Eiger

Regarding the last series of posts: I was looking into resurrecting the "VSA Crock or Not" thread to move this last series of threads started by Mr. Noorx there. However, since the tenor of the posts quickly moved off the topic of the utility of VSA and devolved into less than mature behavior and irrelevancies, I just decided to delete them in their entirety. Eiger

Well, keeping things separated and trashing/censoring are horses of vastly different colours, as they say. Wyckoff/SMI seems to have done a pretty good job at keeping the 'Old Testiment' and the 'New Testiment' separated over the years, but you need to look at the material to understand that. The original course, unaltered, is still available from Wyckoff/SMI on special request. Unit 2 (Old Testiment) has been modified over the years (last time in the 1970s, I believe), but mostly for clarity; it is really not that different from the original (1931). Units 1 (introduction) and 3 (New Testiment) have not altered the original course (Unit 2). And, Units 4 & 5 are practice trading and a 'final exam' that includes both the old and the new. Many of the tapes focus on the original course (Geo King's "Back to the Books" series, for example), others on the newer material. There is much misinformation out there on this issue, and of course lots of bias. Be careful that what you are told isn't just more biased misinformation. As with everything in trading and in life, make your own informed decisions. Eiger

Here is a partial list of tapes that Wyckoff/SMI recorded over the years. This does not include any of the tapes made by Robert Evans (still looking for that list). Nonetheless, you can see just by glancing at the list there are many, many topics covered in quite good detail by the people who lived and breathed Wyckoff 24/7. Also, this is a list that dates back a few years. A small number of these tapes were converted into MP3. Please contact Wyckoff/SMI (see link above) for current tape/MP3 availability and current prices. Again, there is a huge inventory of information developed by numerous Wyckoff experts we all could be talking about, discussing, and learning from ... Hope this is useful, Eiger SMI Trading Techniques.pdf

Hi Flojo, The tapes used to be offered just a short time ago as cassettes for about $6 US each, less if you bought in quantity. They came with large format charts. Up until recently, Wyckoff/SMI would copy them off their old tape machines (reel-to-reel, I think) onto cassettes as orders came in. They have the complete set of Evans's tapes, who started the practice (and, I believe very early on, Evans would actually send out the tape machine with the weekly tape to subscribers!). He covered then current markets as well as reviews of sections of the original course and new elements about the markets that he and others at Wyckoff/SMI discovered. The recorded series also includes more than Robert Evans, now called "Evans's Echoes." George King did an excellent series on the original course (and, as Rollo mentioned, these are excellent), Dave Mathys did many tapes on then current markets, springs, UTs, and other topics during the late 1960s/1970s, Craig Schroeder--current director of Wyckoff/SMI--covered quite good material in the 1980s/1990s, and others did short series as well. As you can see, there is an enormous library of recorded history and education on the Wyckoff Method available in addition to the written course. In addition to the tapes, there is some written material, as well. I have, for example, a few stock case studies and discussions of volume and price authored by some of the names mentioned above -- all quite useful material. Unfortunately, I think much of the written material has been lost over time. Fortunately, most of the tapes still exist. Now, SMI/Wyckoff is in the process of converting the tapes into MP3 format. The price has gone up, of course and there are only a handful available at the moment in this format. You can find them on the link posted below. I don't know the status of the remaining written materials I believe I still have a list of all of the tapes Wyckoff/SMI has. If I can find it, I will post into this thread. Regarding posting to Wyckoff Resources - frankly, each time there is a post to the so-called Wyckoff Forum that references Wyckoff/SMI, the post either gets trashed or censored in some way as "not being true Wyckoff" (and, God help you if it references VSA) by the moderator. That's unfortunate as it unilaterally censors nearly 80 years of history and development of the Wyckoff Method, forbids free and open dicussion, and certainly runs contrary to Wyckoff's intention in establishing Wyckoff Associates, now SMI, but that is what exists. Wyckoff Stock Market Institute Tapes

Just as a friendly FYI - Rollotape was a pen name used by Wyckoff in early writing like Studies in Tape Reading

