Learning Hub
Glossary
The average closing price over the last 30 weeks (approximately 150 trading days). Used in Weinstein Stage Analysis as the primary trend indicator. Stocks above this line with rising slope are typically in Stage 2.
Consensus SignalOn InvestingStrategy, the combined output when both the Technical Scorecard and Fundamental Scorecard agree on a direction (BUY, HOLD, or SELL). A consensus signal carries higher confidence than either scorecard alone.
DCF (Discounted Cash Flow)A valuation method that estimates the present value of a company based on projected future cash flows, discounted back using a rate (WACC). If the DCF value exceeds the current stock price, the stock may be undervalued.
Margin of SafetyThe difference between a stock's intrinsic value (e.g., from DCF analysis) and its current market price. A positive margin of safety means you're buying below estimated fair value, providing a buffer against estimation errors.
P/E Ratio (Price-to-Earnings)The ratio of a company's current stock price to its earnings per share. A lower P/E may indicate undervaluation relative to peers, but must be evaluated in context of growth rate and industry.
Relative Strength (RS)A measure of how a stock's price performance compares to a benchmark (typically S&P 500) over a given period. Positive RS means the stock is outperforming the market.
ROIC (Return on Invested Capital)A profitability metric that measures how efficiently a company uses its capital (equity + debt) to generate returns. Higher ROIC relative to the cost of capital (WACC) indicates a competitive advantage.
Scale-In StrategyAn approach to building a position gradually at predetermined price levels rather than buying the full position at once. This reduces timing risk and allows for better average entry prices on pullbacks.
Short InterestThe total number of shares currently sold short, often expressed as a percentage of float. High short interest can indicate bearish sentiment but also creates potential for a short squeeze if the stock rallies.
Weinstein StageA four-stage classification system for stock trends: Stage 1 (Basing), Stage 2 (Advancing), Stage 3 (Topping), Stage 4 (Declining). Developed by Stan Weinstein. Only Stage 2 is considered favorable for buying.
Learning Tips
Never buy a Stage 4 stock
The single most important rule in Weinstein methodology: if a stock is trading below its declining 30-week moving average, it is in Stage 4. No matter how "cheap" it looks fundamentally, the technical picture says sellers are in control. Wait for Stage 1 basing, then a Stage 2 breakout.
RS new highs predict price new highs
When a stock's relative strength vs SPY makes a new 52-week high before the stock's price does, that's a leading indicator. It means money is flowing into this stock faster than the broad market. Our platform alerts you when this happens.
Use DCF as a range, not a target
A DCF model produces one number, but that number depends on assumptions about growth, margins, and discount rate. Always run base, bull, and bear scenarios. If the current price is below even the bear case, you have a real margin of safety.
Position sizing matters more than entry
The difference between a 2% and 5% position in a stock that drops 30% is the difference between a manageable loss and a portfolio-damaging one. Use the scale-in approach: split your target position across 3 entry zones (40/35/25) instead of going all-in at one price.
Separate your swing and long-term holdings
A stock that's a great swing trade (Stage 2 breakout, 3-30 day hold) may be a poor long-term investment (overvalued on DCF). And vice versa. Mixing timeframes in one portfolio leads to confusion and poor decisions. Use separate portfolios with different scoring weights.