The Wyckoff Method

[motorway]

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

Why ?

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

The CO has to sell on the way up and he has to buy on the way down.

( At least he starts to... 1- No turning points otherwise 2- The CO's volume is the volume of the mkt ...The CO is the one on the other side of the spread to "Mr Market" )

The pendulum swings Up and Down...

Each swing up is building a cause for the next swing down
Each swing down is building a cause for the next swing up

The CO uses the liquidity that is generated by those swings .
Liquidity created by emotions & by corners ( opes prime ?, poor FA & TA , broken investors, stupid investors greedy investors !)

Technical positions are being constantly created

People under water ( The press is full of it... ) Hold their breath for as long as they can , but until they stop , those waters will not recede..

( Risk risk RISK , Money is put at risk, always there is risk)

"It only goes up after you sell,
It only goes down after you buy"


Mkts can move in only three active ways ( they can also do nothing )

UP
DOWN
& SIDEWAYS

We define movement by a series of highs and lows

UP is a series of higher highs and higher lows
Down is a series of lower lows and lower highs

Sideways is a series Higher Highs & Lower Lows
or
A series of lower lows and lower highs

here defined are all possible patterns
trending , expanding . contracting ( dampening )

By measuring these swings
their thrust their duration & the Volume

In the context of position

We can identify the actions of the CO

and Hitch a ride on these swings

Keeping our heads above water
Riding waves not being smashed by them

The largest participation occurs at tops and bottoms
like moths to a flame or lemmings to a cliff

when trends are just about to enter Corners

( Just read through Saturday AFR , You name it it blows up ------The corner is always up ahead )

The action of the market unfolds by a series of waves
because action always gathers a following

We can measure this following
and so we can identify when the following meets opposition ( selling into the trend ) or simply wanes ..

how urgent , climatic etc

Price .... how far ( result )
Volume.... how much ( effort )
Time......how long ( duration )

backing and filling
information and manipulation , create following

The swings build causes

And in the context of STEP ONE ( That is why it is No-1 )

Are we coming or going ( what is the trend and what is the position in the trend )

Little swings build into bigger swings,, Same principles just different degrees

So The small trader can wait for those swings , those waves .
and ----->

Figuratively speaking, therefore the small trader should imagine himself as a hitch-hiker in the market. For the ordinary hitch-hiker, someone else supplies the car, chauffeur, oil and gas. When he thinks the car is about to go in his direction, he jumps aboard and rides as far as he thinks the car will go.

When he notices the machine has been stopped by a red light, or is about to turn a corner and go in some other direction, or that the car is running out of gas, or the brakes failing to work properly, he steps off and figures he has secured about as long a ride as he may expect.

All he has supplied in this transaction is a modest commission and whatever brains were necessary to observe and recognize the opportunity when to get on and off.

So it is with the market. The observer, whether a small trader or large operator, watches for his opportunity. When he sees a chance that offers reasonable odds in His favor, where the probability of profit far exceeds the risk, he buys, limits his risk and awaits developments.

So long as the stock behaves properly, in accordance with the technical action that confirms his original judgment, he maintains his position. As soon as he finds the stock has reached it's indicated objective....

Begins to waver in it's stride, or passes through a set of maneuvers that clearly indicate supply is increasing, and a reactionary movement seems imminent, he acts on the information thrust upon his attention and gets out.......

Richard D Wyckoff
Stock Market Technique ( vol 2 I think ~ 1934 )

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

SMI is putting up some good material...eg all of The Five Steps

motorway

 

[motorway]

Livermore came to wall street in 1906 confident and ready to conquer.
Too cocky for his own good, he lost it all in his first bust. ............................Buying stocks is different from reading the tape. If he saw a stock at 20 in the bucket shops and thought it would go to 24. he could buy at 20, and when it got to 24 he could "sell" for a 20 percent profit.

But on Wall Street he would take his $50,000 and plan to buy 2,500 shares of the stock. That was a hefty position in a market much smaller and less liquid than today's and the spread between bid and offered prices was often huge. it wasn't abnormal to see a stock quoted at 20 bid, offered at 25 - a 25 percent spread. Suppose a stock traded last at 20 but was quoted 19 bid, offered at 21. He started buying at 21, plus commission.