I agree. Once again I am reminded of the adage that the true character of a person is revealed by what he or she does. No matter. This is as good a place as any for discussing Wyckoff. Bob Evans was a great educator in my judgement. Have you ever listened to the tape series he did from about the 1940s through the late 1960s? There are some real gems there. (For those who may be unware, Robert Evans owned Wyckoff Associates after Wyckoff died and developed what is now know as Unit 3 - the tape series - of the Wyckoff Course. He also did weekly chart analysis sent out via tape of current stocks). Instead of making Wyckoff more obscure, he worked hard to help the average guy learn the method. Plus, he added some wonderful material to the course. Evans's work, along with Wyckoff's case study of the 1930-31 market are some of the most important Wyckoff material for me. And, I agree with Rollotape - the 1930-31 case study had much to say about bar analysis. I am looking forward to this thread, too. Eiger

I found this post on "re: Bob Evans' Adaptation" interesting and have nominated it accordingly for "Topic Of The Month May, 2009"

Hi Rollotape, Nice analysis. It's good to see Bob Evans's 'One-Eyed Joe,' too. There are a lot of elements favoring the short side in your charts, which you describe well. I think you have a few other things going for you in this trade: The figure chart (short-term, 10-point) indicates that the uptrend since the March lows has run out of cause. There was a count across the 750 line and a Stepping Stone count along 780 that targeted the present levels of the ES. There has been a shortening of the thrust since late in March. Wyckoff was keen on following the trend, but was always looking for a change in trend when the waves in the direction of the trend shortened in time and length and/or the counter trend waves lengthened, and this has been happening. As it has been happening, up waves draw less and less demand (volume). The SDS is in a potential spring position. Even though the market rallied into the close today (SPYs) it was a light, No Demand rally. The trade may not work out, but there is more than enough of a Wyckoff Story to go long SDS/short SPY. The main risk as I see it is that the market holds gains here and goes sidesways a couple of days in an effort to absorb supply at these levels before making a run towards 95. Again, nice to see a Wyckoff analysis like this. Eiger

Well, your neighbor's auto mechanic should know better ... The S&P 500 is a car racing company. It's like the Daytona 500, but held in Europe -- in Spain & Portugal, actually, so that's why its called S&P. Anyway, it is a good stock, especially if you like cars. Here's a secret for trading: If you look in the parking lots, all the brokers and traders have nice cars. So, since they like cars, they buy new cars and stocks like the S&P 500 will be bullish. Since they like cars so much, they won't let something like the S&P 500 go down. Plus, its summer and that's when all the racing occurs, so car racing stocks are gonna do well in the summer - it's a seasonal effect. See, it's pretty easy when you think about it -- I don't understand why people think trading is so hard. Just apply logic and buy what the brokers and traders like! So, I'd be buying the S&P company and looking to sell other things -- like maybe a ski company since it's May an all the snow has melted and nobody is going to be skiing ...

There is a good list of available materials listed in the resources thread, including the free Master the Markets book available as a download. With respect to your question about the usefulness of VSA - there are two very large threads and a handfull of smaller threads that show how many contributors use VSA, both on its own and in combination with technical analysis. Most of these posts are about the time frames you ask about with the exception of the 1-minute chart, which is a bit too noisy for VSA and gives many false indications. If you are interested in VSA, review the material and determine whether or not it would be useful for the way you as an individual trade, given your trading style, unique personality, strengths & limitations, etc. Eiger

In the Pure VSA thread there is quite some attention to reading the background. which is applicable for all time frames. You should find that very helpful.

A follow up on the point & figure charts I have been posting over the past few weeks: To recap: in early March, after the rally off the lows, the ES indicated a SOS as it rallied and put in a minor Last Point of Support (LPS) allowing for a count along the 720 line of 80 points for a target objective of 800. This count was flagged, was met, and then exceeded (unlabled flag). The rally was strong and a more significant LPS at the 750 level gave us a two-phase count of 110 to 140 points off the 750 line. This provided target objectives of from 860 to 890, which is flagged at A. By the end of March, the S&Ps worked its way higher, both holding the gains off the early March rally and absorbing the residule supply from 800 to 830. In doing so, the market developed a 'Stepping Stone' count along the 780 line of 100 points, or a target objective of 880. This is flagged at B and lies in between the high and low of the target flagged at A. The consistency of the Stepping Stone count with the count off the LPS both confirms the later count and gave a timing indication for the market to break from the trading range and rume its rally. Yesterday, the market achieved that target objective. Bob Evans, the great Wyckoff trader and educator at what is now SMI/Wyckoff, used to say on his tapes that the completion of the P&F count is a place to 'Stop, look, and listen.' And, as we do just that, we see that the ES is now in a potential UpThrust positon off the January and February highs. You can see this in both the P&F chart and the bar chart. Eiger

Hi David, Your interpretation of the high volume bar and the no demand is essentially correct. The high volume was a minor climax seen by the sudden increase in volume. The DMI & pivots are not used in VSA. Good luck with your trading.

