Stan Weinstein Stage 2 investing is simple to describe: only own something when it's trading above a rising 30-week moving average. We applied that rule to the Nasdaq-100 itself, using weekly closes of NQ futures from June 2010 to April 2026, to see whether stage analysis could keep a futures trader on the right side of the big trends.
Stage analysis in one paragraph
Stan Weinstein laid out his four-stage model in Stan Weinstein's Secrets for Profiting in Bull and Bear Markets (1988). Every market cycles through Stage 1 (a base, with a flat 30-week average), Stage 2 (an advance, price above a rising 30-week average), Stage 3 (a top, the average flattening) and Stage 4 (a decline, price below a falling average). Weinstein's core advice: buy in Stage 2, avoid or short Stage 4. He applied it mainly to individual stocks, with volume and relative strength confirmation and breakouts from resistance; we've kept only the moving-average skeleton.
Our Weinstein Stage 2 rules
- Data: NQ continuous futures, weekly closes only (Friday close), June 2010 – April 2026.
- Stage 2 definition: the weekly close is above the 30-week simple moving average, and that average is higher than it was the week before.
- Entry: the first weekly close that meets the Stage 2 definition. Buy at that close.
- Exit: the first weekly close that no longer meets it (price below the 30-week MA, or the MA turns down). Sell at that close.
- No stop-loss, no intraweek exits. Long only. Volume, relative strength and resistance breakouts are not used.
- Costs: 1.0 NQ point per round trip.
All results are in NQ index points per 1 contract. A Micro E-mini Nasdaq-100 (MNQ) contract is worth $2 per point and a full NQ contract $20 per point, so MNQ dollars below are simply points × 2. Every trade has 1.0 point deducted per round trip to cover slippage and commission.
Stan Weinstein Stage 2 results vs buy and hold
| Metric | Stage 2 (weekly) | Buy & hold |
|---|---|---|
| Trades | 26 | — |
| Win rate | 61.5% | — |
| Avg trade (pts) | +632.69 | — |
| Total (pts) | +16,450.0 | +24,677.2 |
| Profit factor | 8.24 | — |
| Closed-trade drawdown (pts) | 679.8 | 5,878.2 (mark-to-market) |
| Avg win / avg loss (pts) | 1,170.11 / -227.18 | — |
| MNQ total ($, 1 contract) | $32,900 | $49,354 |
| Points 2010–2019 | +3,265.8 | — |
| Points 2020–2026 | +13,184.2 | — |
| Profit factor 2020–2026 | 10.97 | — |
The Stage 2 rule made 16,450.0 points on 26 trades: a 61.5% win rate, an average winner of 1,170.11 points against an average loser of -227.18 points, and a profit factor of 8.24. On one MNQ contract, $32,900. Buy and hold made 24,677.2 points, so stage analysis kept about two-thirds (66.7%) of the gains while being in cash whenever the 30-week average wasn't rising.
Read these numbers carefully
Sample size. Twenty-six trades in 16 years is not a statistically meaningful sample. The profit factor of 8.24 rests on a few very large trends: trades entered in 2020 made 4,918.2 points, 2023 made 4,834.2 and 2025 made 3,372.2. Remove any one of them and the story changes.
Drawdown is not comparable. The Stage 2 closed-trade drawdown was 679.8 points. Buy and hold's 5,878.2-point drawdown is measured on every daily close, marked to market. The Stage 2 figure only counts losses once a trade is closed, and with weekly exits and no stop, an open position can give back a large chunk of its gains before the weekly close finally drops under the 30-week average. So don't read the table as "Weinstein cut drawdown by 88%." It may have reduced drawdown, but this test can't measure by how much.
Weekly-only execution. Because the system only looks at Friday closes and has no stop, a crash that starts on a Monday is fully absorbed before you can act. That is the price of ignoring daily noise.
A note on drawdown: the figure we report is closed-trade drawdown, the worst peak-to-trough of the equity curve built only from finished trades. It ignores how far an open position sank before it was closed, so for a system that holds for weeks it understates the pain you would actually sit through.
Robustness: 2010–2019 vs 2020–2026
The rule made 3,265.8 points in 2010–2019 and 13,184.2 in 2020–2026 (profit factor 10.97 in the later period). It lost money on trades entered in 2011, 2015 and 2026 (through April 16), and there were no new entries in 2017, 2021 or 2022. Positive in both halves, but most of the points came after 2020, when NQ traded at much higher prices.
Our take: The 30-week moving average rule is the most sensible trend filter we tested on NQ, and the low-maintenance, weekly-check format fits people with day jobs. But it didn't beat simply holding the Nasdaq in this secular bull market, and 26 trades can't prove it's reliable. Its value is behavioral: it gives you a pre-committed reason to step aside in a Stage 4 decline instead of hoping. If you want more points and can stomach the drawdowns, holding won. If you need a rule to keep you out of the next 2022, Stage 2 is a reasonable, unproven candidate.
Compare with the daily-bar 50/200 golden cross, which uses a similar idea on a faster clock.
What this backtest does not model
- Roll gaps. The test runs on a continuous front-month NQ series, so quarterly contract rolls can create small artificial price jumps.
- Perfect fills. Signals are computed on the Friday weekly close and filled at that same close. In real life you need to act in the last minutes of Friday's session or accept Monday's open.
- Overnight and weekend risk is in the price series, but position sizing, margin calls and psychological stamina through deep open drawdowns are not.
- No taxes or financing costs are modeled beyond the 1-point round-trip deduction.
This is a backtest on one instrument. Past results do not guarantee future results, and nothing here is financial advice.
Key takeaways
- Weinstein Stage 2 on weekly NQ made 16,450.0 points on 26 trades, about 67% of buy and hold (24,677.2).
- Twenty-six trades is too few to trust the 8.24 profit factor.
- Closed-trade drawdown (679.8) can't be compared with buy-and-hold drawdown (5,878.2).
- Weekly closes only, no stop: gap and crash risk inside the week is fully taken.
- Stage analysis is a discipline tool first, a performance edge second.
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FAQ
Does Stan Weinstein Stage 2 work on the Nasdaq?
On weekly NQ futures from 2010 to 2026, a Stage 2 rule (close above a rising 30-week MA) made 16,450.0 points on 26 trades versus 24,677.2 for buy and hold. Positive, but 26 trades isn't a meaningful sample.
What is Stage 2 in stage analysis?
Stage 2 is the advancing phase in Stan Weinstein's four-stage model: price trades above a rising 30-week moving average.
Why use a 30-week moving average?
It's Weinstein's chosen trend line in his 1988 book. On weekly charts it roughly corresponds to a 150-day average and filters out short-term noise.
Did the Stage 2 rule reduce drawdown?
We can't say from this test. Its drawdown figure only counts closed trades, while buy-and-hold's is marked to market daily, so the numbers aren't comparable.
Loomi.Ai provides educational market research, not financial advice. Trading futures and options involves substantial risk of loss, and backtested results are historical and do not guarantee future returns.