The secret to trading success lies in timing—getting in when smart money is accumulating and getting out before the crowd rushes for the exits. For decades, Weinstein Stage Analysis has been the ultimate roadmap for spotting big trends before they explode—but applying it manually is time-consuming and tedious.
What if you could automate this legendary approach and instantly pinpoint the strongest stocks in a matter of seconds? With TrendSpider’s AI Coding Assistant, you can transform Stan Weinstein’s powerful framework into a fully functional, custom indicator—no coding required. Want to learn how? Read on.
What is Weinstein Stage Analysis?
Developed by Stan Weinstein, Weinstein Stage Analysis categorizes price movements into four basic stages. Popularized in his book Secrets for Profiting in Bull and Bear Markets, this approach revolves around the 30-week Simple Moving Average (SMA) as a guide for identifying these stages.
- Stage 1: Accumulation – The stock moves sideways, often following a downtrend, and trades around a flattening 30-week SMA. This phase typically sees early accumulation by smart money investors.
- Stage 2: Advancing – The stock breaks out above Stage 1 resistance and surges above a rising 30-week SMA, attracting momentum traders.
- Stage 3: Distribution – After a prolonged uptrend, the stock starts plateauing, and the 30-week SMA flattens. Selling volume increases, hinting at a potential reversal.
- Stage 4: Declining – The stock falls below a declining 30-week SMA, confirming increased selling pressure and signaling further downside potential.
Access The Weinstein Stage Analysis Indicator
Before we get into the build, let’s get you equipped with the Weinstein Stage Analysis indicator so you can begin using it in your analysis. Just click on the image below to import this powerful indicator into your account today.
Import the Weinstein Stage Analysis indicator into your account now!
Building The Indicator Step-By-Step
The best way to build a complex custom indicator with the AI Coding Assistant is to break it into manageable pieces. We will start with the easiest stages to define, gradually adding complexity and specificity with each prompt. Saving each iteration of generated code is recommended, as it allows for easy reference if subsequent prompts do not yield desired results.
Prompt 1: Identifying Stage 2 and Stage 4
We start with the most distinct phases: Stage 2 (Advancing) and Stage 4 (Declining). To capture these visually, we instruct the AI Coding Assistant with the following prompt:
‘Create a Weinstein Stage Analysis indicator that paints all candles that open and close above an increasing 30-period SMA green. Also, paint candles green if they close more than 10% above a 30-period SMA. Paint all candles that open and close below a decreasing 30-period SMA red. Also, paint candles red if they close more than 10% below the 30-period SMA.‘
What This Prompt Means
- Green candles (Stage 2): The stock trades entirely above a rising 30-period SMA or closes more than 10% above it, signaling sustained bullish momentum.
- Red candles (Stage 4): The stock trades entirely below a falling 30-period SMA or closes more than 10% below it, indicating strong bearish trends.
This step colors candles in clear uptrends or downtrends while mostly filtering out indecisive price action.
Prompt 2: Identifying Stage 1 and Stage 3
Now that we’ve defined the trend-confirming stages, let’s refine the indicator to capture consolidation phases—Stage 1 (Accumulation) and Stage 3 (Distribution). These phases occur when the price moves sideways near a flattening 30-period SMA, signaling a potential trend transition. To highlight these areas, we use the following prompt:
‘Paint a candle orange if it closes below but within range of the 30-period SMA. Paint a candle light green if it closes above but within range of the 30-period SMA. The range should be 5%.‘
Why Define a Range?
Markets often experience choppy periods where price fluctuates around the SMA without a clear direction. This prompt helps introduce the concept of a flexible range into the indicator, allowing traders to adjust it based on market conditions rather than relying on a fixed threshold.
- The 5% range in the prompt is a suggested starting point, not a rigid rule—it simply ensures that the feature is incorporated into the indicator.
- Traders can expand the range for more volatile stocks to prevent false trend signals.
- Conversely, they can tighten the range for a more precise identification of trend shifts.
This built-in flexibility makes the indicator more adaptable, ensuring traders can fine-tune it to fit their specific strategy and market environment.
Prompt 3: Customizing the Indicator
With our stages now visually defined, the final step is making the indicator more adaptable and actionable so that it can be used across the platform:
‘Allow me to adjust the type of moving average and candle colors. Create signals for each of the stages. Name light green candles “Stage 1,” green candles “Stage 2,” orange candles “Stage 3,” and red candles “Stage 4.”‘
Enhancements and Practical Uses
- Defining ‘signals’ allows traders to integrate the indicator into scans, alerts, and strategies.
- Switch from SMA to alternative moving average style to align with individual strategies.
- Personalize the visual appearance to fit existing chart layouts.
Key Weinstein Stage Analysis Setups
Now that our indicator is complete, it’s time to put it to work in real-world trading scenarios. Let’s discuss a few actionable setups to look for and how to identify them using TrendSpider’s market scanner.
Stage 2 Breakout Scan
It is well known that the transition from Stage 1, the Accumulation Stage, to Stage 2, the Advancing Stage, can signal significant upside potential. Here’s how you can script this opportunity:
- Use the ‘Stage Two’ signal alongside the ‘signal emerged’ filter.
- Confirm prior Stage 1 behavior to ensure a true breakout.
- Add an RVOL condition to detect breakouts with above-average volume.
Stage 2 Pullback Scan
For stocks already in a robust Stage 2 advance, short-term pullbacks to the 30-week SMA present excellent re-entry opportunities. Here’s how to capture these moments:
- Ensure Stage 2 signals have persisted over several weeks.
- Check if the stock is within 5% of the 30-week SMA for a healthy pullback.
- Use Relative Performance to confirm continued market strength.
Stage 4 Breakdown Alert Scan
Many of the stocks that show prolonged Stage 3 behavior eventually break down into Stage 4, marking significant declines. Our “Stage 4 Breakdown Alert” scan is designed to catch these transitions early, giving traders the advantage of entering short positions at the onset of a decline.
- Look for consistent Stage 3 readings over multiple weeks.
- Ensure recent highs are below but in close range of the 30-week SMA to confirm resistance.
Customizing The Indicator
Once you’ve imported the indicator, you can fine-tune it to match your trading style and market conditions. Here’s how to make it work best for you:
- Moving Average Settings: While the traditional 30-week SMA works well for many traders, you might find that another MA type provides earlier signals in your market. The range parameter, set to 5% by default, can be widened for more volatile stocks or tightened for steadier names. Take time to experiment with these settings using historical data from your typical trading universe.
- Visual Preferences: Make the indicator your own by customizing how it appears on your charts. While we’ve chosen intuitive colors for each stage (light green for Stage 1, solid green for Stage 2, orange for Stage 3, and red for Stage 4), you might prefer different colors that better match your existing chart setup.
Conclusion
In this post, we’ve demonstrated how to utilize TrendSpider’s AI Coding Assistant to build a robust indicator that identifies the stages of Weinstein Stage Analysis. By integrating this dynamic tool, we’ve outlined how to spot key setups for potential breakouts and breakdowns, empowering you with the precision to act on these opportunities confidently.
Ready to take your trading to the next level? Import the indicator and start exploring Weinstein Stage Analysis today!
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