The Wyckoff Method

[happyjack]

Hi All
Some time ago when I was reading this thread I came across a trading system that had an Acronym for a name. I think it was 5 or 6 letters the letters and the name described the system. Only shares that paid dividends were considered so one letter was a "D" only shares that had an institution as a major shareholder were considered, so another letter was "I" I know that it came from an American university but that is all I can remember.

Can anyone give me a lead on this?

Happyjack

 

[brty]

Hi Happyjack,

Did you mean CANSLIM?

C - Current quarterly earnings per share has increased sharply from the same quarters' earnings reported in the prior year. (Beware of items in financial statements that can cause earnings distortions.)

A - Annual earnings increases over the last five years.

N - New products, management, and other new events. In addition, the company's stock has reached new highs.

S - Small supply and large demand for a stock creates excess demand, and an environment in which stock prices can soar. Companies acquiring their own stock reduces market supply and can indicate their expectation of future profitability. Look for low debt-equity ratios.

L - Choose leaders over laggard stocks within the same industry. Use the relative strength index as a guide.

I - Pick stocks who have institutional sponsorship by a few institutions with recent above average performance. Be cautious of stocks that are over owned by institutions.

M - Determining market direction by reviewing market averages daily.

bye

brty

 

[motorway]

hello Happyjack

The only thing that rings a bell

with letters acronym and method
is William O'Neil's

CANSLIM

C = Current earnings per share. They must be up 18 to 20% or more.

A = Annual earnings. They should be up 25% or more in each of the last three years.

N = New. The company should either be under new management, have a new product, or have a new service. It should also have a new high for its stock price.
S = Shares of common stock Outstanding:Keep it small. The price of a common stock with 300 million shares outstanding is hard to budge up because of the large supply of stock available.

L = Leader or laggard? Within an industry, always choose the company that is leading the way, not one that is following in another's footsteps.

I = Institutional sponsorship. Make sure large mutual fund companies (and other institutions) are investing in your stock - you can ride on their capital. Also, focus on the better performing institutions buying your stock.

M = Market trends and market indices. Recognize the cup and handle pattern, as well as other market correction footprints. Know when a stock has peaked out. Also, buy stocks only when the Dow, S&P 500, and Nasdaq are going up.

Not completely off topic
Here is Richard Wyckoff 's 1920 version

The " Ten Vital Trends " Wyckoff 1920

Corporate

1 to financial strength or weakness ..........
2 of management ............ positive or negative
3 earning and dividend power......................up or down
4 to or from leadership in industry.............A leader or laggard

Trends of the Sector

5 of The Industrial Group..........
6 Of business in general ( esp money and interest rates ) ...

Technical....( Graham's Mr Market But instead of a suggestive anecdote ,, A method )

7 trend of Market...
8 trend of intermediate
9 trend of short term
10 accumulation distribution , trends of manipulation ..........

On Mr Market

Ben ) Graham's association with ( Richard ) Wyckoff began in 1919. When he Submitted an article
entitled " Bargains in Bonds " to the Magazine of Wall Street and Quickly became a regular contributor.

Eventually Graham was offered the publication's chief editorship, with a generous salary and a sizable share of the profits. After considering the offer seriously ,he turned it down, perhaps influenced by the lure of a junior partnership that he received in 1920. Graham capitalized on his friendship with Wyckoff, however, to land his brother Victor a job in the periodical's advertising department.

Victor swiftly rose to head the department , then rode the crest of the Magazine of Wall Street's soaring circulation during the twenties. Advertising sales climbed and Victor prospered. Unfortunately ,he then fell in love with a young woman, whom he married in 1928.

Carrie (Ceclia G. ) Wyckoff was furious. According to Ben Graham, she had amorous designs on Victor, or hoped he would marry her younger sister, or both. Victor left her employ and embarked on a far less successful career in investment banking. Throughout it all, Ben remained on good terms with both Wyckoff's .....


From...
It Was a Very Good Year: Extraordinary Moments in Stock Market History
By Martin S. Fridson

motorway

 

[happyjack]

Hi Brty and Motorway
That is the one I was thinking of, God knows where I got the Dividend bit from.

