DbPhoenix

I didn't do sufficient homework (blame it on the holidays). It may be coincidence that the high for today coincided with the midpoint of the range either side of 10/20, but there was also quite a bit of congestion after 11/6 around that point. But 1250 is still important, as is now today's high, then 1300 and the entire zone between that and 1350. Quite frankly, I don't think the bulls have it in them, but we'll see.

If only price were a coastline.....

For use today as a reference point, the "test" of the 12/11 low was not quite as decisive on the NQ as on the NDX (posted earlier by atto). What any of this means, of course, beats the hell out of me, but it should make for an interesting day.

Thank you. This will be enormously helpful. Will the work you've done on this make it easier to provide a list in the User CP of all the attachments that one has made?

Putting it above the high of the 29th is what I'm suggesting, but it's not my idea. I got it from Teresa Lo*, who got it from Dunnigan (from the 50s). Putting it above the high of the 27th is not more risk averse. The trader is merely assuming more of one kind of risk and less of another. *A little follow-up note, five days later. By mentioning Teresa Lo, it was not my intention that anyone should sign up for anything or buy anything. I have no idea what Teresa is in to these days (this was nine or ten years ago), and things change. My point in bringing it up is that these are "classic" ideas, and if one wants to pursue them, he should investigate the classics: Dow, Hamilton, Wyckoff, Schabacker, Dunnigan, Magee, Cole, de Villiers et al. The "horse's mouth", as it were. Though these books are not cheap, they are far less expensive than the thousands that people spend on CDs and DVDs and courses and so forth that are little more than warmed over concepts originated by the above.

I'm not deciding for anyone what is or is not valid. My impression upon reading the OP was that jason was looking for practical suggestions on using multiple timeframes to make trading decisions, which is why I made my first post. If anyone can provide a practical application of an assertion that the market is fractal (however he might define the term), then this would be a good time to begin. On the other hand, if I misunderstood the thrust of the thread, my apologies.

Price may move up and down and sideways with all bar intervals in all timeframes, but that doesn't satisfy the self-similarity criterion, at least in any way that would aid in making a trading decision.

Springboards are discussed in Section 7, which you're working on now, as well as Section 14, Volume Studies, though they are mentioned here and there throughout the course. One could assume that sellers were not yet done. But one could also not help but be impressed by the determination of buyers. For them to hold their positions in the face of even greater pressure would be even more positive for longs. The low of 12/17 is the "danger point", i.e., that's where buyers were able to turn the tide, at least for the time being, and the force they were able to bring to bear for the reversal was considerable. Placing a stop under the lows of the 29th may make the trader feel better, but that has nothing to do with what the market has in mind or with what it may or may not do. Buyers could choke there and price continue to drop all the way back to what appears to be the climax low (one can't know except in hindsight). Buyers aren't going to panic if price drops below the low the 29th, particularly those who participated in the reversal. But if price were to drop below the climax low, you'd have a lot of nervous longs on your hands, particularly if they begin to suspect that that wasn't a climax low after all but might be instead just an indication of preliminary support. This is not to say that a protective stop should not be placed under the 29th. Otherwise, you run the risk of allowing hope to govern your trading decisions. However, if stopped out there, you must also be prepared to re-enter if price does test the climax low at a lower level and stages a better rally. Volume wouldn't have had much to do with it since volume frequently fails to lead price. I would have taken the trade anyway and gotten out quickly if it didn't succeed, then re-entered on the later, more substantial test (the 26th and following). Yes, though the meaning of that would have to be explained in real time. Yes. But I'm not the last word. All intervals are arbitrary unless trading literally halts, as is generally the case with stocks at the market close. Coming up with some bizarre interval hoping that secrets might be unlocked is rather pointless except insofar as the activity demonstrates the pointlessness of itself. Price moves by ticks, and you're completely justified in bundling them in some way in order to avoid zooming out over and over again in order to see what's going on. However, price doesn't know what you're doing and wouldn't care if it did. It moves up and down independent of however you choose to illustrate the movement. One way to move away from an overemphasis on bars, whatever kind of bars (or candles) they may be, is to plot price and volume as continuous lines. In this way, one can see literal waves rather than the series of snapshots which bars more closely represent. Both are thrusts, i.e., tests of buying interest. The buying interest doesn't materialize, so that's that. Absent the buying interest, the drop should come as no great surprise. Whether one characterizes it as distribution or not is up to the trader, but I wouldn't, considering where this is in relation to what had been happening with price at the end of 1930. And price does stage an awfully nice rally subsequent to this. As to over-egging it, probably. All you really need to know is that a periscope went up to check on buying interest and there wasn't any. What you call any of this is unimportant. I have the entire course, though I haven't restored all of it. The job of the trendline is to show trend. The jobs of demand and supply lines are to show where demand and supply are entering the market. D&S lines can coincide with trendlines, depending on how micro one wants to get with his trendlines, but they are better used to detect changes in momentum which may lead to changes in trend. You can see here that a number of supply and demand lines can be drawn within a trend, whether it forms a channel or not. And, again, these lines can show the trader changes in momentum and provide an early warning that there might be trouble: In this case, there appears to have been a successul test of the last swing low since this chart was created, but what was notable at the time was the failure to reach what was shaping up to be a new trendline but what was at the time just a supply line. Effort and result. Buyers made a huge effort on the 21st and could only finish in the middle of the range. When they let up the next day, price deflated. When they put everything they had into reaching the top of the wave on the next day, it all fell apart immediately the day after that. Badly. When they put their backs into it again on thd 25th, they can't hold it much past the midpoint of the wave, much less the top. I'm sure there would be, but I'd rather give those who are still working on this, like you, to give it a shot (you know who you are). If anybody contributes anything that's too far off the mark, I'll toss in my 2 cents.

