Wyckoff Method

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Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

 Law o Supply an

 Law o Supply an

d Demand 

d Demand 

by Jerry Garner jr 

by Jerry Garner jr 

Te Law o Supply and Demand

Te Law o Supply and Demand

1. States that when demand is

1. States that when demand is

greater than supply, prices will

greater than supply, prices will

rise, and when supply is greater

rise, and when supply is greater

them demand, prices will all.

them demand, prices will all.

Here the analyst studies the

Here the analyst studies the

relationship between supply

relationship between supply

 versus demand using price &

 versus demand using price &

 volume over time as ound on

 volume over time as ound on

the bar chart.

the bar chart.

2. Te L

2. Te Law o Cause & Effaw o Cause & Effectect

Postulates

Postulatesthat in order to havethat in order to have

an effect will be in proportion

an effect will be in proportion

to the cause. Tis law is

to the cause. Tis law is

seen working as the orce o

seen working as the orce o

accumulation or distribution

accumulation or distribution

within a trading range.

within a trading range.

3. Te Law o Effort Versus Result

3. Te Law o Effort Versus Result

divergences and disharmonies

divergences and disharmonies

between volume and price ofen

between volume and price ofen

presage a change in the direction

presage a change in the direction

o the price trend & helpul or

o the price trend & helpul or

indentiying accumulation verses

indentiying accumulation verses

distribution & gauging effort.

distribution & gauging effort.

• Demand reers to how much (quantity) o a product or service is desired by buyers. Te quantity demanded is the amount oDemand reers to how much (quantity) o a product or service is desired by buyers. Te quantity demanded is the amount o

a product people are willing to buy at a

a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as thecertain price; the relationship between price and quantity demanded is known as the

demand relationship

demand relationship. Te analyst . Te analyst studies the relationship between supply studies the relationship between supply vs. demand using price and vs. demand using price and volume over time.volume over time.

• Supply represents how much the market can offer. Te quantity supplied reers to the Supply represents how much the market can offer. Te quantity supplied reers to the amount o a certain amount o a certain good producers aregood producers are

willing to supply when receiving a certain price. Te correlation between price and how much o a

willing to supply when receiving a certain price. Te correlation between price and how much o a good or service good or service is suppliedis supplied

to the market is known as the

to the market is known as the supply relationshipsupply relationship. Price, thereore, is a reflection o supply and demand.. Price, thereore, is a reflection o supply and demand.

• Te Law o Demand states, the lower something’s price is, the more demand there is or it and the relationship betweenTe Law o Demand states, the lower something’s price is, the more demand there is or it and the relationship between

demand and price is an inverse relationship

demand and price is an inverse relationship. As one goes up, the ot. As one goes up, the other comes down. Te Law o Supply states, the higherher comes down. Te Law o Supply states, the higher

something’

something’s price is, the s price is, the more it will be supplied and the relationship between supply and price is a more it will be supplied and the relationship between supply and price is a direct relationship. As onedirect relationship. As one

goes up, the other goes up.

goes up, the other goes up.

• Supply and demand is the basic oundation o economics However Supply and demaSupply and demand is the basic oundation o economics However Supply and demand is the effect, not nd is the effect, not the cause. Somethingthe cause. Something

happens, and supply increases or demand decreases (or both) causing price to go down, or something happens and supply

happens, and supply increases or demand decreases (or both) causing price to go down, or something happens and supply

goes down or demand goes up (or both) causing price to

goes down or demand goes up (or both) causing price to go up. Te “something” is the cause, and the change in supply/go up. Te “something” is the cause, and the change in supply/

demand is the effect. So, yes,

demand is the effect. So, yes, price went up because o an increase in demand however, it is the cause or the change inprice went up because o an increase in demand however, it is the cause or the change in

supply and demand that caused the price change. trading is the perception and speculation o what the change in supply and

supply and demand that caused the price change. trading is the perception and speculation o what the change in supply and

demand will be.

demand will be.