This time I will write it down but the last time I found it I was trying to concentrate on the Wykoff side of it I just pushed it to the corner of my mind.

Thank you for the time and effort you put it researching it for me

Happyjack

 

[Broadway]

Hey Motorway,

I have another question.

I think you mentioned that P+F charts and Wyckoff methods can be used to set a target. This would be good to learn.

Hypothetically, let's say last week (Monday) was a successful Secondary Test.
And I entered a long SPI position at 5100. (like many did!)
Where would the target(s) be according to P+F analysis? Or is this something you work out depending on what you see as the price goes up?

thanks again.

 

[motorway]

Hey Motorway,

I have another question.

I think you mentioned that P+F charts and Wyckoff methods can be used to set a target. This would be good to learn.

Hypothetically, let's say last week (Monday) was a successful Secondary Test.
And I entered a long SPI position at 5100. (like many did!)
Where would the target(s) be according to P+F analysis? Or is this something you work out depending on what you see as the price goes up?

thanks again.

The law of cause and effect states that the excesses that develop in supply and demand are not random but are the result of key events in market action or the result of periods of preparation. Wyckoff teaches what these developments are and how to judge when they are unfolding in time to take advantage of the excesses in supply or demand that will follow.

http://www.wyckoffstockmarketinstitute.com/goal_article.htm

P&F is used to quantify this unfolding imbalance.
It is measuring the "differences of opinion"' that when resolved will result in the price moving to a new level

Price moves to the new level by the principle of markup and markdown..

( inventory can be simply marked up or down it does not have to trend..That is why the imbalance in demand and supply... The cause that will have an effect is important to identify )

This quantity is the objective ( like the target of an archer. The bow is an energy storage device that releases and flights the arrow.

How important is it to recognize the energy in the bow before the arrow is shot.. rather than when the arrow is in flight esp if that bow was pointing at YOU )

What is the Wyckoff Method ?

It is identifying imbalances of demand and supply
it is not moving averages
it is not buying breakouts
it is not any indicators

it is

demand and supply
cause and effect
effort and result

The best way to get a grip of a P&F chart
is watch one in real time unfold

those differences of opinion.. arise and are resolved

the chart flows , it congests-----> pressure builds ( the bow is drawn )

The most important differences are those between

Strong and Weak hands

A stock goes down there is selling overcoming demand
But the transfer of ownership builds a "cause"

stability creates instability ( sub-prime excesses ? )

The P&F and esp the areas of congestion identify this cause building

We have defined a Tape Reader as one who follows the immediate trend.
This means that he pursues the line of least resistance.

A mechanical engineer, given the weight of an object, the force of the blow that strikes it, and the element through which it must pass, can figure approximately how far the object will be driven.

So the Tape Reader, by gauging the impetus or the energy with which a stock starts and sustains a movement, decides whether it is likely to travel far enough to warrant his going with it - whether it will pay its expenses and remunerate him for his boldness.


When a stream breaks through a dam it goes into new territory. Likewise the breaking through of a stock is significant, because it means that the resistance has been overcome.

The stronger the resistance, the less likelihood of finding further obstacles in the immediate vicinity. Dams are not usually built one behind the other.
So when we find a stock emerging into a new field it is best to go with it, especially if, in breaking through it, it carries the rest of the market along.

That is early Wyckoff from 1908/1909

The best measure of this resistance is the congestion on the P&F

It it not a horizontal line drawn from a top or bottom

It is the differences between Strong and Weak hands
It is opposing forces being overcome

Demand meeting Supply
Supply meeting Demand

Sentiment and Ownership changes.

P&F is very instructive
If you have the opportunity to watch

A P&F chart "FLOW" through through time

You will soon appreciate what
resistance is and what happens when it is overcome

It is always something met up ahead
It is the running into the opposite force

The more congestion on the P&F
The more new ground that will be
achieved

Bull markets are the "cause" of bear markets
Bear markets are the "cause" of bull markets

An important Wyckoff principle is the springboard.

Where is the spingboard for a move really ?
It is not the breakout to new or highs or low.