But then his own buying would drive the stock up. It might take him until 24 to get his entire portion built. Then, if he thought it would fall and started to sell , it might be quoted at 23 bid, offered at 24. he'd then start selling but never get a better price than 23, less commission, and take a loss on his first sale. Then he would drive the stock down and take a loss on the liquidation of his remaining 2,500 shares. It's a lot harder to make money in reality than it is to do on paper - something which few people today, except for institutional money mangers, seem to realize.

For instance, investment newsletters "manage" portfolios the same way Livermore traded bucket shops. But actually operating off the newsletters' advice is like Livermore's buying on Wall Street.
Livermore didn't get that at first. He though he couldn't read the tape fast enough on wall street.

Ken Fisher, 100 minds that made the market

So on one side of the buy - sell spread is Benjamin Graham's "Mr Market"

Always on the wrong side

On the other side of the spread is the Composite Operator ...

ALWAYS on the right side

Strong and Weak hands

Tops and Bottoms
Bull and Bear Markets

What is our task ?

Traders respond to input based on the model of the market they have built for themselves. A positive response grounded in Wyckoff's
theory of the Composite Operator will have distinctly different--and I
would argue, consistently more profitable outcomes ,than will a
negative response to input based on the theory of Contrary Opinion.
Understand and work with the Composite Operator--rather than against
the Public.

Hank Pruden

Four Phases of the Market

Accumulation ( A position has to be taken )
Mark-up (Rallies have support)
Distribution ( A position has to exited )
Mark-down ( Rallies do not have support)

Signatures of Price Volume And Time
That We can observe , identify and measure.

Signs of Strength ( demand )
Signs of Weakness ( Supply )

motorway

 

[motorway]

volume traded is buyer & seller
But only one side of the spread is of "good" quality
The other side being of "poor"

Volume is the meeting of demand and supply
Two things seen as one

But

How different is demand and supply ?

Think of any company... So many shares outstanding, of which so many are listed and even fewer available to buy...

Those available to buy = Supply

Supply is finite , it is limited .
Supply has a source , it flows , it has a speed , it can be absorbed

It is like a "creek" it can be "jumped"

Demand compared to supply is (almost) infinite

It surges , it waxes and wanes , it can be present or absent. We have seen it almost vanish in some cases recently..

Demand and Supply


We are always looking for where the volume comes in ( what it does )
and where it subsides.

It is the volume that gives clear defined boundaries--that mean something.

If the history of the market were to be written, these periods of lifelessness should mark the close of each chapter. The reason is: The factors that were active in producing the main movement, with its start, its climax and its collapse, have spent their force. Prices, therefore, settle into a groove, where they remain sometimes for weeks or until affected by some other powerful influence.

When a market is in the midst of a big move, no one can tell how long or how far it will run. But when prices are stationary, we know that from this point there will be a pronounced swing in one direction or another. There are ways of anticipating the direction of this swing. One is by noting the technical strength or weakness of the market (and )... The resistance to pressure

Studies in Tape reading

Wyckoff terms are very measured and defined

Up, Down & Sideways
The (last) Points of Support or Resistance etc

With these last two it is important to see the difference of a last point of support and where support maybe NOW

One is a point of background & context .The other is the point of what really matters..

Where is the "Creek" ----Where the volume comes in
It is not a horizontal line drawn from a series of tops

The creek is resistance that is met aways up ahead
It is the Supply , that has to be absorbed and Jumped.

It is the Jump that dramatically changes things and shows them to be changed.

It is where the volume comes in ( important--it is the volume that gives the clear defined boundaries ) and what results.

Charts We saw preliminary Support ( test ) Selling climax ( response)
We saw Selling Climax ( test ) Automatic Rally ( response )
Automatic Rally ( test ) Secondary test ( response )

Prices met supply a number of times

The light blue line is where I see the flow of supply ( creek )

As I said in the XAO thread the creek is found near the rally tops and can be divided into major and minor.... The creek is not any line or even these lines

Only the Volume can reveal where they actually are

Along the minor creek was noted "absorption"

Since then the Volume & Price action I would say is bullish

Observe the volume in the context of the Price movements
( look at the last bar ?