• Markets move off o the imbalance o supply and demand, a imbalance o supply and the market has to all, Markets move off o the imbalance o supply and demand, a imbalance o supply and the market has to all, a imbalance oa imbalance o

demand and the market has to rise. Accumulation rom the Supply/Demand perspective is demand coming in to gradually

demand and the market has to rise. Accumulation rom the Supply/Demand perspective is demand coming in to gradually

overcome and absorb the supply and to support the market at this price le

overcome and absorb the supply and to support the market at this price level. Distribution rom the Supply/Demandvel. Distribution rom the Supply/Demand

perspective is

perspective is where the Supply overcomes Demand and stops where the Supply overcomes Demand and stops the upward move and eventually begins tthe upward move and eventually begins the downward move.he downward move.

Distribution reers to the elimination o a long investment or speculative position and ofen involves establishing a speculative

Distribution reers to the elimination o a long investment or speculative position and ofen involves establishing a speculative Te mechanics o the markets are so

Te mechanics o the markets are so complicated that one must breakcomplicated that one must break

it down into some oundational guidelines that encompass the whole,

it down into some oundational guidelines that encompass the whole,

then build upon that oundation slowly and methodically until it

then build upon that oundation slowly and methodically until it

makes sense and becomes a high probability, low risk undertaking.

(2)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

 Law o Cause & Effect 

 Law o Cause & Effect 

by Jerry Garner jr 

by Jerry Garner jr 

Te Law o Supply and Demand

Te Law o Supply and Demand

1. States that when demand is

1. States that when demand is

greater than supply, prices will

greater than supply, prices will

rise, and when supply is greater

rise, and when supply is greater

them demand, prices will all.

them demand, prices will all.

Here the analyst studies the

Here the analyst studies the

relationship between supply

relationship between supply

 versus demand using price &

 versus demand using price &

 volume over time as ound on

 volume over time as ound on

the bar chart.

the bar chart.

2. Te L

2. Te Law o Cause & Effaw o Cause & Effectect

Postulates

Postulatesthat in order to havethat in order to have

an effect will be in proportion

an effect will be in proportion

to the cause. Tis law is

to the cause. Tis law is

seen working as the orce o

seen working as the orce o

accumulation or distribution

accumulation or distribution

within a trading range.

within a trading range.

3. Te Law o Effort Versus Result

3. Te Law o Effort Versus Result

divergences and disharmonies

divergences and disharmonies

between volume and price ofen

between volume and price ofen

presage a change in the direction

presage a change in the direction

o the price trend & helpul or

o the price trend & helpul or

indentiying accumulation verses

indentiying accumulation verses

distribution & gauging effort.

distribution & gauging effort.

• A second basic principle underlying all analytical efforts is A second basic principle underlying all analytical efforts is the law o cause and effect. Te idea the law o cause and effect. Te idea here is that in order or therehere is that in order or there

to be an effect t

to be an effect that shows up as a change in the price o a hat shows up as a change in the price o a stock, there must first be a stock, there must first be a cause. In its most basic state, tcause. In its most basic state, this lawhis law

seems very much the s

seems very much the same as the law o supply and demand. In the cases o ame as the law o supply and demand. In the cases o the individual trades mentioned, the cause is thethe individual trades mentioned, the cause is the

buyer’

buyer’s desire to hold the shares, or s desire to hold the shares, or the seller’s desire to have dollars. In one case the cause is expressed in terms the seller’s desire to have dollars. In one case the cause is expressed in terms o demando demand

and in the other in terms o

and in the other in terms o supplysupply..

• A cause can be stated in terms A cause can be stated in terms o the reason behind an individual trade. In the making o o the reason behind an individual trade. In the making o important profits in the stockimportant profits in the stock

market, however

market, however, the significance o each individual trade is , the significance o each individual trade is greatly reduced. Here the idea o a cause must be taken moregreatly reduced. Here the idea o a cause must be taken more

broadly

broadly, Te effect realized by a , Te effect realized by a cause will be in cause will be in direct proportion to that cause. Consequently, to get an important move, ordirect proportion to that cause. Consequently, to get an important move, or

effect there must be an important cause. Tese are not

effect there must be an important cause. Tese are not built rom one trade, but rather take time, sometimes built rom one trade, but rather take time, sometimes a long time, toa long time, to

develop.

develop.

