Summary of Secrets for profiting in Bull and bear Markets by Stan Weinstein.

 

Summary of Secrets for profiting in Bull and bear Markets

Investing and trading can seem intimidating, especially with the constant ups and downs of the market. But what if we have a roadmap to navigate the bull and bear market with confidence?

Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets is one of the most insightful books on trading and investing. Unlike many books which focus on theory, Weinstein provides practical strategies for identifying market trends, managing risk, and making profitable trades using technical analysis.

Though this book does not cover the importance of good fundaments and earnings of a stock, it is purely profiting, using technical tools. Weinstein breaks market movement into four stages. By understanding these phases, traders and investors can spot the best time to buy, sell, or stay out of the market.

The different stages of a market movement are:

Stage 1 – The Base Area: It is the time of consolidation at the base, before any potential breakout. This phase is important to watch out as any breakout with high volume and moving average would take the stock into stage 2.

Stage 2 – The Advancing Phase: The breakout from the base area with confirmations of high volume; advancing Moving Average and RSI uptrend is the start of phase 2. This phase is the best time to enter and ride the uptrend for maximum gains.

Stage 3 – The Maturity Phase: The upward advance starts to weaken and starts to trend sideways. This is where the sellers start to outnumber the buyers. In this stage the MA run sideways, and volumes increase as both buyers and sellers match the trade.

Stage 4 – The Declining Phase: The bearish trend takes over, leading to significant price drop and potential short selling opportunities. In this phase, also the stop sell orders are triggered quickly, especially for traders who go through the strategy. The stock falls below its 30-week moving average, confirming the transition from Stage 3. Additionally, RSI drops significantly, signaling weakening momentum. Recognizing this phase helps traders exit their position quickly avoiding further losses.

Point A denotes Breakout
Point B denotes 







Pullback
Point C denotes start of Maturity Phase
Red Line denotes Moving Average (MA)
Blue Line Denotes Support Line.
Point D denotes Breakdown and start of Decline Phase
                                                                

 

The Importance of Timing the Market – Entry and Exit.

One of the most crucial decisions for any trader or investor is when to enter and when to exit the market.

Stan Weinstein provides a powerful framework for determining the right timing for trades. According to Weinstein, the factors which are important to check before the entry into the market are:

• 1.      The stock should move out of its stage 1 with heavy volumes and should move above MA      with a rising RSI, preferably above 1. (A)
• 2.       If one misses this stage entry, then when the stock pulls back towards the break point (B).
• 3.       Since there is no overhead resistance after breaking of stage 1, the upside potential is              tremendous.
• 4.       It’s important to use buy-stop orders, because there are few potential dangers to be aware of.  One problem with this type of order is this trend can reverse sometime, and we only buy after        the stocks breaks its resistance with high volume and moving above MA.  
• 5.   The stocks which break stage 1 and have less overheard resistance been always better              purchases.

Weinstein also advised to remain disciplined while make an entry into the market and has put forward a number of don’ts for not entering the market.

• 1.       Don’t but when the overall market is bearish.
• 2.       Avoid stocks from negative groups.
• 3.       Never buy a stock below its 30-week MA.
• 4.       Don’t buy a stock with declining MA.
• 5.       No matter how bullish a stock is, don’t buy it too late in stage 2, when is far above the ideal    entry point.
• 6.       Don’t buy a stock that has poor volumes on the breakout.
• 7.       Don’t buy a stock showing poor relative strength.

Now as far as the timing the selling of the stock is concerned, according to Weinstein, one should not marry a stock. If we have bought a stock and it has advanced to stage 3, better to exit at that point of time with good profits.

Here are some don’ts for selling:

1.       Don’t base your selling decision on tax considerations:

Investors delay selling with good profit, because there is a big tax bite waiting. Then in the following months the stock plummets and wipes out a good portion of the profit.

This behavior led to a trap, when a stock turns negative, it’s a sale whether you have a profit or a loss or have to pay taxes.

2.       Don’t base your selling decision on how much the stock is yielding:

A stock that has performed well and also pay dividends, well might be overvalued or it may be in    stage 3 (Maturity Phase), making it risky to hold. When a stock begins to decline – regardless              of how profitable it has been over the years and how much dividend it pays –investors should                  consider exiting the stock. Because there is a possibility that the plunge in the stock price is a                  signal of future bad economic news.

3.       Don’t hold unto a stock because the price/earnings (P/E) ratio is low:

While the low P/E ratio might indicate the stock is undervalued, it doesn’t always mean it is a good investment. If a stock is in stage 4 (Declining Phase), holding onto it just because it appears cheap can lead to losses.

This is where the investor needs to go through the technical analysis, is a stock has broken key support levels, The moving average and shows bearish volume trend, it’s better to exit before losses deepen.

4.       Don’t sell a stock simply because the P/E is too high:

Too high PE can become much higher if the stock is in stage 2 (Advancing phase), so investors should hold back selling high PE stocks only if enters stage 3. The concept is that at stage 2 buyers outnumber the sellers, pushing the stock higher despite a high P/E. Investors focus more on trend strength than valuation.

5.       Don’t refuse to sell because the overall market trend is bullish:

Bull market can make anyone look like a genius. But if a stock shows weakness technically, don’t think twice – get out.

6.       Don’t wait for the next rally to sell:

When the chart pattern weak signal, meaning a stock is running into trouble, get out immediately. Don’t wait to gain an extra point or two on a reverse rally. Chances are this tactic will cost you your whole capital.

7.       Don’t hold onto a stock simply because it is of high quality:

Every stock has a cycle, when a high-quality stock reaches its maturity downfall is inevitable. Weinstein uses the example of IBM a very high-quality stock of its time. In early 1973, as the stock reached its peak above, and entered a stage 4, which then carries it back down to 155.

So, now the question remains. when to sell?

A very important thing a good investor should do is to never hold any position without sell – stop. If you buy a stock in stage 2 at point A in the above chart. As long as the stock is above its rising MA, be sure to give it plenty time to gyrate. After we see some correction make sure to put a sell – stop order just below the MA line.

So, when the MA line start to run sideways (Point C), it’s the start of stage 3 (Maturity Phase) where there is a consolidation as sellers start to accumulate and finally start to outnumber the buyers, keep close watch in that stage and as soon as the price start to decline and finally moving below the support line and the MA (at point D in Chart), this is the right time to exit from the stock.

***Conclusion***

Whether you’re new to investing or tired of guessing market turns, Secrets for Profiting in Bull and Bear Markets gives you a structured, rational approach.

It reminds us of something deeper too — everything moves in cycles. Stocks, markets, even phases of life. The key is learning when to hold, and when to let go.

Stan Weinstein's system isn't just about profits — it's about clarity.

And in chaotic markets, clarity is everything.