SEPA
1. Identify Trend template
2. Fundamental Scan-- growth Sales / margins, relative strength
3. Leadership
4. Manual Review
Influenced by Weinstein
- Every super stock starts big performance in stage 2.
Avoid buying stage 1 no matter how good the fundamentals may be.
Stage 1 characteristics:
- -- price oscillates around 40 week / 200 dma
- Can last years
Goal is not to buy cheapest price-- its to buy the right price-- we want stocks that move quickly after you buy them.
Transition from 1 to 2:
Stage 2 will show volume--- should always be a rally of 25-30% before you conclude Stage 2 has begun.
Transition Criteria
Series of higher lows, above 150 and 200 ema
Weekly Charts
Large volume spikes on up weeks
in contrast to low volume pull backs.
Stage 2 Characteristics:
>40Week and 40 week ema in uptrend
Staircase pattern-- clear uptrend
Stage 2/ 3 transition -- VOLATILITY increases
Major price break on volume
200 DMA flattens
Stage 4: capitulation --
price breaks
Conclusion-- Big money is identifying when stage 2 begins
Ride the waves
Within a trend (tide) there will be short term oscillation (waves)
There can be basing 5-25 weeks in a stage 2
Base count-- should stair case up a stage 2, stock typically has 3 to 5 bases.
You want to get in when institutional money is getting in.
When the leader sneezes the industry catches a cold
Look for contraction areas:
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