The Hidden Order Behind Major Stock Moves

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BY KEITH KAPLAN
CEO, TRADESMITH

May 1962 was a big month in U.S. history.

Marilyn Monroe sang “Happy Birthday, Mr. President” to JFK at Madison Square Garden.

Scott Carpenter orbited the Earth aboard Aurora 7 – becoming the second American after John Glenn to complete the trip.

And a young singer, Bob Dylan, was just starting to gain buzz through the New York folk scene.

It was also the month the U.S. stock market suffered its sharpest one-day drop since the Great Depression.

That plunge is largely forgotten now. But on May 28, 1962, the S&P 500 dropped nearly 7% in a single session. It was the worst day of a bear market known as the “Kennedy Slide.”

Between December 1961 and June 1962, it took the S&P 500 down 28%. Panic swept through Wall Street. Newspapers warned of a new Depression.

Legendary technical analyst and author Stan Weinstein remembers it well.

Although still a teenager, he’d begun investing based on “safe picks” from leading newsletters. During the crash, those picks collapsed. He watched helpless as his portfolio unraveled – and with it, his confidence in the old rules.

But it wasn’t all bad news.

The experience led him to discover one of the most powerful frameworks in modern technical analysis – what he called Stage Analysis.

And if you have any money in the markets, Stage Analysis needs to be on your radar.

It doesn’t just give you a repeatable system to time entries and exits. It helps you avoid chasing headlines and false signals by clarifying when a stock is entering a powerful breakout phase.

In fact, according to Weinstein, it’s the hidden order behind all major stock moves.

That’s why we’ve built Weinstein’s insight right into one of our most powerful software tools.

Already, it has uncovered the following gains among many others…

271% on Paycom (PAYC)
437% on SolarEdge Technologies (SEDG)
723% from The Trade Desk (TTD)

And in a brand-new research presentation we’re releasing right this minute, I’ll show you how we’ve combined stage analysis with a breakthrough system that picks up this kind of momentum building “beneath the surface” of a simple price chart.

I highly encourage you to check out the debut. It’s live right now and will tell you precisely how to start using Stage Analysis in your own trading.

Further, you’ll learn about the kinds of stocks that are most promising for this strategy.

And if you’re interested in a bit more history about this powerful concept, read on…

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Law of Nature

Most people don’t know this, but at any given time, every stock in the market is in one of four distinct – and predictable – stages.

Weinstein laid it all out in his 1992 book, Secrets for Profiting in Bull and Bear Markets.

The original hardcover edition sold more than 60,000 copies. And it remains a cult classic. But it’s largely forgotten today.

Stan Weinstein’s book was a hit when it came out in 1992

That’s a pity. Because it details a four-stage method you can use to profitably trade stocks in any market condition.

It doesn’t matter what sector a stock is in. It doesn’t matter if it’s a $2 million startup… or a $4 trillion behemoth like Nvidia (NVDA).

Like a law of nature, all stocks – even entire stock-market indexes – move through the same four stages.

To see them in action, here’s a chart of the tech-heavy Nasdaq from the early 1990s through the early 2000s.

Source: Yahoo Finance

Over that time – which includes the inflating and bursting of the dot-com bubble – it went through all four stages.

From 1990 to 1995, the index was in Stage 1 – known as the “Basing” or consolidation stage.

Valuations are attractive, and stocks may even be rising, but it’s hardly euphoric. Stocks tend to see a lot of choppy movement in this stage.

This stage can feel like no man’s land – stock prices can bounce around aimlessly, often for months or even years.

And as you saw above, after the 1990-91 recession, the Nasdaq trended lazily higher with some months-long ruts along the way.

All told, the Nasdaq ran about 90% higher from 1990 to 1995. This was coming off a few years of sideways action in the late ‘80s.

Those are solid returns. But they pale in comparison to Stage 2.

Weinstein called this stage the Advancing Phase; it’s a “Breakout & Uptrend” stage.

This is where institutional money floods in. Stocks surge on volume, returns accelerate, and sentiment shifts to being more predominantly positive.

And this is where the big money is made.

Buying Frenzy

Whether you realize it or not, most of your profits from stocks are during Stage 2.

It’s a buying frenzy.

The Nasdaq entered Stage 2 in early 1995. From there, it marched higher for the next five years. This uptick delivered gains of about 500% – five times what it returned in the first half of the ‘90s.

Then you get Stage 3 – the “Topping” stage where stocks blow off to the upside and quickly retrace. This happened in late 1999 and early 2000. The Nasdaq rose 45% in the two months before the top… only to crash by more than 40% in the 10 weeks to follow.

Finally, you get Stage 4 – or the “Downtrend.” This is when bullish momentum turns to bearish panic. Sellers take control and stay in control for months and years.

This is the least enjoyable part of a stock’s life cycle.

But eventually, selling pressure eases, the market re-enters Stage 1, and the cycle begins anew.

The most important point to remember in this process is that the real money is made in Stage 2.

Once a stock leaves this stage and enters Stage 3, you want to sell your shares and take your money off the table.

Just being able to spot which stage a stock is in can save you time, money, and a whole lot of frustration.

Of course, that’s easier said than done. But thanks to great momentum tools like ours, it’s possible.

Don’t Fly Blind

One of the proprietary trading systems we at TradeSmith are privileged to bring you flags big money flows from institutional investors. The kind of multimillion-dollar bets that push a stock into the right stage to make it a fantastic buy.

In fact… about 70% of all money flows in the market are from institutional investors. If you’re missing these signals, it’s like flying blind.

That’s why I’m so excited about today’s event – which you can access right here.

During this event I’ll be sharing more details of the partnership behind this system. Tune in right now and learn how you can use it to really move the needle on your wealth.

The Hidden Order Behind Major Stock Moves