Background
Stan Weinstein's 1988 book 'Secrets for Profiting in Bull and Bear Markets' introduced Stage Analysis to retail traders — a framework for classifying every stock into one of four stages (basing, advancing, topping, declining) based on the 30-week moving average. His approach is perhaps the most accessible and practical long-term timing methodology ever published.
Core Methodology
Weinstein's Stage Analysis classifies all stocks into four stages based on the 30-week (150-day) moving average: Stage 1 (basing/accumulation), Stage 2 (advancing/markup), Stage 3 (topping/distribution), Stage 4 (declining/markdown). The rule is simple: only buy stocks in Stage 2, and only short stocks in Stage 4.
Key Trading Rules
- Only buy stocks in Stage 2: price above a rising 30-week moving average
- Entry: breakout from Stage 1 base on above-average weekly volume
- Never buy a stock in Stage 3 (topping) or Stage 4 (declining) — no matter how cheap it looks
- Stop loss: close below the 30-week moving average on a weekly basis
- For shorts: only short stocks in Stage 4 — price below a declining 30-week MA
- Use relative strength to identify the strongest stocks within the strongest sectors
Key Concepts
Books & Resources
Secrets for Profiting in Bull and Bear Markets by Stan Weinstein. One of the most recommended trading books of all time.