The resistance to pressure

)

Also look at the B%

Strength or weakness of the market

OK where do we buy ?

On the response to the test....What in effect is a last point of support after a Sign of Strength


Note every principle is a response to what has been and a test to see what becomes.



What do we buy ?....Step 5 ... Emerging relative strength.

motorway

 

[goatbeater]

WOW what a thread!!

I wanted all who contributed to know this thread is why I just joined the forum.
I haven't seen so much good stuff on any other forum - anywhere!

The contributors have obviously put a lot of time and effort into the submissions and I hope everyone appreciates the great learning available

Of course it's an Aussie forum - awesome!!

 

[Timmy]

So, should I ask what goat beating actually entails or is it to be taken literally? Not sure I can condone it if it is to be taken literally - but welcome to the thread anyway!

Yeah, great stuff here ... I think what I like most about the Wyckoff methodology is I can pick stuff out of it that I particularly like, and even add stuff in ...

I keep in mind the 3 things I am trying to weigh up:
1. Supply and Demand
2. Cause and Effect
3. Effort and Result
and can play around with various different ways of looking at the data to measure these things. It just seems to me to be a method that encourages experimentation around these 'fundamental' 3 principles/laws.

I use all 3 to weigh up the context of where price is (i.e. "what's the trend?" would be a simple way of summarising context), while leaning more on the 3rd point for the actual entry point.

Wyckoff's basic tools were the Point and Figure chart and the time-based HLC bars. I must say I have more-or-less abandoned the use of time-based bars/candles, but really like the Point and Figure chart (and thanks to Motorway for his continual badgering me on this, took me a while to get what these charts were all about but am happy I persisted, at Motorway's encouragement). I do use HLC bars (acually OHLC candles, just find these easier to see - literally), but either based on Constant Volume &/or Constant Range, rather than constant time.

 

[motorway]

A chart is its own interpretation

Line of least resistance would appear UP

looking for a possible LPS to form

No JUMP as yet .

Indications are for a "normal reaction"
Back to support ( which is always met up ahead )

Where is the volume met
and how... Is what matters now

and will define the zone at 5650 to 5700

B% is holding up .
The negative divergence over the recent action

( B% is holding up well )

Suggests to me little more that some "waiting"
in order
to get back in sync
before a move HIGHER

B% is not concerned with price levels
but support levels



For Discussion
On Wyckoff Method.

Very narrow range on the last bar
With falling volume

no work on the P&F at the pivot high
but an uncorrected column

( which has now corrected )

Could even be as low as we go
( P&F )

motorway

 

[nomore4s]

Looks like some form of support has showed up in the last few days.

While yesterdays bar doesn't look very flash, a wide range down bar on slightly higher volume, todays bar on slightly higher vol again tends to suggest there was some buying in yesterdays bar. Of course the response in the next few days will confirm or disprove this theory, but todays bar looks somewhat bullish.

There doesn't appear to be alot of conviction in the selling atm, will be interesting to see if support does form & hold at this current level or not.

Would like to see a LPS form at around these levels or else we will probably see a retest of the 5100-5200 area imo.

Had a chart but for some reason I can't attach it.

 

[motorway]

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

some more articles here

eg the buying tests 1,2 & 3

these are PDF files too

to save them I had to open them and then save from within acrobat

..................

Behavioural Finance would appear to me to be often only
one half of tape reading..

That is it does not focus on the other side of the spread..

But considers what is two, as a one

eg in capitulation , is everyone capitulating ?

never the less a quote from one of it's practitioners
and the last paragraph maybe makes my point a little strong

motorway

Looks Random, Seems Random, So It Must Be Random?

The rational school of economists who postulated efficient markets assumed stock prices were random. Harry C. Roberts presented one of the earliest renderings of randomness in stocks in 1959. Of course the simplest way to prove randomness in stocks is to discredit anyone who postulates patterns in stocks.

The unlucky "patternists" in this case were the technical analysts ,Roberts's paper compared real stock prices with what we might call virtual stock prices. His virtual graphs were constructed of data obtained from a random number generator. The original graphs are reproduced in diagram 10-2. His assertion, or perhaps his assumption, is that because the real and the virtual stock chart have the "same visual appearance," stock prices are random.

