The short version
Oliver Kell won the 2020 US Investing Championship with a 941% return. His method is a map of where a stock is in its cycle, read off its 10-day and 20-day exponential moving averages. Buy as it turns up out of a washed-out low, add on the first orderly pullbacks and breakouts, take profits when it gets stretched far above its averages, and get out when it falls back through them.
Who he is
Kell trades US stocks for his own account. His championship came in 2020, a year that opened with the fastest fall into a bear market the US had seen and then turned into a broad, fast recovery, the kind of market his cycle is built to read. He has since taught the approach in courses and long interviews, always under the same name: the cycle of price action.
The cycle of price action
Kell sees the same sequence in stock after stock, and gives each stage a name:
- Reversal extension. The stock is stretched far below its moving averages after a long fall. Selling is exhausted.
- Wedge pop. Price pushes back up through the 10-day and 20-day averages for the first time. The first long entry.
- EMA crossback. A pullback to the now-rising averages that holds. A lower-risk place to add.
- Base and break. The stock builds a base and breaks out to new highs. Another place to add.
- Exhaustion extension. The stock runs far above its averages, often on news and excitement. Time to sell into strength, not buy.
- Wedge drop. Price falls back through the averages. The advance is over for now; the cycle starts again.
What each stage asks of you
| Stage | What the chart shows | What to do |
|---|---|---|
| Reversal extension | Far below the 10- and 20-day averages after a long fall | Watch. Nothing to buy yet |
| Wedge pop | The first close back above both averages | Start small, with the stop under the pop |
| EMA crossback | A pullback to rising averages that holds | Add, with the stop just under the averages |
| Base and break | A sideways base, then a new high | Add again |
| Exhaustion extension | Far above the averages, gaps, excitement | Sell into the strength |
| Wedge drop | A close back below the averages | Sell what is left |
The table also shows what not to do. There is no stage where you buy a stock still falling far below its averages, and no stage where you buy one that is already stretched far above them.
Building a position as it proves itself
The wedge pop is the cheapest entry and the least proven: many pops fail and roll back over. So the first buy is small. Each later stage, the crossback and the base and break, is a chance to add, but only while the earlier buys are showing a profit. By the time the stock is a clear leader, the position is at full size and the average cost is well below the price.
Selling works the same way in reverse. Part of the position goes into the exhaustion extension, while buyers are most eager, and the rest goes on the wedge drop.
The same cycle on the indexes
The shape isn't limited to single stocks. A market index stretched far below its averages after a sharp sell-off, then a first push back above them, is often where new leadership starts. Reading the S&P 500 or Nasdaq through the same stages helps decide how much to have invested. On this site, the follow-through day and the Zweig breadth thrust are two other ways of spotting that turn.
How it fits with stage analysis
Kell's cycle runs on daily charts and short averages; Stan Weinstein's four stages run on weekly charts and the 30-week average. They describe the same shape at different speeds: a wedge pop is often how a stock leaves a Stage 4 decline, the crossbacks and breakouts happen inside Stage 2, and the exhaustion extension and wedge drop are often the start of Stage 3. Using both tells you where a stock is in the long trend and where it is in the short swing within it.
Using his method here
- Momentum stocks: the strongest US stocks in uptrends, where his crossbacks and breakouts happen.
- Breakouts today: stocks clearing their 20-day high on heavy volume, close to his base and break.
- Near the 50-day: uptrend stocks pulling back to a longer average.
- Stage analysis: the weekly frame his daily cycle sits inside.
Questions people ask
Who is Oliver Kell?
A US stock trader who won the 2020 US Investing Championship with a return of 941%. He teaches his approach, which he calls the cycle of price action, in courses and interviews.
What is Oliver Kell's cycle of price action?
A sequence he sees every trending stock move through: a reversal extension far below its moving averages, a wedge pop back above them, an EMA crossback pullback to the rising averages, a base and break to new highs, an exhaustion extension far above the averages, and a wedge drop back below them. Each stage calls for a different action.
What is a wedge pop?
The first move back up through the short-term moving averages (he uses the 10-day and 20-day exponential averages) after a stock has been stretched far below them. It is often the first sign that a downtrend has ended and a new advance is starting.
What is an EMA crossback?
A pullback, after the wedge pop, to the now-rising 10-day or 20-day exponential average that holds there. It is a lower-risk place to buy or add, because the stop can sit just below the averages.
What is an exhaustion extension?
A late stage of a run in which the stock races far above its moving averages, often with gaps and a burst of excitement. Kell treats it as a time to sell into strength, not to buy.