That is the move itself that will gather a following
It has already sprung already..



motorway

 

[motorway]

These articles are directed at two audiences.

The first are those traders who are unfamiliar with
the Wyckoff method. While they may have read articles or books about Wyckoff or interacted with others who profess to be knowledgeable about the Wyckoff method, they have never embarked upon a step by step course of study intended to result in a working knowledge of the Wyckoff approach to technical trading in the stock market.

The other audience that can benefit from these
articles is the previously educated. These are traders and investors who have made a comprehensive study of the Wyckoff approach and who are endeavoring to employ it in their market operation.

http://www.wyckoffstockmarketinstitute.com/corner.htm

I would totally endorse those sentiments

The WYCKOFF-SMI course is the real deal imo

Just point out I am not pushing myself forward as any type of expert

SMI are posting some very nice articles...

I recommend you grab that small bit of unit one linked in the first post

It contains a nice definition of the three laws.

sharing and discussion

motorway

 

[motorway]

Charts might be marked a bit different

( had some problems lost some saved charts )

Bar chart

A large Volume down bar

BUT rising bottoms and second and third bars
deem that volume to be demand

You need to see the last three bars as one bar
A three day bar... But only these three

The next four bars might be a theme
and then the next six ....
if only We had a chart that could do that for us

Adapt to the support and resistance as it unfolds

and only change columns as the themes change---------P&F

The 2 box 2point chart over these three days as been a very strong pattern

We left it with the other side turning up ( demand ) the chart slowed and congested...But at the end of the day the "ladle" overflowed
But not by much

From there ( a higher low ) a strong move up above the last high
a "back-up" and then a strong move pushing through supply

Demand was moving higher "absorbing" and pushing through supply..
A strong pattern

USA mkts will again have the ability to whip this around
BUT strength is still strength..

And atm this thrust down ( this wave ) still has not made much new ground.

motorway

 

[ceasar73]

R.WYCKOFF

"Stock prices are made by the minds of men."

I'm no expert, but I tend to agree.

Any thoughts on R.Wyckoff?

thanks

ceasar73.

 

[motorway]

The Link to this Pruden Article is not longer available
It was available for a significant period of time..

It is from ---> TSAA Newsletter August, 1995

I would refer always to the SMI-WYCKOFF original material

You are always getting a bit of someone else ( which does not mean it is not valuable ) When the material is from a second hand, and a different emphasis.

motorway included

motorway

MENTAL STATE CONTROL

AND THE COMPOSITE OPERATOR

by H. O. Pruden, Ph.D

We gain some substantial degree of MENTAL STATE CONTROL/EMOTIONAL CONTROL if we train ourselves in the attitudes and actions of the COMPOSITE OPERATOR.

1. a. Wyckoff/SMI argue that "…rigid self-control is half the battle…"

b. Van K. Tharp concludes that investment success "…comes when the investor realizes that investment success does not come from external control, but from internal control."

2. a. Wyckoff/SMI counsel: "Until you can learn to trade and invest without hope or fear, you will not meet with all the success you should."

b. Van K. Tharp observes the "investment problems result from emotional states such as impatience; compulsiveness; anger; fear; being stuck; or depression…In fact, most investment problems that I can think of result from an inappropriate state of mind."

3. a. Wyckoff/SMI state: "…you must operate with no emotions whatever."

b. Van K. Tharp states: "Discipline is (mental) state control."

4. a. Wyckoff/SMI report that "…the qualities essential to the equipment of a speculator (and an investor), are: judgment, self-reliance, courage, prudence, and pliability. To these could be added another quality, patience."

b. Van K. Tharp concludes: "Achieving excellence usually occurs as a result of attaining states, such as confidence, that are appropriate…"

5. a. Wyckoff/SMI: "If you find you do not possess courage, self-reliance, patience, prudence, and pliability, cultivate those qualities."

b. Van K. Tharp: "What you really need is the ability to call upon that state at will and to maintain it."

6. a. Wyckoff/SMI: "…you must train yourself…Make a searching analysis of your own mental process."

b. Van K. Tharp: "My primary goal in this volume is to help you develop state control. Focus on what is going on within you instead of what is outside of you. Become aware of what is going on inside you. When you do, I think you will be amazed at what you discover."