• Generally these causes are built during an important shif in who is Generally these causes are built during an important shif in who is holding the stock. Te flow o shares that is holding the stock. Te flow o shares that is o greatesto greatest

significance is the one that occurs as

significance is the one that occurs as shares leave the strong hands o the proessional traders and go to the weaker hands oshares leave the strong hands o the proessional traders and go to the weaker hands o

the general public.

the general public.

• Every market advance begins only afer the proessional traders have all, or just about all, Every market advance begins only afer the proessional traders have all, or just about all, the shares they desire. Once thethe shares they desire. Once the

move begins, it will b

move begins, it will be carried orward primarily by the increasing and emotional buying o the public. Te emotion at worke carried orward primarily by the increasing and emotional buying o the public. Te emotion at work

here, by the way, is greed. Te knowledgeable trader will go with the upward trend o the advance as long as prices continue

here, by the way, is greed. Te knowledgeable trader will go with the upward trend o the advance as long as prices continue

to move up e

to move up easily.asily.

• Te idea is to measure this Te idea is to measure this cause and project the extent o its effect. Te cause and project the extent o its effect. Te excesses that develop in supply and demand are notexcesses that develop in supply and demand are not

random but are the result o key events in market action or the result o

random but are the result o key events in market action or the result o periods o preparation. Tis law’s operation can beperiods o preparation. Tis law’s operation can be

seen working as the orce o accumulation or distribution within a trading range that works itsel out in the subsequent move

seen working as the orce o accumulation or distribution within a trading range that works itsel out in the subsequent move

out o that trading range. Tis law can be seen

out o that trading range. Tis law can be seen working over a group o bars.working over a group o bars.

Richard D. Wyckoff devised three laws that gove

Richard D. Wyckoff devised three laws that govern market dynamics.rn market dynamics.

Tese laws tell you how and why the markets work. Te law o Supply

Tese laws tell you how and why the markets work. Te law o Supply

and Demand is the most undamental and overriding aspect o

and Demand is the most undamental and overriding aspect o

market dynamics. Te other two laws act on and measure Supply

market dynamics. Te other two laws act on and measure Supply

and Demand.

(3)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

 Law o Effort vs Result 

 Law o Effort vs Result 

by Jerry Garner jr 

by Jerry Garner jr 

Te Law o Supply and Demand

Te Law o Supply and Demand

1. States that when demand is

1. States that when demand is

greater than supply, prices will

greater than supply, prices will

rise, and when supply is greater

rise, and when supply is greater

them demand, prices will all.

them demand, prices will all.

Here the analyst studies the

Here the analyst studies the

relationship between supply

relationship between supply

 versus demand using price &

 versus demand using price &

 volume over time as ound on

 volume over time as ound on

the bar chart

the bar chart

2. Te L

2. Te Law o Cause & Effaw o Cause & Effectect

Postulates

Postulatesthat in order to havethat in order to have

an effect will be in proportion

an effect will be in proportion

to the cause. Tis law is

to the cause. Tis law is

seen working as the orce o

seen working as the orce o

accumulation or distribution

accumulation or distribution

within a trading range.

within a trading range.

3. Te Law o Effort Versus Result

3. Te Law o Effort Versus Result

divergences and disharmonies

divergences and disharmonies

between volume and price ofen

between volume and price ofen

presage a change in the direction

presage a change in the direction

o the price trend & helpul or

o the price trend & helpul or

indentiying accumulation verses

indentiying accumulation verses

distribution & gauging effort.

distribution & gauging effort.

• states that the change in price o a tstates that the change in price o a trading vehicle is the result o an effort expressed by the rading vehicle is the result o an effort expressed by the level o volume & that harmonylevel o volume & that harmony

between effort & result promotes urther price movement while lack o harmony promotes a change in direction. Te law o

between effort & result promotes urther price movement while lack o harmony promotes a change in direction. Te law o

effort (volume) verses result (price) is action, this

effort (volume) verses result (price) is action, this law can be seen working on one bar.law can be seen working on one bar.