Professional traders certainly operate extensively in the indicies through futures, options and ETFs. Volume & spreads can be read well in these vehicles. You needn't limit your trading to equities. XLF did indicate the uptrend was primed for a reaction with the UT and supported by the other indications, including the lack of result by the high volume day. I don't know where the bottom of the reaction will be and I doubt anyone does. It never pays to predict. The task now is to observe the character of this reaction to see whether or not this uptrend is likely to continue.

Anticipating a drop I saw this over the weekend, but was too busy to post it. The SPYs have come off the lows by 25% surprising just about every market commentator. Note that on Friday, SPY hit significant resistance just below the 880 level. A few posts earlier, I mentioned that the ES had come into its conservative point & fiugure projection. So, resistance on a couple of fronts. You can also see in the SPY that the range narrowed on Friday and the close was off the highs. The supply line that formed (the top trend channel line) indicates a shortening of the thrust - price was struggling to sustain the hefty rally. Volume also lessened the higher we went further indicating that demand was tiring at the higher levels. On Thursday, there was a spike in volume without much result in price, suggesting a possible minor climax. Friday saw less volume as price tried to rally. The banks stocks led this rally after helping to depress prices for so long. Take a look at the XLF chart, which is the financial sector SPYDRs that has a heavy weighting of bank stocks. Although there is no clear resistance area like the SPYs, you can see that the financial sector was having difficulty rallying up into its supply line, indicating supply, or at least a lack of demand, was occuring early in this leg of the rally. On Friday, price was unable to close on a new high. Instead, it gave us an UpThrust, showing an inability to rally and hold gains above the high set on Monday. Between the SPY and XLF (and the other sectors, too) there were lots of good indications that the market would begin a reaction soon. Hope this is helpful, Eiger

How does it compare to TradeStation and AmiBroker, if you know?

ANF has clean data on a 1-minute basis for eminis, yen, FX, NQ & ER going back to the inception of the contracts. Downloads into excel and inexpensive. http://www.anfutures.com/

That's an interesting question, Zdo. A major difference between humans and animals, including monkeys, is in the symbolic use of language. Cutting-edge psychology is now learning that our mind's analytical properties (e.g., the ability to compare and contrast, evaluate, plan, etc) is great for building things like the information superhighway, rocket ships, smart bombs, fuel effiecent cars, and better mouse traps. Argueably, most things that the human mind applies itself to "outside of the skin," so to speak, has advanced the species. When we start applying the same mental abilities to ourselves, however, things can break down. It is easy to imagine that if we we locked in a room, we could use our mental powers to find the solution to get ourselves out. We could, for example, open a window and jump out. Too, far to jump? Then call our mate on the cell phone. Battery dead? Then we could shout out the window at passersby for assistance, etc, ect, ect. The mind has no problem coming up with possibile solutions. It's very, very good at that. Perhaps too good. When, for example, we compare ourselves with others and find ourselves coming up short (e.g,, not as pretty, not as good a trader, more fat than, have less hair than, etc) and feel bad, or we think about the last losing trade we had and project that into the future for the next trade and hestitate on pulling the trigger, our mind is actually working against us. Even though it feels true and right, we aren't always well-served by what our mind is telling us. Have you ever had this experience: You get in a long trade and it shows a little profit. Your mind says, "Hey, take the profit. Don't be a smuck and give it all back, just take your profit now." So you listen to what your mind says and you exit. Price continues to rally and makes new highs. And, what is your mind saying to you now? "Why didn't you stay in that trade? It was a perfectly good trade! Look at all the money you left on the table!" etc, etc. So here's the question: which was the truth? Unfortunately, traders stuck in the loss aversion/disposition effect and cut winners short see both as true. As good as our mind is in problem-solving and other analytical activities, when applied to ourselves it often causes suffering and results in not only inappropriate behaviors, but in a restriction of our behavioral repertoire -- we limit our responses and options. This has enormous implications. The minds of monkeys and other animals don't work this way, mainly because they don't use language. Think about this for a moment: how many animals have you known or heard of that committed suicide? I'll wager not one. But in the human realm there are many. We are now thinking that the act of suicide is the mind turned against itself in a problem-solving way in extremis. Behavioral psychologists have studied animal behavior and learned many useful things. For example, teach an animal to press a level to recieve food, and it will quickly learn the task. Stop giving food when the lever is pressed and the animal quickly figures out the effort no longer produces results and so it stops pressing the level. Humans will do the same in similar rewarded tasks. Here's where there is a difference: Teach the animal to press the lever and every so often give it the reward of food. Like before, it learns and will do the task. Stop giving the food and the animal quickly figures out it is no longer being rewarded and it soon stops the task. Humans take much, much longer to stop. It's called an intermittent schedule of reinforcement. Casinos know this and program the slots to "reward" players on such a schedule. They know that when reinforced just a little, people will continue to play and play and play. It's great for the casino; not so good for the player. Likely, the culprit is the mind telling the player, "Hey, XX losses in a row, you're due for a hit" or some such nonsense. And, by the way, this is the real reason animals are not allowed to gamble This is the main difficulty with traders moving their stop and giving the trade "just a little more room." When it worked out a time or two earlier, the trader was reinforced for a poor trading behavior. The behavior avoided the pain of loss and gave an immediate gratification. So even though the trader knows it is a bad move, it will take him or her a long time and many losses to correct that behavior because of that highly reinforcing experience. If the trader is honest and candid, he or she will tell you that they discounted a basic axiom of trading because they thought (i.e., their mind was telling them) that it would be better to move their stop to avoid the loss. Animals certainly respond to punishment and aversive consequences. If, for example, they were given a shock every time their trade was a loser, they wouldn't be trading long unless the shock was relatively mild and the rewards for the win were a lot larger than the pain. They don't relate to money, and I can't remember if there have been animal studies that were able to produce effective reinforcement with non-natural reinforcers (money is a non-natural reinforcer; food is a natural reinforcer). I think you could probably teach a monkey to trade a couple of basic setups. As long as you reward it with something it likes every time there is a win, you would probably have a good trading machine. Because it doesn't use language like we do and, therefore, it doesn't evaluate itself as a loser in the context of a loss, it wouldn't get flustered at the losses or begin restricting or altering it's behavior. It would just wait for the next set up and be looking for that next banana. So, let me know if you have a monkey you want to train ... Eiger