7. Van K. Tharp: "State control is not that difficult. At least six major methods include:


8. Tharp: MODEL OTHER PEOPLE

Thinking about someone who can easily attain the state that you want also can help you change your experience.

9. The person you model may even be a FICTIONAL character in whole or in part.

Tharp:

You can even do this for a fantasy figure. Imagine a super investor. How would that person handle the situation that is bothering you? How would that person look? What would that person feel like? What state of mind would your super investor be in to deal with the situation confronting you? Again, get the answers to these questions and then role play.

 

[motorway]

continued

10. Wyckoff/SMI provide us with just such a "fictional" SUPER TRADER: THE COMPOSITE MAN:
Composite Man

In studying, understanding, and interpreting market action, we consider all market action as a manufactured operation in which the buying and/or selling is sufficiently centered and coming from interests better informed than the generally untrained individual investor/speculator. The many large interests which do have an effect on the market place (trust companies, banks, mutual funds, investment trusts, investment companies, hedge funds, specialists, position brokers, etc.) are best thought of as the "Composite Man."

This Composite Man causes the market to act and react. Or, what actually happened is the market responds to the ageless, natural Law of Supply and Demand. The Composite Man and the effects of the Law of Supply and Demand are relay synonymous. It is the result of the motives, objectives, hopes, and fears of all the buyers and sellers whose actions produce the net effect upon the market.

Other terms which may be thought to be synonymous with the Composite Man would be the "Market", the "Sponsor", the "Operator", or "They". These terms are used interchangeably throughout the text. The selection of the terms is determined by what is most meaningful to the student. It should be your objective to think of the Composite Man as the primary force in the marketplace. Thinking of him in this light should enhance your analysis of the action resulting from the dominant groups operating within individual stocks and their total effect within the general market place.

11. Richard D. Wyckoff based the COMPOSITE MAN, and based his own trading philosophy, upon his observations and intimate understanding of such famous old-time professionals as James R. Keene, Russell Sage, Edward H. Harriman, and Jesse Livermore.

12. Indeed, Edwin Lefevre's Reminiscences of a Stock Operator, which is based upon Jesse Livermore, is an excellent model of the COMPOSITE MAN or COMPOSITE OPERATOR.

13. Dubin examines how fictions enable decision makers to more adequately cope with the unknown.

Organization fictions are those fictions that are necessary in order that action within the formal organization may proceed.


14. The concept of the COMPOSITE OPERATOR serves a function similar to the role or organization fictions.

15. Playing the role of the COMPOSITE OPERATOR enables the market decision-maker to escape his/her "egocentric predicament".

There is no more serious error that a marketer can make than to allow himself to be caught in the "egocentric predicament". In the realm of philosophy, from which the expression is borrowed, the egocentric predicament simply describes the basic situation in which each one of us finds himself, namely, that he has to look at the world through his own eyes. In marketing, the implication of the phrase is that any seller who succumbs to the natural temptation to look at his problems solely from his own viewpoint and who does not make a conscious effort to overcome the natural limitations of his own outlook will indeed find himself in a predicament. Look at every problem from the standpoint of the COMPOSITE OPERATOR!

16. Overcoming the "egocentric predicament" by playing the role of the COMPOSITE OPERATOR automatically neutralizes the emotions by placing one is a dissociated position. Tharp notes that:

One of the biggest secrets of trading success is to remain cool, detached, and unemotional. Most traders who obtain and maintain that detachment do so by being dissociated. In other words, instead of actually experiencing the ups and downs of the market, they watch themselves having that experience. When Dick, the trader introduced in the opening story, became anxious, he moved to a dissociated position to observe himself. Other traders who undergo extreme emotional ups and downs as the market fluctuates go through those emotional swings because they remain associated. Simple dissociation is an effective way to neutralize your emotions.

17. Playing the role of the COMPOSITE OPERATOR forces us to reframe our perceptions. As Robbins explains, "…The meaning of any experience depends upon the frame we put around it. If you change the frame, the context, the meaning changes instantly. There are ways to see our biggest problems as our greatest opportunities -- if only we can step out of our trained patterns…If we change our frame of reference by looking at the same situation from a different point of view, we can change the way we respond in life. We can change our representation or perception about anything and in a moment change our states and behaviors. This is what reframing is all about."