" The graph seems to show a pattern, but in fact a pattern does not exist."

This may be a dubious logic.


After all, if you showed a physician an EKG graph generated from random numbers and he gave you a diagnosis, does it prove that the patterns in all the real EKG data are random or did you just put one over on the good doctor?

Could it be that the cognitive error is on the part of those who are culturally biased against patterns whether in technical analysis, chaos, or whatever.



The Challenge of Chartism

Price charts only tell us what we think they tell us. Our bias interferes with the potential for an objective perception of a given price history. We see only what we have been taught to see. One may say the same thing about fundamentals. Fundamentals are perceptual, too. The terrible news of the bankruptcy of WorldCom and generally failing communications companies were negative fundamentals for the telecom sector. Yet, some would say that these bankruptcies have finally created value in telecom shares, which had been overvalued for years. The return to realism and the reduction of expectations to reasonable growth may actually provide the best fundamentals in years. Who sees what? Those with a perpetually bullish bias are victims of the adage that beauty is in the eye of the buy-and-holder.

Woody Dorsey

 

[The Edge]

Saturday 30 august 2008

Motorway:

Your posts on Wyckoff are appreciated.

Have you, or anyone else, seen or read copies of
his "Trend Letter" that he began in 1911?

TIA.

 

[motorway]

Hello Edge

There is a reasonable description of the nature of the "Trend Letter"
in Wall Street Ventures and Adventures Through Forty Years
With some "campaign examples" .

That old material like that would be interesting to see.
The early issues of "The Ticker" as well....


.........................


The chart must reveal to us what the intention of the Composite Man really is. Is there support here in order to sell at higher prices or is there a serious real accumulation ?

Over this phase there is significant volume now across this pattern
relative

There was the question asked with the move down below the line of support
and the subsequent working higher with some strength ( Figure chart )

Now it is at an interesting juncture,,,, Can the "boy scout" get back above that "ice" (vertical line chart)..

Note the B% significant number of stocks are above "points of resistance"
But it is at a significant juncture too ( red line ) Good place for a short ?

Unless we see continued move up with expansion of volume
We should be doubtful at this point in time

The reverse trend line ( brown line ) continues to define the larger trend.
B% is not making panic lows
There is support at this level...

I would wait for the market to confirm or negate
continue or reverse
watch for the volume...

What position would we put the XAO in...

A higher probability of a rally to 5600
Than a move down below 4800.. ?

Then we see some more response,

The chart must reveal to us what the intention of the Composite Man really is

..

certainly there is no passing of many of the "nine buying tests"

motorway
Only for discussion

Wyckoff tells us that the most important thing that anyone can know about the market or an individual issue is its trend. The trend is most simply defined as being the line of least resistance. Prices will tend to follow the line of least resistance until there is a significant development in the action that suggests that a change in trend should be anticipated.

http://wyckoffstockmarketinstitute.com/wyckoff_articles/Trends/Trends.htm

 

[motorway]

A third essential element in developing an analysis of the action is judging the character of the action. The character of the action is revealed by the relationship between the price action and the volume action. These relationships either make bullish statements or bearish statements. Each trading session makes one of these statements. Some are strongly bullish or bearish and some are more moderate.

Occasionally, when the action is an especially sensitive point in its development, the character of the action on one particular day is seen as being so important in determining how developments are likely to unfold from that point forward that the day is frequently referred to as being a key day. However, most of the time, it is an accumulation of bullish or bearish statements over a succession of days that reveals whether a move in progress is likely to continue or if a change in direction is likely.

Some good introduction to Wyckoff Price and Volume Analysis.

http://www.wyckoffstockmarketinstit.../Wyckoff_Articles/price_vol_relationships.htm

Judging the "Character" ....

the price of the market or an issue is likely to move up or down on a close to close basis. It does so either in a price spread that is likely to be wider or narrower than the day before and volume that is likely to be either higher or lower than the day before.