• o get a o get a better idea o better idea o how the concept o how the concept o effort versus result works and how it effort versus result works and how it can help protect against disaster, consider yetcan help protect against disaster, consider yet

another hypothetical situation. It begins with a stock that explo

another hypothetical situation. It begins with a stock that explodes upward by six points. Te volume is ten thousand shares.des upward by six points. Te volume is ten thousand shares.

Te next day, there is an additional advance o our points and trading expands to twenty thousand shares. At this point,

Te next day, there is an additional advance o our points and trading expands to twenty thousand shares. At this point,

many people are making a lot o money. Tis is also t

many people are making a lot o money. Tis is also the type o situation that brings out an incredible amount o greed. Onhe type o situation that brings out an incredible amount o greed. On

the third day, the stock takes on an additional two points while

the third day, the stock takes on an additional two points while the volume soars to orty-thousand shares. Ten day numberthe volume soars to orty-thousand shares. Ten day number

our comes and this time the “wonder stock” only advances hal a point. Te

our comes and this time the “wonder stock” only advances hal a point. Te volume, howevervolume, however, tops the hundred thousand, tops the hundred thousand

share level.

share level.

• Is it clear what is happening in this case? Is it clear what is happening in this case? ObviouslyObviously, the price is , the price is moving up and the volume is expanding. Tat should bemoving up and the volume is expanding. Tat should be

a good sign and in many cases

a good sign and in many cases it is a good indication or the it is a good indication or the uture. In this case, though, it creates a problem. As tuture. In this case, though, it creates a problem. As the stockhe stock

advances, the amount o each successive advance decreases. Te volume on the ot

advances, the amount o each successive advance decreases. Te volume on the other hand increases steadily throughout theher hand increases steadily throughout the

our days. Tis results in a clear case o

our days. Tis results in a clear case o an effort without a corresponding result. It produces a warning o potential trouble.an effort without a corresponding result. It produces a warning o potential trouble.

Anyone not already in this stock is well advised

Anyone not already in this stock is well advised not to get in, at least not to get in, at least not at this dangerous time. Tose already holdingnot at this dangerous time. Tose already holding

positions should protect themselves as best

positions should protect themselves as best they can, or just get out. they can, or just get out. Until it can be determined why the result is laggingUntil it can be determined why the result is lagging

behind the effort or until the s

behind the effort or until the situation corrects itsel, there is the potential or disaster. Te chart at the bituation corrects itsel, there is the potential or disaster. Te chart at the bottom o exhibit fiveottom o exhibit five

shows how this concept o effort without result might look in actual

shows how this concept o effort without result might look in actual practice.practice.

Te price o every equity moves up or down because there is an excess

Te price o every equity moves up or down because there is an excess

o demand over supply or supply over demand, the Law o Effort vs.

o demand over supply or supply over demand, the Law o Effort vs.

Results - divergencies and disharmonies between volume and price

Results - divergencies and disharmonies between volume and price

ofen presage a change in the direction

(4)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff

Wyckoff Schematics O

Schematics O

Market

Market

Phases

Phases

Whckoff Schematics

Whckoff Schematics

1. Wyckoff empowers the

1. Wyckoff empowers the

trader-analyst with a balanced, whole

analyst with a balanced, whole

brained approach to technical

brained approach to technical

analysis decision making. Te

analysis decision making. Te

schematics provide picture

schematics provide picture

dia-grams as a right-brained tool to

grams as a right-brained tool to

complemen

complement the t the lef-brained ana-lef-brained

ana-lytical checklists urnished by the

lytical checklists urnished by the

Wyckoff three laws and nine tests.

Wyckoff three laws and nine tests.

2. One objective o the Wyckoff

2. One objective o the Wyckoff

method o technical analysis

method o technical analysis

is to improve market timing

is to improve market timing

when establishing a speculative

when establishing a speculative

position in anticipation o a

position in anticipation o a

coming move where a avorable

coming move where a avorable

reward/risk ratio exists to justiy

reward/risk ratio exists to justiy

taking that position.

taking that position.

