Johni Wang

A lot of stocks are starting to show signs of Stage 3, and I think it's important to understand what could potentially come next I've always believed in one simple philosophy when it comes to trading: Hope for the best, but ALWAYS prepare for the worst Especially when the market starts showing signs that the trend could be changing I'm watching names like $MU, $SNDK, and several other semiconductor stocks for the possibility that they could be transitioning from a Stage 3 topping structure into a Stage 4 decline That doesn't mean it's guaranteed to happen BUT Understanding the possibility is exactly why studying market cycles is so important For those unfamiliar with Stage Analysis, stocks generally move through four stages: Stage 1: Accumulation: Price builds a base, institutions potentially accumulate shares, and the stock trades sideways Stage 2: Advancing: Price breaks out of the base, volume expands, and a strong uptrend develops above a rising weekly moving average Stage 3: Topping/Distribution: Momentum begins fading, price becomes increasingly choppy, breakouts start failing, and the 30-week moving average begins flattening Stage 4 Declining: Price breaks below its Stage 3 trading range, the longer-term moving average turns lower, and a sustained downtrend can develop One historical example I encourage everyone to study is $ARKK in 2021 After an incredible Stage 2 advance, $ARKK began losing momentum. The stock stopped making meaningful progress, rallies increasingly struggled, and a topping structure eventually transitioned into a prolonged Stage 4 decline. Now compare that structure with the weekly chart of $MU today There are some interesting similarities in the progression from an explosive advance to weakening momentum, volatile rebounds, and pressure on the broader trend I'm NOT saying $MU is going to follow the exact same path as $ARKK, but the structural similarities are worth understanding And this is the important part: Stage 3 doesn't always transition into Stage 4 Sometimes a stock consolidates, rebuilds strength, and breaks out into another Stage 2 advance That's why price action, volume, weekly moving averages, and confirmation matter so much You don't need to predict what's going to happen next You need to understand the different scenarios and recognize when the evidence supporting your original thesis has changed The absolute worst thing you can do is become emotionally attached to a position, ignore every warning sign, and simply pray while holding forever without knowing when you're wrong There is a massive difference between having conviction and being unwilling to accept that your thesis might be incorrect Being a good trader isn't about being right all the time. It's about knowing how to handle the situations when you're wrong Hope for the best Prepare for the worst Because protecting your capital and your ability to participate in future opportunities will always be more important than proving a thesis right.