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 BUY HIGH, SELL EVEN HIGHER
 

   This is a translation of the former paper published by André Gosselin on the OrientationFinance.com web site on January 10 2005 ( Read the original paper in French here).

 

   Stan Weinstein is one of the most popular technical analysts among amateur investors.

 

   Since 1972, he is the editor of a financial letter (The Professional Tape Reader) which is headquartered in Hollywood, Florida and which counts more than 15 000 subscribers.

   He is also the author of one of the technical analysis books among the most accessible and pleasant to read that have been published to date in the United States: Secrets for Profiting in Bull and Bear Markets (in French: Secrets pour gagner en Bourse ŕ la hausse et ŕ la baisse, published at Valor Editions). Among the French-written books, it is probably the bestseller of the technical analysis books.

   Weinstein is one of these gurus which have anticipated the crash of October 19, 1987. On October 16, it has recommended to the subscribers of its financial letter to liquidate 76% of their stock positions. The same day, it has declared in the daily newspaper USA Today: "What occurs in this moment, it is all except a normal correction of the market, I expect an absolute massacre of the stocks next Monday". On Monday October 19, the New York Stock Exchange recorded the biggest fall of its history.

   Not without reasons, Weinstein deplores the esotericism of the majority of the books devoted to the technical analysis, so complicated that only the authors and their disciples can understand what it deals with. It denounces certain stereotypes conveyed by Wall Street since ages, as the one which says that to beat the market it is necessary to buy low and sell high. He rather thinks that it is necessary to buy high and sell even higher. In this way, one can say that he is in favour of a momentum approach of the technical analysis.

   He says that a good technical analysis strategy must be simple enough to be applied with constancy and effectiveness. It is the discipline which counts. The worst tactics to be adopted is the one which consists in being fundamentalist one week and technician the next week, or to follow a technical indicator for a month and another indicator for the next month.

   The investment strategy of Stan Weinstein is one which can be described as "top-down", because it goes from top to bottom. Indeed, it starts with a technical analysis of the overall market in order to determine if it is favorable or not; it then seeks to identify the industrial sector indexes which are performing well; if the market is good and that some industrial sectors are largely more "positive" that others, it concentrates on two or three industries which show the most significant bull signals and the lower risk of fall over the next months.

   Once these questions are solved, the security selection can be carried out with the stocks that match the technical signals recommended by Weinstein.



Secrets for Profiting in Bull
and Bear Markets


Stan Weinstein

Special Price
US$ 13.30
in our bookstore


   André Gosselin

 
 
 
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