3. o be successul, you must be able

3. o be successul, you must be able

to anticipate and correctly judge

to anticipate and correctly judge

the direction and magnitude o

the direction and magnitude o

the move out o the R.

the move out o the R.

rad

rading ranges ing ranges are places where the previous move has been haltedare places where the previous move has been halted

and there is relative equilibrium between supply and de

and there is relative equilibrium between supply and demand. It ismand. It is

here within the R that campaigns o

here within the R that campaigns o accumulation or distributionaccumulation or distribution

develop in preparation or the coming bull or bear trend.

develop in preparation or the coming bull or bear trend. It is thisIt is this

 orce o accumulation or distribution that can be said to build a

 orce o accumulation or distribution that can be said to build a

cause that unolds in the subsequent move.

(5)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Accumulation

Wyckoff Schematic O Accumulation

Whckoff Schematics

Whckoff Schematics

1. Wyckoff empowers the

1. Wyckoff empowers the

trader-analyst with a balanced, whole

analyst with a balanced, whole

brained approach to technical

brained approach to technical

analysis decision making. Te

analysis decision making. Te

schematics provide picture

schematics provide picture

dia-grams as a right-brained tool to

grams as a right-brained tool to

complemen

complement the t the lef-brained ana-lef-brained

ana-lytical checklists urnished by the

lytical checklists urnished by the

Wyckoff three laws and nine tests.

Wyckoff three laws and nine tests.

2. One objective o the Wyckoff

2. One objective o the Wyckoff

method o technical analysis

method o technical analysis

is to improve market timing

is to improve market timing

when establishing a speculative

when establishing a speculative

position in anticipation o a

position in anticipation o a

coming move where a avorable

coming move where a avorable

reward/risk ratio exists to justiy

reward/risk ratio exists to justiy

taking that position.

taking that position.

3. o be successul, you must be able

3. o be successul, you must be able

to anticipate and correctly judge

to anticipate and correctly judge

the direction and magnitude o

the direction and magnitude o

the move out o the R.

the move out o the R.

rad

rading Ranges present avorable short-teing Ranges present avorable short-term trading opportunitiesrm trading opportunities

with potentially very

with potentially very avorable reward/risk parameters.avorable reward/risk parameters.

 Nevertheless, great reward comes with participation in the trend that

 Nevertheless, great reward comes with participation in the trend that

emerges rom the rading Range. Wyckoff offers unique guidelines by

emerges rom the rading Range. Wyckoff offers unique guidelines by

which the trader-analyst can examine the phases within a R

which the trader-analyst can examine the phases within a R..

visual representation of the Wyckoff market action typically found within a TR

(6)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Accumulation

Wyckoff Schematic O Accumulation

Phases o Accumulation

Phases o Accumulation

1.

1. Lines A and B define support oLines A and B define support o

the trading range, while lines C

the trading range, while lines C

and D define resistance.

and D define resistance.

2. Phase A: o stop a downward

2. Phase A: o stop a downward

trend either permanently or

trend either permanently or

temporarily.

temporarily.

3. Phase B: o build a cause within

3. Phase B: o build a cause within

the trading range or the next

the trading range or the next

effect and trend.

effect and trend.

4. Phase C: Smart money “tests”

4. Phase C: Smart money “tests”

the market along the lower and/

the market along the lower and/

or the upper boundaries o the

or the upper boundaries o the

trading range. Here one observes

trading range. Here one observes

“springs” and/or “jumps” and

“springs” and/or “jumps” and

“backups”.

“backups”.

5.

5. Phase D: Defines the “line o leastPhase D: Defines the “line o least

resistance

resistance” with the ” with the passage o thepassage o the

nine buying tests.

nine buying tests.

6.

6. Phase E: Te mark up or thePhase E: Te mark up or the

upward trending phase unolds.

upward trending phase unolds.