How these three variables group themselves together determines that character of the action for that day and whether it makes a bullish or bearish statement.

motorway

 

[motorway]

Psychology of the Stock Market

by G. C. Selden is the result of years of study and experience as fellow at Columbia University, news writer, statistician and on the editorial staff of The Magazine of Wall Street.


Ticker Publishing, New York, 1912

Talking about the older material
G C Seldon was Richard Wyckoff's associate editor
at the "ticker" the name was changed in 1912 to "The Magazine of Wall Street."


Some aspects of the Composite Operator

The point we fail to remember is that public opinion in a speculative market is measured in dollars, not population. One man controlling one million dollars has double the weight of five hundred men with one thousand dollars each.

This is why the great body of opinion appears to be bullish at the top and bearish at the bottom. The multitude of small traders must be, as a plain necessity, long when prices are at the top, and short or out of the market at the bottom. The very fact that they are long at the top shows that they have been supplied with stocks from some source.

Again, the man with one million dollars is a silent individual. The time when it was necessary for him to talk is past - his money now does the talking. But the one thousand men who have one thousand dollars each are conversational, fluent, verbose to the last degree; and among these smaller traders are the writers - the newspaper and news bureau men, the manufacturers of gossip for brokerage houses.

It will be observed that the above course of reasoning leads us to the conclusion that most of those who write and talk about the market are more likely to be wrong than right, at least as far as speculative fluctuations are concerned. This is not complimentary to the "moulders of public opinion," but most seasoned newspaper readers will agree that it is true.

The psychological aspects of speculation may be considered from two points of view, equally important. One question is, What effect do varying mental attitudes of the public have upon the course of prices? How is the character of the market influenced by psychological conditions?

A second consideration is, How does the mental attitude of the individual trader affect his chances of success? To what extent, and how, can he overcome the obstacles placed in his pathway by his own hopes and fears, his timidities and his obstinacies?

gleaned from http://www.dailyspeculations.com/wordpress/?m=200809

motorway

 

[Marcel]

Motorway, thanks for your excellent analysis and insight into the Wyckoff Method.

I notice that there is the SMI Wyckoff Course but there is also an original Wyckoff publication (1931): "The Richard D Wyckoff Method of Trading and Investing in Stocks" by Wyckoff Associates, INC. Park Ridge, Illinois.

Would appreciate you views on this, many of the terms present in SMI version are not there in the original course.

Also a guy by the name of Tom Williams has created his own brand of price/vol reading, based on the SMI course, Volume Spread Analysis which appears to be vogue nowadays, and is market via a software charting program called Tradeguider, do you have any comments in this regard.

 

[motorway]

Motorway, thanks for your excellent analysis and insight into the Wyckoff Method.

I notice that there is the SMI Wyckoff Course but there is also an original Wyckoff publication (1931): "The Richard D Wyckoff Method of Trading and Investing in Stocks" by Wyckoff Associates, INC. Park Ridge, Illinois.

Would appreciate you views on this, many of the terms present in SMI version are not there in the original course.

Also a guy by the name of Tom Williams has created his own brand of price/vol reading, based on the SMI course, Volume Spread Analysis which appears to be vogue nowadays, and is market via a software charting program called Tradeguider, do you have any comments in this regard.

Hello Marcel,,,

By taking the best of what forty years in Wall Street have taught me and preparing it for others so that it can be readily absorbed and applied, I will be creating something that should aid in establishing a new standard of practice in the public’s stock market operations.

I do not claim any monopoly of stock market knowledge, but up to this time, no one else seems willing to be so frank in offering to the public the most intimate knowledge of the inner workings of the stock market.”

Thus with forty years of study and personal experience, Mr. Wyckoff crystallized his knowledge into one writing and published “The Richard D. Wyckoff Course in Stock Market Science and Technique.”

This is the 1931 course......

By the methods herein explained, I have made a great deal of money for myself and my clients and subscribers who numbered in excess of 200,000.

By making this available to those who desire to learn the business of trading and investing in stocks -- for it is a business just like law, medicine or any
other -- I hope to be of still greater service, not only to my former patrons, but to others who have not had an opportunity to invest under favorable conditions.

