The 4 Market Phases Stan Weinstein describes the evolution of stocks in four main phases:
- Phase 1: Accumulation The market is flat after a prolonged decline. Smart investors start buying. - Phase 2: Uptrend The price breaks a key level and rises above the 30-week moving average, which is rising. This is the ideal phase to buy. - Phase 3: Distribution The market stabilizes after a rise. Big investors sell, and the moving average stabilizes. This is the beginning of the end of the uptrend. - Phase 4: Downtrend The price breaks a key support, the moving average goes down. Avoid buying or selling to limit losses. Key Indicators 30-week moving average: In an uptrend, the price is above. In a downtrend, it is below. Volume: Increasing volume during breakouts confirms the strength of the trend. Weinstein advises buying early in Phase 2 and selling early in Phase 4 to follow major market trends.
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