# Stage 4 Strikes Again as High-Flyers Plummet

Canonical: https://stocksurgedaily.com/stage-4-strikes-again-as-high-flyers-plummet/

As regular readers know, I’m a big fan of [**the four stages of the stock cycle**](https://stocksurgedaily.com/why-this-100-year-old-stock-strategy-is-still-relevant/).

This is an idea originally pioneered by legendary trader Richard Wyckoff.

The cycle is made up of four distinct stages…

*   **Stage 1**: Consolidation
*   **Stage 2**: Accumulation
*   **Stage 3**: Distribution
*   **Stage 4**: Capitulation

The pattern is clear.

It repeats itself like clockwork and has for more than 100 years.

And this year, Stage 4 has taken out several high-flyers…

Still, some investors just can’t help themselves. They want to buy these stocks “on the cheap.”

Problem is… They usually get even cheaper.

Take **Roku, Inc.** (ROKU) for example…

![](https://lh4.googleusercontent.com/6U8gX9TXNOAf52RRixB1i4oTENQA3anokV92lwAqvgchpOCr0pI7vGkLQbJS43XxmxS79ZVaQgPILIJKV3xLgI7sHVBIhgwa0KJ9pUxQke0oO-8f9KYaOxPe41v_YM7D23cfsG8Y)

**_Weekly Chart of Roku, Inc. (ROKU) with Wyckoff’s Four Stages -- Source: TradingView_**

The stock tripled in less than a year [**during its Stage 2 uptrend**](https://stocksurgedaily.com/how-to-scan-for-stage-2-stocks/). But then, the selling started.

Institutions began dumping the stock in early 2021. That’s what created the Stage 3 volatility.

Stage 3 is your warning. [**It is the tell that you need to get out of the stock**](https://stocksurgedaily.com/five-reasons-to-sell-a-rising-stock/).

This period can be short, so it is important to learn how to spot it.

The biggest clue will be wild price movements.

If a stock that only made small pullbacks of 10%-15% is suddenly pulling back 30% or more, that’s your warning sign.

This volatility is [**the footprint of large institutional selling**](https://stocksurgedaily.com/why-the-institutions-cant-hide-their-tricks-anymore/).

What comes next will not be pretty. The time to sell is NOW!

But ROKU is not alone.

Take a look at **Teladoc Health, Inc.** (TDOC), which was one of the hottest stocks of 2020, suffered a similar fate.

![](https://lh5.googleusercontent.com/sJVxdshO8SLGiKkBAC-YCx-z6vToEV_OvcmAe96S2MvhMGFFkDJdtFWAy64qwida8jGi9aklR2bWT9KkGlpJi5bChIWcYYHWfasEi7U_vrS-Q-ZCYSClq-sK6kzeHUUAr5brCID_)

**Weekly Chart of Teladoc Health, Inc. (TDOC) _with Wyckoff’s Four Stages -- Source: TradingView_**

So did **Peloton Interactive, Inc.** (PTON), **Zoom Video Communications, Inc.** (ZM), **Redfin Corporation** (RDFN) and [**dozens of others**](https://stocksurgedaily.com/past-leaders-getting-pummeled-in-a-stock-pickers-market/).

So, please, take my advice…

Quit trying to bottom fish and buy stocks on the way down.

Only buy stocks in Stage 2 uptrends!

That’s where you’ll earn the majority of your gains.

Embrace the surge,

![](https://lh4.googleusercontent.com/L6ze6VXP-9E3d5SqKUQoG70uRLbG5THipFGJ4vVe5hBMu4qxkDWMIiT242nDG32RvvsSCWUyax81F0mre2cza12mL36FCbJhDv8cDL33Armtm9U18v-OaUPTGuzcaarEml_aGR5x)

Ross Givens

Editor, **_Stock Surge Daily_**