You can learn from this how to develop independent judgment, so that you need never ask anyone’s opinion or listen to anyone’s tips, or take anybody’s advice. You can so train your judgment that you will know just what to do and when to do it. When you are in doubt you will do nothing.

This is a method of judging the stock market by its own action.

It is intended for investors as well as for traders.
It has been planned and prepared for those who desire to safeguard
their investment capital against, and to make money from, the
fluctuations in the prices of stocks dealt in on the New York Stock
Exchange or any other organized exchange.

It is applicable as well to bonds, preferred stocks and the leading
commodity markets.

Richard Wyckoff established Wyckoff Associates Inc. which became the Stock Market Institute ,SMI.

Richard Wyckoff died in 1934 . Robert E. Stanlaus assumed the responsibility to continue to offer the public specialized education in the stock market science and technique. He expanded the program with material (that) he and Mr. Wyckoff had written since the original printing.

This is the 1934 course published after Richard Wyckoff's death
revised by material Mr. Wyckoff had written since the original printing.

In 1951 Mr. Robert G. Evans began his career as the promulgator of the Wyckoff Course. Mr. Evans made considerable contributions to the benefit of all students of market action. They are most notable in the further development of technical analysis, market psychology and philosophy. His unique talent in using analogies to explain various market phenomena and principles (has) become an inseparable part of the Wyckoff Course.

The ice story , the creek story etc

Now who was Robert Evans and what were his credentials ?

The Wyckoff principles were expanded by Robert
Evans in the 1950s and 1960s. Evans, who learned
the Wyckoff approach from the master himself,
went on to share his knowledge by opening The
Stock Market Institute. His wonderful stories
explained the Wyckoff strategies in easy to understand ways as he introduced "jumping the creek", "falling through the ice" and many
other delightful phrases

It is very likely that these analogies ( Wyckoff used analogies himself ) date back to the time when Evans was learning the Principles from Richard Wyckoff

What is resistance what is support ?
Resistance is a flow of supply across the rally tops
It is not a line.......It is something met up ahead that needs to be crossed
JUMPED , when it can be.

In brief, do not make the mistake of attempting to classify chart
formations according to mechanical rules with the idea that you may
discover automatic buying and selling signals from similar
'patterns'. You are being deluded if you believe that a system of
drawing 'triangles', 'heads and shoulders', and similar imaginary
geometrical diagrams on your charts will produce results or relieve
you of the necessity of employing judgment and sound, practical
reasoning.

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. RDW

I see the Evan's analogies as the making visible of the Principles of the Wyckoff Method

If a principle is to be a principle, it must work in all markets to be valid and reliable. The Wyckoff Course is based upon principle and laws------------Do not forget: The breaking of a trendline, by itself, is neither a
conclusive nor an all-inclusive symptom. The significant thing is
HOW the line is broken

Robert Evans talent in using analogies to explain various market phenomena and principles (has) become an inseparable part of the Wyckoff Course.

Lloyd I. Andrews succeeded Robert Evans in 1967.

So the course is alive and has lineage ( very good one )
At it's heart is the original course of Richard Wyckoff

Richard D. Wyckoff text in Stock Market Science and Technique .

. You will be able to judge the supply and demand on the basis of the price action, volume and time.

Tom Williams

In the early 1960s, Tom
took the Wyckoff Course (written by Richard
D. Wyckoff, a turn-of-the-20th-century bond
trader), which was to prove the market
revelation that would guide him from
that point.
Indicators such as on-balance volume and
the like are irrelevant according to Tom. What
counts is the reaction of price to volume.

TRADERSPEAK CD
INTERVIEW.

motorway
DYOR Always...

 

[Marcel]

Thanks Marcel for your detailed response.

Do you reckon that the concepts of accumulation and distribution can be applied to futures where there is no float.

If you are trading futures would appreciate if you could put up some examples as I am very much in the learning process.

 

[Marcel]

Typing error, sorry, mean to state,

Many thanks to Motorway from Marcel , a relative novice at WYckoff Methodology

 

[motorway]

Marcel
good question

My answer of Course the principles should work..

It is not supply as such that needs to be absorbed or exhausted
or overcome.

But the Willingness to supply....

