Stage 2 Stock Analysis: How to Find Stocks in a Mark Minervini Uptrend

What is Stage Analysis?

Stan Weinstein's Stage Analysis is a market cycle framework that divides the life of any stock (or market index) into four distinct phases:

• Stage 1: Basing/accumulation — price moves sideways after a decline, volume dries up
• Stage 2: Advancing — the big move; price trends upward with rising moving averages
• Stage 3: Distribution/topping — price stalls, choppier action, institutions selling
• Stage 4: Declining — downtrend, price below falling moving averages

The core insight: you want to buy in Stage 2 and only Stage 2. Buying in Stage 1 is premature; buying in Stage 3 or 4 means you're fighting the trend. As Weinstein wrote in *Secrets for Profiting in Bull and Bear Markets* (1988), "the single most important rule is to never buy a stock in Stage 4."

The Stage 2 Criteria

A stock is in Stage 2 when:

1. Price is above the 30-week (150-day) moving average 2. The 30-week MA is sloping upward 3. Price is above the 10-week (50-day) MA 4. The 50-day MA is above the 150-day MA is above the 200-day MA (MA stack) 5. Volume trend is rising — more volume on up-days than down-days over the past 3 months

Minervini extended this with his specific uptrend template (SEPA — Specific Entry Point Analysis), adding conditions like:

• The 52-week high must be within reach (stock within 25% of its 52-week high is ideal)
• Relative strength rank must be 70+ (ideally 90+)
• Earnings trend must be positive

Why Stage 2 Matters

The reason Stage 2 is so important is compounding probability. When a stock satisfies all Stage 2 criteria:

• Institutional investors have already been accumulating (hence the Stage 1 → Stage 2 transition)
• The trend is your ally — you're not trying to guess a bottom, you're riding momentum
• Risk is lower — a stock in a confirmed uptrend with a rising 200-day MA provides a natural backstop; if the MA starts turning down, you have an exit signal

Empirically, the majority of the biggest winning stocks show Stage 2 characteristics at the time of their major breakouts. According to a study by Investor's Business Daily, 9 out of 10 stocks that gained 100% or more in 12 months were in Stage 2 — above their 200-day MA with the MA stack confirmed — at the start of their move (IBD, *How to Make Money in Stocks*, O'Neil, 4th ed., 2009).

Moving Average Stack: The MA Stack Check

EasySwing automatically checks the "MA stack" — the hierarchical ordering of moving averages that confirms Stage 2:

Price > 50-day MA > 150-day MA > 200-day MA

If all four conditions are true and the 200-day MA is trending upward (slope > 0), the stock receives the S2 (Stage 2) tag. This is one of the first filters EasySwing applies — stocks not in Stage 2 are deprioritised regardless of other signals.

The Stage 1-to-2 Transition

The most explosive moves often happen right at the transition from Stage 1 (base) to Stage 2 (uptrend). The signal is a high-volume breakout above the Stage 1 base — the stock clears a long-term resistance level with conviction.

What to look for at the transition:

• A base of at least 3–6 weeks (the longer the base, the more powerful the breakout)
• Volume on the breakout day should be 2–3× the 50-day average volume
• Price closes in the upper half of the day's range
• The RS line (relative strength vs S&P 500) makes a new high before or on the breakout day

Stage 2 in Different Market Environments

Stage 2 analysis works across all market caps, but works best for small and mid-cap stocks where institutional ownership is lower (less efficient pricing). EasySwing focuses on stocks with market caps between $200M and $20B — the sweet spot for swing trading returns.

In a broad market downtrend (Stage 4 for the S&P 500), you should reduce position sizes and be more selective — even Stage 2 stocks can correct sharply when the market falls. EasySwing's market regime indicator helps you calibrate position sizing to the current environment.

Practical Checklist for a Stage 2 Stock

• ✅ Price > 50-day MA > 150-day MA > 200-day MA
• ✅ 200-day MA trending upward (slope positive)
• ✅ Volume on up-days > volume on down-days (past 60 trading days)
• ✅ Stock within 30% of 52-week high (not overextended)
• ✅ RS rank ≥ 70 (ideally ≥ 90)
• ✅ No Stage 3/4 characteristics (no "rounding over" pattern, no death cross)

*EasySwing screens for Stage 2 stocks across 2,000+ US equities automatically. Once you've identified Stage 2 stocks, look for VCP patterns as entry triggers and use RS rank to confirm leadership. New to swing trading? Start with What is Swing Trading?. Scan results are for informational purposes only. See our Risk Disclaimer.*