18. By assuming the role of the COMPOSITE OPERATOR we can create dissociation and cause reframing. We will see market events differently; we will talk to ourselves about those events differently and in a different tone of voice, and we will feel differently about those events. As a consequence, our behaviors will more appropriately move us toward our objectives.

19. Wyckoff/SMI implore us to follow in the footsteps of the COMPOSITE OPERATOR -- to think like him and to act like him:

a. Like individuals, stocks have certain characteristics with which one becomes more and more familiar as he studies intensively their past and present movements. The market is made by the minds of men, and all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man's operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and plays the stock to his advantage. It's to your disadvantage if you do not understand the game as he plays it; and to your advantage if you do understand it.

Not all of the Composite Man's moves can be detected. Not all of the moves are made by the Composite Man. In fact, it does not matter to the tape reader or the chart reader whether the moves are real or artificial, that is, the result of actual buying and selling by the public and long term investors or buying and selling by large traders. Most of the important trades in the market are prepared, executed, and concluded. It is our business to show you how a large number of these trading and investment opportunities may be spotted in time to take advantage of them.

b. The Composite Man carefully plans, executes, and concludes his campaigns.

c. A 'broad market' is created by the Composite Man advertising his stock on the ticker tape.

d. Study charts with the purpose of judging the behavior of the stock and the motives of those who dominate it.

e. To study charts, look for the motives behind the action which the chart portrays.

f. But, the market behaves naturally in this very manner. And, if you learn to understand this market behavior of a so-called Composite Man, you can learn to make judgements, then conclusions, which should have a positive effect in your stock market operations.

20. To attain the perspective of the COMPOSITE OPERATOR, we should ask ourselves such basic questions as: "What is the motive of the COMPOSITE OPERATOR?" and "What would I do if I were the COMPOSITE OPERATOR?"

21. In addition to the basic two queries about the COMPOSITE OPERATOR, we can add such complementary questions as: "What is it that the COMPOSITE OPERATOR is attempting to prepare or carry out or conclude?"; "What is the COMPOSITE OPERATOR attempting to do to the public and for what purpose?" As you gain understanding through practice with the role of the COMPOSITE OPERATOR, you'll want to add your own questions to the list.


REFERENCES

1. Brown, England and Matthews, Problems in Marketing

2. Robert Dubin, Human Relations in Administration

3. Edwin Lefevre, Reminiscences of a Stock Operator

5. Van K. Tharp, How to Develop Discipline to Become a More Successful Investor

6. Richard D. Wckoff, Wall Street Ventures and Adventures Through Forty Years

7. Wyckoff/SMI, The Richard D. Wyckoff Course in Stock Market Science and Technique

 

[RichKid]

The Link to this Pruden Article is not longer available
It was available for a significant period of time..

It is from ---> TSAA Newsletter August, 1995

I would refer always to the SMI-WYCKOFF original material

You are always getting a bit of someone else ( which does not mean it is not valuable ) When the material is from a second hand, and a different emphasis.

motorway included

motorway

Thanks a million motorway, that article has some very practical, and hopefully, very powerful advice. The psychology behind the techniques is very interesting and is worth adopting in a suitable manner.

The fact that you refer constantly, and in detail, to Wyckoff's original material is one distinguishing feature of your writing and explanation. It certainly allows readers to glimpse the core of his teachings and judge the material for themselves instead of just swallowing someone else's gloss or simplified interpretation of the course. I'm sure Wyckoff would have been proud of your efforts.

Thank you again for sharing your passion with us so freely in such a collegiate manner!

 

[Timmy]

Thanks a million motorway, that article has some very practical, and hopefully, very powerful advice. The psychology behind the techniques is very interesting and is worth adopting in a suitable manner.

The fact that you refer constantly, and in detail, to Wyckoff's original material is one distinguishing feature of your writing and explanation. It certainly allows readers to glimpse the core of his teachings and judge the material for themselves instead of just swallowing someone else's gloss or simplified interpretation of the course. I'm sure Wyckoff would have been proud of your efforts.

