Glossary
Every term used in the lessons and on the site, in plain English, with the lesson that teaches it and the page where you can see it live.
The four stages
- Stage analysis
A way of reading charts that places every stock in one of four stages: basing, advancing, topping or declining.
Popularised by Stan Weinstein in 1988. Instead of predicting prices, you identify which stage a stock is in today and act accordingly: buy in Stage 2, stay away from Stage 4.
- Stage 1: Basing
The quiet stage after a fall: the price moves sideways and the long-term average flattens.
Selling has slowed, but buyers haven't taken over yet. A base can last weeks or years, and some fail and roll over into another fall. Stage 1 is a watchlist, not a buy list.
- Stage 2: Advancing
The rising stage: higher highs and higher lows, with the price above a rising 30-week average.
The only stage worth buying in stage analysis. It usually begins with a breakout from a Stage 1 base on heavy volume, and it lasts until the advance stalls into Stage 3.
- Stage 3: Topping
The stall after a long rise: the average flattens and the price swings back and forth across it.
From the inside, Stage 3 feels like a pause. Watch for a flattening line, wider swings, and heavy volume without progress. Stop buying, tighten stops, and consider taking some profit.
- Stage 4: Declining
The falling stage: lower highs and lower lows, below a falling 30-week average.
Every bounce meets sellers. Stage 4 doesn't end because a stock looks cheap; it ends when selling runs out and a new base forms. Never buy in Stage 4, however good the story.
- Stage transition
A stock moving from one stage to the next, for example from Stage 1 to Stage 2 on a breakout.
The transitions that matter most are 1→2 (a new uptrend starting), 2→3 (an uptrend stalling) and 3→4 (a top turning into a decline). We list every stock that changed stage after each close.
- Weeks in stage
How long a stock has been in its current stage.
A stock a few weeks into Stage 2 has more of the move ahead of it, usually, than one that has been in Stage 2 for a year. Shown on every stock page.
- Failed base
A Stage 1 base that breaks down into another decline instead of breaking out.
Common after long falls, and the reason Stage 1 is for watching, not buying. YES BANK formed two bases on its way down in 2018–20; both failed.
Reading a chart
- 30-week moving average
The average closing price of the last 30 weeks, recalculated every week.
Stan Weinstein's line for reading the trend on a weekly chart. Read it in two glances: first its slope (rising, flat or falling), then which side of it the price is on. On a daily chart, the 150-day average is roughly the same line.
- 200-day moving average
The average closing price of the last 200 trading days, about 40 weeks.
A widely watched long-term trend line, a little slower than the 30-week average. The share of stocks above their 200-day average is a quick read of market breadth.
- Golden cross / death cross
A shorter moving average crossing above (golden) or below (death) a longer one, classically the 50-day and 200-day.
A popular trend signal, but a late and noisy one on its own. Stage analysis puts more weight on the slope of the long average than on any single crossover.
- Breakout
A weekly close above the top of a range the price has been stuck in.
The classic Stage 2 entry. Breakouts on heavy volume are more trustworthy than breakouts on light volume, which fail more easily.
- Pullback
A dip back toward the breakout level or the rising 30-week line after a breakout.
The second Stage 2 entry. Good pullbacks come on lighter volume and hold above the breakout level; you buy when the price turns back up.
- Volume
The number of shares traded in a day or week.
Volume shows how much conviction is behind a move. Heavy volume on a breakout means many buyers paid up at once; light volume on a pullback means few sellers.
- Base
A sideways range where a stock rests before its next move.
Stage 1 is a base after a fall. Stocks in Stage 2 also pause in smaller bases before moving higher. Breakouts from these are called continuation breakouts.
The market
- Market breadth
How many stocks are taking part in a market move, as opposed to the index alone.
The Nifty can rise on a handful of large companies while most stocks fall. Breadth measures what the market underneath is doing: the share of stocks in Stage 2, above their 200-day average, or making new highs.
- Advance/decline
The number of stocks that rose compared with the number that fell on a day.
Added up day after day, it becomes the advance/decline line: a running picture of whether most stocks are rising or falling, regardless of the index.
- New highs vs new lows
Stocks making a 52-week high minus stocks making a 52-week low.
Healthy markets make many new highs. When the index rises but new highs dry up and new lows grow, the advance is narrowing.
- Market read
Our one-line summary of the market's condition, updated after every close.
It brings together breadth, trend and momentum into a plain label, so you know whether the market is helping or hurting new buys before you look at a single stock. A summary of the evidence, not a forecast.
