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 In Step #3 of the Tutorial, we
discuss calculation and assembly of Stock Configurations. Stock Configurations
are combinations of moving averages which help us articulate whether it is time
to Buy, Sell, Short, or Cover an individual stock by illustrating where the
stock is going in relation to where it has been (i.e., direction).
Each week, after we have determined the Market Stage and assembled
the Stock Configurations for each stock in our Universe, we look for Short Configurations among the
stocks in our Universe. We do this by
comparing each stock's configuration against the Short Configurations shown in the
table for the appropriate Market Stage. If a stock in our Universe has
a matching Short Configuration, we evaluate that stock for short-selling.
Please notice we do not
Short-sell stocks except during Market Stages 1, 4 and 5.
| Market Stage 1
- Uncertain, but probably just a Bear Market rally |
15wk - DOWN
40wk - UP
5wk - DOWN |
or |
40wk - UP
Price of the stock
- UP or DOWN
15wk - DOWN
5wk
- UP or DOWN |
| Market Stage 2
- Uncertain, but possibly the 1st sign of a new Bull Market |
DO NOT
SHORT
DURING THE POSSIBILITY OF A
NEW BULL MARKET |
| Market Stage 3
- Bullish: We are experiencing Bull Market conditions |
DO NOT
SHORT
DURING A
BULL MARKET
|
| Market Stage 4
- Uncertain, but possibly the 1st sign of a new Bear Market* |
15wk - DOWN
40wk - UP
5wk - DOWN |
* Note: Short-selling during a Market Stage
4 is more risky than short-selling during a Market Stage 5.
| Market Stage 5
- Bearish: We are experiencing Bear Market conditions |
15wk - DOWN
40wk - UP
5wk - DOWN |
or |
40wk - UP
Price of the stock
- UP or DOWN
15wk - DOWN
5wk
- UP or DOWN |
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