Wyckoff model or accumulation is not a schematic or all the

Wyckoff model or accumulation is not a schematic or all the

 possible variations within the anatomy o a 

 possible variations within the anatomy o a rading Range, it doesrading Range, it does

 provide the important W

 provide the important Wyckoff principles that are evident in anyckoff principles that are evident in an

area o accumulation. It also shows the key phases used to guide

area o accumulation. It also shows the key phases used to guide

our analysis rom the beg

our analysis rom the beginning o the radiinning o the rading Range with a sellingng Range with a selling

climax, through building a cause

climax, through building a cause until the taking o a position.until the taking o a position.

visual representation of the Wyckoff market action typically found within a TR

(7)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Accumulation

Wyckoff Schematic O Accumulation

Accumulatio

Accumulation n Schematic DefinedSchematic Defined

1.

1. PS (1) – preliminary support,PS (1) – preliminary support,

where substantial buying begins

where substantial buying begins

to provide pronounced support

to provide pronounced support

afer a

afer a prolonged down-move.prolonged down-move.

Volume and the price spread

Volume and the price spread

wid-en and provide a signal that the

en and provide a signal that the

down move may be approaching

down move may be approaching

its end.

its end.

2.

2. SC (2) – selling climax, the pointSC (2) – selling climax, the point

at which widening spread and

at which widening spread and

selling pressure usually climaxes

selling pressure usually climaxes

and heavy or panicky selling by

and heavy or panicky selling by

the public is being absorbed by

the public is being absorbed by

larger proessional interests at

larger proessional interests at

prices near the bottom. At the

prices near the bottom. At the

low

low, the , the climax helps to define theclimax helps to define the

lower level o the R.

lower level o the R.

3. AR (3) – automatic rally, where

3. AR (3) – automatic rally, where

selling pressure has been

selling pressure has been

exhausted. A wave o buying

exhausted. A wave o buying

can now easily push up prices,

can now easily push up prices,

which is urther uelled by short

which is urther uelled by short

covering.

covering.

visual representation of the Wyckoff market action typically found within a TR

(8)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Accumulation

Wyckoff Schematic O Accumulation

Accumulatio

Accumulation n Schematic DefinedSchematic Defined

1. S (4, 5, 8) – secondary test, price

1. S (4, 5, 8) – secondary test, price

revisits the area o the s

revisits the area o the selling cli-elling

cli-max to test

max to test the supply/demand atthe supply/demand at

these price levels. I a bottom is to

these price levels. I a bottom is to

be confirmed, significant

be confirmed, significant supplysupply

should not resurace, and volume

should not resurace, and volume

and

and

2.

2. Te Creek (6) – is a wavy line oTe Creek (6) – is a wavy line o

resistance drawn loosely across

resistance drawn loosely across

rally peaks within the

rally peaks within the tradingtrading

range. Tere are minor lines o

range. Tere are minor lines o

resistance and a more

resistance and a more significantsignificant

“creek” o supply that will have

“creek” o supply that will have

to be crossed beore the market’s

to be crossed beore the market’s

 journey can contin

 journey can continue onwarue onward andd and

upward.

upward.

visual representation of the Wyckoff market action typically found within a TR

(9)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Accumulation

Wyckoff Schematic O Accumulation

Springs or Shakeouts (7) Defined

Springs or Shakeouts (7) Defined

1.

1. Usually occur late within theUsually occur late within the

trading range and allow the

trading range and allow the

dominant players to make a

dominant players to make a

definitive test o available supply

definitive test o available supply

beore a markup campaign will

beore a markup campaign will

unold.

unold.

2. I the amount o supply that

2. I the amount o supply that

suraces on a break o support is

suraces on a break o support is

 very light (low vol

 very light (low volume), it will beume), it will be

an indication that the way is clear

an indication that the way is clear

or a sustained advance.

or a sustained advance.

3. Heavy supply here usually means

3. Heavy supply here usually means

a renewed decline.

a renewed decline.

4. Moderate volume here may mean

4. Moderate volume here may mean

more testing o support and a

more testing o support and a

time to proceed with caution.

time to proceed with caution.

5.

5. Te spring or shakeout alsoTe spring or shakeout also

serves the purpose o

serves the purpose o providingproviding

dominant interests with

dominant interests with

additional supply rom weak

additional supply rom weak

holders at low prices.

holders at low prices.

visual representation of the Wyckoff market action typically found within a TR

(10)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Accumulation

Wyckoff Schematic O Accumulation

Accumulatio

Accumulation n Schematic DefinedSchematic Defined

1.