Sectors
- Sector rotation
Money moving from one group of stocks to another.
Money rarely leaves the market all at once; it rotates. Finding the sectors money is moving into narrows thousands of stocks to a few hundred worth your time.
- Relative rotation graph (RRG)
A chart that plots each sector's strength against the market, and whether that strength is growing or fading.
Sectors move clockwise through four quadrants: Improving, Leading, Weakening, Lagging. Improving is often where new leaders come from.
- Cyclical sectors
Sectors whose profits rise and fall with the economy: banks, autos, metals, capital goods, real estate.
They tend to lead when growth is improving and suffer most when it slows.
- Defensive sectors
Sectors whose demand holds up in any economy: consumer staples, pharma, utilities.
They often hold up better in falling markets, which can make them look strong relative to the market even while they go nowhere.
Picking stocks
- Relative strength
How a stock is doing compared with the overall market over the same period.
A stock that falls 5% while the market falls 15% has strong relative strength. Leaders tend to keep leading, but strength without a Stage 2 trend is often just shelter.
- Mansfield relative strength
Weinstein's version of relative strength: a stock's price relative to the index, drawn around a zero line.
Above zero and rising means the stock is beating the market. Weinstein used it to confirm that a Stage 2 stock was also a leader.
- Setup score
Our score for the quality of a stock's trend, shown on the screener.
A high score means a strong, healthy uptrend. It does not mean the stock is early, since a stock that has already run can score well. For buying, we also show whether a stock is still early in Stage 2.
- Early entry
Our badge for Stage 2 stocks that are still early in the move, not already stretched.
Buying early in Stage 2 means a closer stop and more of the move ahead. Stocks far above their base can keep rising, but with less room and more risk.
- Acceleration
A stock whose uptrend is getting steeper, not just continuing.
A trend can rise steadily or speed up. Accelerating Stage 2 stocks are where buyers are becoming more eager.
- Prop Scan
Our evening scan for Stage 2 stocks at a breakout or pullback entry.
It looks for the two entries Weinstein used, among stocks in a healthy trend, after every close.
Entries and exits
- Stop-loss
The price at which you sell because the idea has been proved wrong.
Set it before you buy (under the base for a breakout, under the pullback low for a pullback) and raise it as the stock rises. Never lower it.
- Trailing stop
A stop-loss you move up behind a rising stock.
Raise it under each new higher low and under the rising 30-week line. It lets winners run while locking in part of the gain.
- Averaging down
Buying more of a falling stock to lower your average price.
In Stage 4 it adds money to your worst position. Stage analysis says sell first and buy again only after a new base and breakout.
Indian market terms
- Nifty 50
The NSE's index of 50 large companies, weighted by size.
The market's headline number, and a poor guide to what most stocks are doing, because a few giants carry much of its weight.
- FII / DII flows
Money bought or sold by foreign institutional investors (FIIs) and domestic institutions such as mutual funds (DIIs).
Their buying and selling is large enough to move whole sectors. You see its footprint in stage analysis as broad Stage 2 advances on heavy volume.
- ASM (Additional Surveillance Measure)
An exchange list of stocks under extra watch for unusual price or volume moves.
Stocks on ASM can carry higher margins and trading limits. Treat a breakout in one with extra caution.
- T2T (trade-for-trade)
A segment where every trade must be settled by delivery, with no intraday squaring off.
Exchanges move stocks here to cool speculation. It usually cuts trading volume sharply.
- Circuit limit (price band)
The most a stock is allowed to rise or fall in one day.
When a stock hits its limit it stops trading for the day, so big moves can arrive in steps. Weekly charts smooth this out.
- F&O ban
When open positions in a stock's derivatives pass a limit, new positions are banned until they fall back.
It affects derivatives traders, not investors buying shares, but can add short-term volatility.
- T+1 settlement
Shares bought on the NSE are delivered to your demat account one trading day later.
India moved to T+1 in 2023, one of the fastest settlement cycles among major markets.
- PSU
A public sector undertaking: a company majority-owned by the government.
PSU stocks often move as a group on policy news; PSU banks and defence were among the strongest groups of 2023–24.
- USFDA
The US drug regulator, whose inspections and approvals often move Indian pharma stocks.
A warning letter or an approval can shift a pharma stock's stage quickly.
Learn it properly
The eight-lesson course puts every one of these terms to work, with real NSE charts.
See it in today's market
The methods on this page, run across the NSE after every close.