Key Lesson from Secrets for Profiting in Bull and Bear Markets by Stan Weinstein’s

Basic concepts:

-10 weeks simple moving average (SMA) is for traders

-30 weeks SMA is for Investors

-Clear cut trendline need at least 3 points of contact

With every stock, there are 4 stages

-Stage 1 – Base formation (Price ranges around 30 SMA)

-Stage 2 – Break out from base and trending up (Price are above 30 wk SMA and the slope of MA is UP)

-Stage 3- Top formation, price cross below 30 wk SMA, SMA slope flatten.

-Stage 4 – Bear market, price stay below 30 wk SMA and SMA direction pointing down

-Never buy stock when price below 30 wk SMA

-Never short stock when price above 30 wk SMA

-Never buy stock if RSI is negative

-Never buy stock with declining 30 wk SMA

BUYING

-Buy stock in Stage 2 uptrend and price must be above 30 wk SMA

-Place stop loss below 30 wk SMA after buying stock

-Try to place stop protected by Round number

SELLING

-Maximum 15% stop loss rule (for me I prefer 10% stop loss)

-Trail stop with 30 wk SMA

-When Stage 3 arrived, tighten stop to latest correction low

-Take partial profit when target price reached

-At least Take partial profit when uptrend line was violated

-Sell everything in Stage 4