1. Jump (9) – continuinJump (9) – continuing the creekg the creek

analogy, the point at which

analogy, the point at which priceprice

 jumps through the

 jumps through the resistanceresistance

line; a bullish sign i the

line; a bullish sign i the jump isjump is

achieved with increasing speed

achieved with increasing speed

and volume.

and volume.

2.

2. SOS (10, 12) – sign o strength, anSOS (10, 12) – sign o strength, an

advance on increasing spread and

advance on increasing spread and

 volume, usu

 volume, usually over some ally over some level olevel o

resistance

resistance

3.

3. BU/LPS (13) – last point oBU/LPS (13) – last point o

support, the ending point o a

support, the ending point o a

reaction or pullback at which

reaction or pullback at which

support was met. Backing up

support was met. Backing up

to an LPS means a pullback

to an LPS means a pullback

to support that was ormerly

to support that was ormerly

resistance, on diminished spread

resistance, on diminished spread

and volume afer an SOS. Tis

and volume afer an SOS. Tis

is a good

is a good place to initiate longplace to initiate long

positions or to add to profitable

positions or to add to profitable

ones.

ones.

visual representation of the Wyckoff market action typically found within a TR

(11)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Distribution

Wyckoff Schematic O Distribution

Accumulatio

Accumulation n Schematic DefinedSchematic Defined

1.

1. PS (1) – Preliminary Supply isPS (1) – Preliminary Supply is

where substantial selling begins

where substantial selling begins

to provide pronounced resistance

to provide pronounced resistance

afer an up move. Volume and

afer an up move. Volume and

spread widen and provide a

spread widen and provide a

sig-nal that the up move may be

nal that the up move may be

ap-proaching its end.

proaching its end.

2.

2. BC (2) – Buying Climax is theBC (2) – Buying Climax is the

point at which w

point at which widening spreadidening spread

and the orce o

and the orce o buying climaxes,buying climaxes,

and heavy or urgent buying by

and heavy or urgent buying by

the public is being filled by larger

the public is being filled by larger

proessional interests at prices

proessional interests at prices

near a top.

near a top.

3.

3. AR (3) – Automatic ReactioAR (3) – Automatic Reaction withn with

buying pretty much

buying pretty much exhaustedexhausted

and heavy supply continuing an

and heavy supply continuing an

AR ollows the BC. Te low o this

AR ollows the BC. Te low o this

selloff will help define the bottom

selloff will help define the bottom

o the rading Range (R).

o the rading Range (R).

visual representation of the Wyckoff market action typically found within a TR

(12)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Distribution

Wyckoff Schematic O Distribution

Accumulatio

Accumulation n Schematic DefinedSchematic Defined

1. S

1. S – Secondary – Secondary est(s) revisit theest(s) revisit the

area o the Buying Climax to test

area o the Buying Climax to test

the demand/supply balance at

the demand/supply balance at

these price levels. I a top is

these price levels. I a top is to beto be

confirmed, supply will outweigh

confirmed, supply will outweigh

demand and volume and spread

demand and volume and spread

should be diminished as the

should be diminished as the

mar-ket approaches the resistance area

ket approaches the resistance area

o the BC.

o the BC.

2. SOW

2. SOW – Sign o – Sign o WWeakness at pointeakness at point

10 will usually occur on increased

10 will usually occur on increased

spread and volume as compared

spread and volume as compared

to the rally to

to the rally to point 9. Supply ispoint 9. Supply is

showing dominance. Our first

showing dominance. Our first

“all on the ice” holds and we get

“all on the ice” holds and we get

up try to orge ahead.

up try to orge ahead.

