Chart of the Day - Thursday, May 6th, 2021

Today’s Chart of the Day was shared by Row Investing (@RowInvesting). With Growth stocks getting smoked this week, it's probably a good time to review Stage Analysis. Stage Analysis was popularized by Stan Weinstein in his 1980's book, Stan Weinstein's Secrets for Profiting from Bull and Bear Markets. The four main stages are simply; 1.) Base, 2.) Uptrend, 3.) Top, and 4.) Downtrend. Stage 1 is the base-building phase in which institutions accumulate a position. Stage 2 is the rip-roaring uptrend phase in which the public jumps on the bandwagon. Stage 3 is when price begins to lose momentum and distribution begins. Finally, Stage 4 is when the downtrend forms and price enters into a sustained bear market. Obviously, it isn't so clear-cut in real-time. But, it does help you tune out the noise and give you an idea of the typical lifecycle of a trend. As @RowInvesting points out, a lot of last year's high-fliers are below a declining 30-week moving average and appear to be entering into that painful Stage 4. So, be careful buying dips on last year's winners!