far as a Stage 1 scan, something simple with the weekly Stochastic might be helpful.

//to capture a loose range of securities that had a low stochastic K level (stage 4)
and [4 weeks ago weekly min(20,weekly Fast Stoch %K(30,3)) < 30.0]

// to capture the ones that are moving up into stage 1 and early stage 2
and
[
[weekly Slow Stoch %K(30,1) x 20.0]
or [weekly Slow Stoch %K(30,1) x 25.0]
or [weekly Slow Stoch %K(30,1) x 30.0]
or [weekly Slow Stoch %K(30,1) x 45.0]
or [weekly Slow Stoch %K(30,1) x 50.0]
or [weekly Slow Stoch %K(30,1) x 55.0]

//you can uncomment the lines below to capture ones moving in a stronger stage 2
//or [weekly Slow Stoch %K(30,1) x 75.0]
//or [weekly Slow Stoch %K(30,1) x 80.0]
//or [weekly Slow Stoch %K(30,1) x 85.0]
]

rank by [weekly Slow Stoch %K(30,1)]

To find Stage 3's that have moved back into Stage 2 you would need to comment out the 1st line, comment out the x 20, 25, 30 lines and uncomment the 75, 80, 85 lines. Basically the 20-55 levels will capture the Stage 1 and early Stage 2 The 45-85 levels will capture the Stage 2 and possible Stage 3 congestion/distribution that turns into re-accumulation to move back into Stage 2.

I use something I call a Dynamic CSS pattern on a Point and Figure chart for my preferred selection method.

Just like Weinstein Stages, my "pattern" shows up in securities that have shown signficant distribution (Stage 4) and beginning to show significant Accumulation (Stage 1 and Stage 2). My public chartlist draws from several different chartlists that I create to try and put my review into a limited pool that is, something I refer to as, "formerly Stage 4" stocks.

Just my 2 cents on the topic. I like Weinstein.

azb

THANKS! ... Excellent writeup.

lmkwin

"The blue horizontal lines are Gerald Appel's "magic numbers"."

I should clarify, Gerald Appel's 'magic numbers' were between 8 and 154. I created an extension of the range to match with higher and lower priced issues.

Below is a reprint of an article discussing the 'magic numbers'. Below that is a parameter list for the Horizontal Line overlay I use on my charts. There are other technicians who say that the numbers ending in 5 and 0 are also levels that provide insight. To me, they are just horizontal lines that assist me in "seeing" the chart data a little better. They help to 'extend' the Volume by Price bars accross the chart for example.



ARE THERE REALLY SUCH THINGS AS “MAGIC NUMBERS” IN THE STOCK MARKET?

COULD BE. WHAT THEY ARE AND HOW TO USE THEM…

Magic numbers? As we said, “could be”. Could also be just our imagination. But, we have observed over the years that certain areas, time and time again, serve as resistance points for stocks moving up and as support levels for stock moving down -- acting, so to speak, almost as magnets for price moves. Doesn’t work all the time, of course. But often enough to pay attention.

CHARACTERISTICS OF MAGIC NUMBERS:

I have observed empirically over the years that stocks tend to find support, at least temporarily in certain price zones, and to stop advancing at those same price zones, at least temporarily. In fact, I frequently use these zones as selling and buying targets as a result of my observations.

These zones tend to be spaced roughly 15-20% apart from each other. Once a stock has passed through the zone, it generally moves rather rapidly, after perhaps a retracement to the top of the zone just passed, onto the next zone. Trading ranges tend to form between zones. Occasionally, false breakouts above these magic numbers do occur, but if the breakout is false, retracements back beneath the magic number are rapid, churning taking place near the top of the zone prior to a decline.

Breakout buyers might purchase issues as soon as they cross through a magic number, or upon the normal retracement back to the top of the zone. Very frequently, a quick 15% or so ride develops. It can, however, be very dangerous to purchase a stock immediately upon its attaining a magic number, unless and until a consolidation period has taken place. Better to await a reaction to the top of the previous magic zone.

WHICH ARE THE MAGIC NUMBERS?

Give or take a fraction, perhaps 1 or 2 points on either side, the higher the price stock the greater the variation, these are the magic zones I have observed.

8 - 20 ¼ - 44 - 88

10 - 24 ½ - 49 ½ - 99

12 ¼ - 28 ¾ - 55 - 110

14 - 33 - 65 - 130

16 - 38 ½ - 77 - 154

In other words, if a stock crosses 28 ¾, you can be fairly certain of its attaining a price objective of 32-33, particularly if the break above 28 ¾ seems at all decisive. Should the stock reach say 29 ¾, it may retrace back to the 28-29 area, but could be purchased then for the move to 33, given no other contraindications. The numbers, 24 ½ through 65 seem particularly significant -- many declines halting at the tops of those zones and advances halting likewise, but just beneath the tops.

By Gerald Appel
as written in Systems and Forecasts



My Magic Numbers parameter(extended) last upd 10-12-23
0.8,1,1.2,1.5,1.75,2.25,2.75,3.5,4.25,5.25,6.5,8,10,12.25,14,16,20.25,24.5,28.75,33,38.5,44,49.5,55,65,77,88,99,110,130,150,175,200,230,265,300,350,400,460,530,610,700,800,900,1050,1200,1380,1575,1800,2100,2400,2750,3150,3625

miguel216

Thank you very much, it has helped me a lot for my strategy, I am very grateful lmkwin, very good contribution.