Thank you again for sharing your passion with us so freely in such a collegiate manner!

Really well put RichKid, second your sentiments.

I found the article excellent. A lot of 'psychology of trading' works I find simplistic and less than helpful.

 

[nomore4s]

Motorway,

Just a quick question on reverse trendlines.

On the attached chart of SIP I have drawn some reverse trendlines (in White) as well as the normal TL (in red). Reverse TL are drawn between the last to thrusts down with high volume.

I've used the reverse TL to highlight the slowing of the thrusts down and change of behaviour on the chart (ease of movement). Is this use of reverse TL valid?

Thanks

 

[motorway]

Strong day for the overall market and also a good day for SIP.

The last two bars esp I think reveal demand

The ease of movement has very obvioulsy slowed since around July 07 - between points 5 - 7. The thrusts down have slowed considerably and the last thrust down has taken longer than the rest for not much new ground.

I would see Preliminary Support at July 07
A Selling Climax at sep 07....Which stopped the downtrend

But

And look at the volume needed to push the price below $1.30. Effort & Result.
The next few days will give more insight into whether yesterdays high vol was demand or not but todays action seems to suggest it was.

Yes I would agree

This may not be the end of this current wave down as I would like to see a better rally than 1 day but the next rally and reaction will reveal more insight (character).

Yes We want to see a Sign of Strength

What I see atm is -
Slowing of momentum to the downside - shortening of thrusts (has yet to go up though)
The volume that has come in, has slowed the descent. Ease of movement - line of least resistence revealing itself?

The line of least resistance is changing
But a new one is not just yet revealed ( to me )

There is a damming up happening

Supply & Demand
Effort & Result
Cause & Effect

All there is

But

now this but... I think it is very good to be questioning of all moves down in this type of mkt

The Selling climax maybe has in a sense failed
But in the context of the market has it failed or is the ending action just been extended and delayed ?

The volume at PS & SC was very large

The action from the SC volume subsided esp Dec Feb Mar

What was happening ?

Yes I think Your reverse trend line is justified

A reverse trend line needs a volume definition in one position
it is where the other side ( the reverse ) came in

Here it is demand !

So if you take the lower line of the reverse use
and the upper line of the normal use

What have you drawn ?

A valid APEX

The thrusts are not only making less ground
But the action is narrowing

My take on that would be that supply withdrew had been overcome
But where we could have expected a SOS we got very little

Did the Character of the market delay the appearance of demand ?

You can see the price drifts down with three rejections of lower prices
( like springs But these are in a down trend )

The stock is moving down with the market
But not being driven down with urgent supply

The stock is just sagging ( A RED FLAG at a TOP but at a BOTTOM ? )

This changes around the 20th mar..

( Supply will always turn up )

The last two bars tend to confirm buying..

BUT what are the buyers' time frames ?

Maybe much longer than yours?

What would tell us would be urgency..

A SOS ( Sign of Strength )

Note also the recent strength in the mkt
and the relative weakness in this stock

The Sellers reached down to the buyers
The last bar puts the positive case.

discussion
motorway

 

[Whiskers]

Really well put RichKid, second your sentiments.

I found the article excellent. A lot of 'psychology of trading' works I find simplistic and less than helpful.

Yes indeed. I thirded o) it.

As you can probably tell, this quote is high on my 'remember list'.

16. Overcoming the "egocentric predicament" by playing the role of the COMPOSITE OPERATOR automatically neutralizes the emotions by placing one is a dissociated position. Tharp notes that:

 

[nomore4s]

now this but... I think it is very good to be questioning of all moves down in this type of mkt

The Selling climax maybe has in a sense failed
But in the context of the market has it failed or is the ending action just been extended and delayed ?

The volume at PS & SC was very large

The action from the SC volume subsided esp Dec Feb Mar

What was happening ?

Yes I think Your reverse trend line is justified

A reverse trend line needs a volume definition in one position
it is where the other side ( the reverse ) came in

Here it is demand !

So if you take the lower line of the reverse use
and the upper line of the normal use

What have you drawn ?