There are some charts from Timmy
early in the thread,,,

Accumulation is about
taking a position
and building "cause"

Accumulation: from the Supply/Demand perspective is demand coming in to gradually overcome and absorb the supply and to support the price at a level.

supply is as much about the willingness as it is about the ability to supply..

I do not trade futures ( so just my ), but know those who do.

It is a fast market

But there is the reality of the underlying and a settlement date..
and positions must be opened first
before they can be profited from

Accumulation is a relationship of demand and supply
that creates a "springboard"

How does it do this
it builds a cause...

A definition from the first few pages of unit 1 of the SMI course
in the link early on in the thread..

motorway

 

[Marcel]

Once again thanks Motorway for your insight.

Read this on Stock Market Trading "Price and Vol Relationships"

"If the price spread for a day is wider to the down side leading to a poor close on increased volume, the decline is said to indicate supply entering. This action makes a bearish statement. The same price action on decreased volume is said to be the result of a lack of demand. It also makes a bearish statement. If the price spread for a day is narrower to the down side, it makes a bullish statement. If the narrower spread is combined with high volume, the action is said to indicate the meeting of demand. If the volume is lower, it is said to indicate a lack of supply. Either combination tends to work against additional down side progress. That is why it makes a bearish statement."

Should not this be a bullish statement.

 

[paulchow2k]

Guys,
I've been reading this thread with interest and have been studying the Wyckoff method since Motorway mentioned it earlier in the thread. This seems to be the missing link in the current state of trading so as a contribution back to Motorway and the rest of the crew...

This is my thanks to this group...

regards

paul

Once again thanks Motorway for your insight.

Read this on Stock Market Trading "Price and Vol Relationships"

"If the price spread for a day is wider to the down side leading to a poor close on increased volume, the decline is said to indicate supply entering. This action makes a bearish statement. The same price action on decreased volume is said to be the result of a lack of demand. It also makes a bearish statement. If the price spread for a day is narrower to the down side, it makes a bullish statement. If the narrower spread is combined with high volume, the action is said to indicate the meeting of demand. If the volume is lower, it is said to indicate a lack of supply. Either combination tends to work against additional down side progress. That is why it makes a bearish statement."

Should not this be a bullish statement.

 

[motorway]

Hi to Paul & Marcel

El-Erian: Sell and Get Out of the Way

Friday, October 24, 2008 12:08 PM

By: Greg Brown Article Font Size




Echoing predictions of a coming hedge fund massacre, bond giant Pimco’s Mohamed El-Erian said Friday that some of these hedge fund managers need to "sell and get out of the way."


Once the hedges capitulate, stocks will fall to a sustainable level, he said. The Dow opened Friday down 430 points before recovering ground by midday trading.


"It's ugly, it's messy ... but that's the reality when you have a system that is damaged. As it recovers it has to get rid of the damaged parts," El-Erian said in an interview with CNBC.


There are thousands of hedge funds, many of them small operations run by relatively inexperienced young traders who got into the business during the recent, five-year stock boom.


Clearing out that deadwood is a big part of cleaning up the markets.


El-Erian sees the market trying to establish a floor, after which he says the actual recession will matter more than the ongoing panic.


"We're getting close to the point where the market will finish repricing. Today we're going to take a major step toward that, but you don't reprice until you get rid of the damage," El-Erian said.


Former Clinton adviser Nouriel Roubini said earlier that he expects an emergency market shutdown amid a “massive dumping of assets” as the weaker hedge funds are flushed out.


Roubini believes hundreds of hedge funds will fail and that policymakers might have to shut down financial markets for a week or more in response.

The multitude of small traders = hedge funds ,must be, as a plain necessity, long when prices are at the top, and short or out of the market at the bottom. The very fact that they are long at the top shows that they have been supplied with stocks from some source.

In 1898 a small book was published called the Game in Wall Street

It is one of the first books on P&F , but much more as well..

That Game stays the same

someone is milked someone does the milking
markets go up and then they go down.

Risk and Reward
constantly change hands
at bottom and tops
is the ultimate transferance

Only at tops can so much leverage be created
that could create such dire deep bottoms

Enantiodromia

The way up IS the way down

motorway