3. Te ice is an analogy to a wavy

3. Te ice is an analogy to a wavy

line o support drawn loosely

line o support drawn loosely

under reaction lows o the

under reaction lows o the

rad

rading Range. A ing Range. A break throughbreak through

the ice will likely be

the ice will likely be ollowed byollowed by

attemp

attempts to get ts to get back above it.back above it.

visual representation of the Wyckoff market action typically found within a TR

(13)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Distribution

Wyckoff Schematic O Distribution

Accumulatio

Accumulation n Schematic DefinedSchematic Defined

1. UAD

1. UAD – UPthrust Afer– UPthrust Afer

Distributio

Distribution Similar n Similar to the to the SpringSpring

and erminal Shakeout in the

and erminal Shakeout in the

trading range o

trading range o AccumulationAccumulation,,

a UAD may occur in a R or

a UAD may occur in a R or

distribution. It is more definitive

distribution. It is more definitive

test o new demand afer a

test o new demand afer a

breakout above the resistance line

breakout above the resistance line

o the R and usually occurs in

o the R and usually occurs in

the latter stages o the R.

the latter stages o the R.

2.

2. I this breakout occurs on lightI this breakout occurs on light

 volume with n

 volume with no ollow throo ollow throughugh

or on heavy volume with a

or on heavy volume with a

breakdown back into the

breakdown back into the centercenter

o the trading range, then this is

o the trading range, then this is

more evidence that the R was

more evidence that the R was

Distributio

Distribution n not not AccumulatioAccumulation.n.

3. Tis UAD usually results in

3. Tis UAD usually results in

weak holders o short positions

weak holders o short positions

giving them up to more dominant

giving them up to more dominant

interests, and also in more

interests, and also in more

distribution to new, less inormed

distribution to new, less inormed

buyers beore a decline.

buyers beore a decline.

 An upthrust is the opposite o a spring. It is a price move above the

 An upthrust is the opposite o a spring. It is a price move above the

resistance level o a

resistance level o a trading range that quickly reverses itsel andtrading range that quickly reverses itsel and

moves back into the t

moves back into the trading range. An upthrust is a “bull rading range. An upthrust is a “bull traptrap” – it” – it

appears to signal a start

appears to signal a start o an uptrend but in reality marks the eo an uptrend but in reality marks the end ond o

the up move.

the up move.

visual representation of the Wyckoff market action typically found within a TR

(14)

Te Whyckoff rading Method 1930:

Te Whyckoff rading Method 1930:

 A Case Study o the US Stock Ma

 A Case Study o the US Stock Ma

rket 

rket 

Wyckoff Schematic O Distribution

Wyckoff Schematic O Distribution

Accumulatio

Accumulation n Schematic DefinedSchematic Defined

1. LPSY

1. LPSY – Last Point – Last Point o Supplyo Supply

afer we test the ice (support)

afer we test the ice (support)

on a SOW, a eeble rally attempt

on a SOW, a eeble rally attempt

on narrow spread shows us the

on narrow spread shows us the

difficulty the market is having in

difficulty the market is having in

making a urther rise. Volume

making a urther rise. Volume

may be light or

may be light or heavyheavy, showing, showing

weak demand or substantial

weak demand or substantial

supply. It is at these LPSY’s that

supply. It is at these LPSY’s that

the last waves

the last waves o distribution areo distribution are

being unloaded beore markdown

being unloaded beore markdown

is to begin.

is to begin.

2.

2. Afer a break through the ice, aAfer a break through the ice, a

rally attempt is thwarted at the

rally attempt is thwarted at the

ice’s surace (now resistance). Te

ice’s surace (now resistance). Te

rally meets a

rally meets a last wave o supplylast wave o supply

beore markdown ensues. LPSY’s

beore markdown ensues. LPSY’s

are good places to initiate a short

are good places to initiate a short

position or to add to already

position or to add to already

profitable ones.

profitable ones.

3. In Phase E, the stock or

3. In Phase E, the stock or

commodity leaves the R and

commodity leaves the R and

supply is in control.

supply is in control.

Within the dynamics o a rading Ran

Within the dynamics o a rading Range, the orce o accge, the orce o accumulationumulation

or distribution gives us the cause and the potential opportunity or

or distribution gives us the cause and the potential opportunity or

substantial trading profits.

substantial trading profits.

visual representation of the Wyckoff market action typically found within a TR

Figure

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References

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