A valid APEX

The thrusts are not only making less ground
But the action is narrowing

My take on that would be that supply withdrew had been overcome
But where we could have expected a SOS we got very little

Did the Character of the market delay the appearance of demand ?

You can see the price drifts down with three rejections of lower prices
( like springs But these are in a down trend )

The stock is moving down with the market
But not being driven down with urgent supply

The stock is just sagging ( A RED FLAG at a TOP but at a BOTTOM ? )

This changes around the 20th mar..

( Supply will always turn up )

The last two bars tend to confirm buying..

BUT what are the buyers' time frames ?

Maybe much longer than yours?

What would tell us would be urgency..

A SOS ( Sign of Strength )

Note also the recent strength in the mkt
and the relative weakness in this stock

The Sellers reached down to the buyers
The last bar puts the positive case.

discussion
motorway

Thanks for the reply MW.

Lots to take out of the above part of the post.

BUT what are the buyers' time frames ?

Maybe much longer than yours?

What would tell us would be urgency..

A SOS ( Sign of Strength )

This is a very valid point, hence why I haven't taken a position yet.

Demand does not seem to be in a hurry and is willing to wait for supply to come to it atm. But in the current market conditions why would it be in a hurry? Plenty of time to accumulate and plenty of supply around at these levels atm, no need to chase prices up yet.

But someone is willing to slowly soak the supply up atm. Early stages

First they scare you out, then they bore you out, and then if they can they scare you out again.

This quote readily comes to mind with this stock atm.

ATM I'm using this stock as yet another learning expirence. As it has been unfolding I've learnt quite abit in regards to the Wyckoff principles. My understanding continues to grow. Posting the chart and analysis up helps to crystalize my thoughts, also feedback from other posters always helps.

Thanks all.

 

[motorway]

The Principle of The Composite Operator is central to why the other Principles exist and why they unfold...

Why ?

The "Method" takes for granted:
That those who know more about it than the observer cannot conceal their future intentions regarding it. Their plans will be revealed in time by the stock's subsequent action.
Victor De Villiers, "The Point and Figure Method of Anticipating Stock Price Movements", Published 1933, pg 8

If we see the market ( for anything ) as like a pendulum we see that

IT SWINGS..... But for why and for who ?

note------>

Stock Market and sector forces together typically cause 80% of the price movement in a stock. That means the company fundamentals usually account for less than 20% of a stock’s price movement. This is the reason a company’s stock price sometimes seems to move independently of the fundamentals!Source: “The Latent Statistical Structure of Securities Price Changes”Benjamin F. King

Most people, however, spend 80% of their time on stock evaluation and only 20% on sector and market evaluation. In other words, they ignore where the greatest amount of risk lies –the market and sector forces. Source: “The Latent Statistical Structure of Securities Price Changes”Benjamin F. King

The why and for who is The Composite operator..
This makes it so important that we identify accumulation and distribution
So we can be in harmony with these swings ( the biggest swings are bear and bull markets )...

imo A Wyckoff trader does not want to follow or fade... A Wyckoff trader trys to be in harmony...

When the CO is accumulating He can not wait for the swing down to stop
he has to buy on the way down.... That is why if we think we see a Selling climax... We have to ask was there preliminary support and why a Sign of strength should follow a test etc

The CO can not wait for the Buying Climax to sell . He has to start to sell on the way up.. So if We see a buying climax there should be preliminary supply
and after a test Signs of weakness.......

Richard D. Wyckoff introduced the concept of the composite operator in the early 1900's, when pools
(manipulators) were in existence. These pools routinely worked with each other for the purpose of influencing
a particular stock.

It’s under these conditions that Wyckoff began to interpret all market action as a
manufactured operation, in which the buying and/or selling is sufficiently centered and is coming from
interests better informed than the generally untrained individual investor/speculator. (Pruden 1994)

These
big money players, in this case, the “elephants” (Central Banks, Investment banks, FX broker/dealers, Hedge
Funds and CTA/CPO types) exert an enormous amount of influence over the global currency market. In fact,
the methods of manipulation practiced by Richard D. Wyckoff and other old-time professionals, such as
James R. Keene and Jesse Livermore, are the same type of manipulations that are practiced globally in
today’s currency market.

