Stage analysis: How to manage stocks

40wk ma (red area) sloping upwards = Stage2
40wk ma (red area) sloping downwards = Stage 4

Stage 1 ---> when stocks build bases
Stock stops going down, builds a base
40wk ma stops declining/flattens out
Time to watch stock and gradually build position

Stage 2 ---> when stocks rally/money is made
Stock becomes over-extended, take partial profits
Stock pulls back towards 40wk ma, add back

Stage 3 ---> distribution phase/topping pattern
Stock stops going up and volatility picks up (zig zag)
40wk ma stops rising and rolls over
When stock goes below prior low, time to sell

Stage 4 ---> when stocks decline/money is lost
When stock declines < downward sloping 40wk ma
Time to stay away from the stock

All stocks/sectors/markets go through these stages and with trend following/technical analysis, one doesn't need to sit through painful drawdowns.