Weinstein stage analysis: the four stages of a stock
Stage analysis, from trader Stan Weinstein, describes a stock’s life as four repeating stages. It helps you avoid stocks in decline and focus on those in advancing trends.
Open the free scannerThe four stages
- Stage 1, basing: after a decline, price moves sideways around a flattening 30-week average.
- Stage 2, advancing: price breaks above the 30-week average, which turns up; higher highs and higher lows follow.
- Stage 3, topping: the advance stalls, price swings widely around a flattening average.
- Stage 4, declining: price falls below a downward-sloping average.
Why the 30-week average
The 30-week moving average, roughly the 150-day average on a daily chart, smooths out short-term noise so the main trend is clear. Its slope and the price’s position relative to it define the stage.
Finding stage changes in the scanner
The swing trading screener has a “just entered Stage 2” screen that lists stocks that recently moved from basing into an advance. Combine it with relative strength to see which of them are also outperforming.
Limits
Stages are only clear in hindsight at the edges, and a stock can move back and forth between Stage 1 and 2 before a real advance. Use stage analysis to filter, then check the chart, volume and market trend.
Frequently asked questions
Who created stage analysis?
Stan Weinstein, in his book on stock market trading. This site is independent and not affiliated with him.
Which stage is best for momentum traders?
Momentum traders usually focus on Stage 2, the advancing phase, and avoid Stage 4.
Does stage analysis work on weekly or daily charts?
It was designed for weekly charts. The scanner uses an equivalent daily-chart measure.
Is a Stage 2 stock a buy?
No. It means the stock is in an uptrend, nothing more.