P&F Update ES made it to the first objective from the first phase count along the 750 line. This is the blue arrow. The projected count has been fulfilled. The stepping stone count objective (red arrow) would take it closer to the full count along the 750 line. Nothing suggests a completion of the up move at this point, so until that happens, we can continue to look to the upside (though a reaction does look likely). You can see that P&F charts can be quite useful and are very easy to keep updated.

No worries, James. Sometimes English feels like it's not my first language either.

Overall, this is also clear and straightforward. I am not quite sure about the use of "upon notice," which is bolded above. To me, that phrase indicates that you will give notice to the offending party before taking an action. Do you mean to say that or something like "without notice?"

This is clear and transparent. It seems quite workable.

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In the Wyckoff and VSA methods, Upthrusts for a double top and Springs for a double bottom are often excellent indications of directional movement. Volume certainly plays a part. When you see less volume on the retest of the top or bottom, it is high odds for a reversal. Even given that, you still want to see a key reversal bar, either closing on the low after attempting to go higher for an UpThrust, or closing on the high after attempting to go lower for a Spring. In both cases, prices above or below resistance and support are rejected by the market and indicate a directional move. Here are a couple of examples: In the first chart, you can see the market fell. Note that the last rally indicated some strength because it pushed above the Supply Line AA at 1. The market then drops below support and makes a 'double bottom,' but a Spring occurs at 2 with the Key Reversal bar. The market rallies at 2 back above support. Because volume is low at this point, it is a relatively 'safe' entry to the long side. The market then rallies 10+ points. In the second chart, you can see an UpThrust. Here, you see an old top in the background. This is resistance. The market tried to push through this old resistence and on the third time, it fails miserably. At 1, it tries to go up, but reverses and closes on the low (second bar). This is a clear indication of lower prices, no doubt. The market then procedes to fall over 30 points in a short period of time. UpThrusts and Springs occur freqently and can be high odds trades in the right circumstances. We talk a lot about these and other high probability setups on the VSA thread - VSA stands for Volume Spread Analysis, a useful, modern, and intuitive version of the Wyckoff Method. Check it out here: http://www.traderslaboratory.com/forums/f151/ Hope this is helpful, Eiger

I think this idea has legs and would be worth trying.