These manipulations are often considered normal business activity, as they are
necessary for the proper functioning of the markets.

Anticipation is not the same as prediction..
We anticipate by identifying the technical position that is unfolding.
We observe accumulation and distribution
Principles of demand and supply things that are real

Because, "They" really cannot conceal their future intentions regarding it.

They have to accumulate or distribute ( Buy or Sell ) FIRST..

This is want is a CAUSE

A recent article in the Economist told the story of Felicity Foresight, a woman gifted with the ability to see the future. Since 1900, Felicity invested one dollar (one time) and succeeded in picking the best performing investment class every year.
Today, she would be 110,000 times richer than Bill Gates (For those who are curious, she would have $9.6 quintillion - 96 followed by 17 zeros). It took her 55 years to become a millionaire and 86 years to become the first trillionaire. Over the last century, her incredible gift earned her a 55% average annual return. Even if we take away taxes and trading costs, she would still be worth $1.3 quadrillion (only 14 zeros).

Now lets take a look at Felicity's friend Henry Hindsight. Henry was different because he did not possess the ability to foresee the future. Henry had to resort to strategies much more typical of the average investor. Henry always picked the best performing investment class from the previous year. I call Henry the trend follower.

Unfortunately for poor Henry, his investment strategy led him to poor investment choices. Over the past 50 years, chasing last year's winners led to a loss approximately every other year. Henry's dollar in 1900 is now a mere $783 - a far stretch from Felicity's quintillions. As sad as this sounds, most investors think they can be Felicity Foresight but wind up being Henry Hindsight.

The proof is in the fact that last years winners always attract the most money from new investment dollars.

So we see accumulation PS SC AR ST SOS LPS
We get in harmony we step out of the "egocentric predicament"
And seeing strength in weakness ( B% at 6.6% ! ) We do not fear

and when we see PSUPPLY BC ARc ST SOW LPsupply , seeing weakness in strength ( B% at 80% !) We do not hope...

Anyone who buys or sells a stock, a bond or a commodity for profit is speculating if he employs
intelligent foresight. If he does not, he is gambling.
Richard D. Wyckoff, American pioneer in technical stock analysis.


Richard Wyckoff's first instruction to students of his stock analysis method published in the 1930s was
quite simple and specific””forget all the decision-making factors you ever used.

All you need to know is
in the table of stock prices and volumes in your daily newspaper.
With this back-to-basics approach, Wyckoff promised to show his students "the real rules of the game"

file attached which shows a nice dynamic

Why and for who does the market Swing ?
Does it swing for YOU

motorway

 

[motorway]

OK

think of that cycle of emotions

when looking at this chart
and note the postion of the B%

( remember the B% is the percent of stocks in the XAO which have found support, moved up made a test down and then moved above a point of resistance... demand and supply )

price has moved above the half way point ( a measure of the real relative strength )

My last comment was Strength is strength... price has moved higher on good volume ..Prices moved up and found supply..l A little congestion zone was encountered..

Look at the volume ... look at the range of the bars.. look at the volume ( fade ) look at where the closes of those bars where and look at what the B% was doing !

ABSORPTION ..

What is happening NOW

narrow range bar higher volume close in the middle

The thrust of this bar is shorter ( SOT )
Volume reveals that the good demand has met much more supply

look left .. what is there ?

So we have a turning point and a move back down ( maybe another secondary test ... or set up a Last point of support ? )

Or will demand again absorb this supply and after some "resting" move even higher

Price will always swing.. because the waves of buying and selling gather a following.... and these followings have a life cycle... early adopters to laggards

The last bar is not a NO DEMAND bar...

more later

Discussion

also the P&F
what does it suggest ?


motorway

 

[motorway]

The P&F chart..is like a bell around the neck of the CO
and like a ball and chain around his ankle

No matter what the CO does

The P&F is always moving exactly the same


The move up from the congestion zone ( congestion zone = risk to what has been ... and a Cause for what will be )

Is a strong pattern ( one step back = absorption )

motorway