Well, I don't see the market as being fractal since it's missing the self-similarity element. And I disagree that there is any such thing as "noise". But, as I said, all this may be entirely off-topic.

That seemed to be what he meant, but that's not what a "breakout" is. As for "fractals", I know a lot of traders like to apply that word to the market, but I suspect they're using it incorrectly. In any case, I don't want to derail the thread. If the definitions of "reversal" and "breakout" are not important to the subject, then set all this aside and carry on.

Would appreciate clarification on this point as a reversal and a breakout are two entirely different things.

Just for grins, here's what happened afterwards. The arrow points to the endpoint of W's analysis.

Clearly you have been paying attention. (1) I wouldn't relate it to the boxes using a daily since only one of the bars is in a box (and keep in mind that the boxes were my attempt to tie together auction market theory with W's notions of "balancing"; they are not mentioned anywhere in W's course). However, there is a moment in any peak or trough when price is moving neither up nor down but sideways. If you were to drop down to a smaller interval, you would likely find a sideways movement long enough to constitute a box, but that's really not the point that W is trying to make here. A springboard is a preparation for a substantial move, either up or down. If you've read enough to get into "cause", the springboard is building cause (though it is not the only means of doing so). Here, buyers and sellers reached equilibrium on the 23rd. When this swing low was tested again on the 25th thru 30th, sellers could not pull price down further, and the lower volume shows that they weren't even trying very hard (if they had, and buyers won the day anyway, volume would be higher). Therefore, sellers are, for the most part, done, and it's up to buyers to move price ahead. If they do..... (2) .....then price advances and you've had a successful test. If they're not ready, then price continues to move sideways (and you may end up with a more box-like box). But since none of this can be known except in hindsight, that's why I suggest placing your entry above the bar and letting the market pull you in rather than just jumping in on the hope that price will rise and either getting stopped out when the market decides to test the lows once again or grinds sideways while you wait and wait and wait. (3) It could. And, in other situations, has. However, note that even though buyers and sellers have reached equilibrium on this day, volume is still quite high. One cannot claim that either side is "done". Even so, price has been known to take off quickly after such a retracement or pullback or test or whatever you want to call it, and there's nothing to stop you from placing an entry above that bar. However, note how anemic the volume is on the following day and that you have a junior version of the same bar. Buyers still don't have it all together, or at least not enough to provide a sustained advance. This suggests that more preparation is necessary, and that turns out to be the case. This is not to suggest that one should just bail if he happened to enter on the 24th, but he ought not to just hang around and hope for the best when price plummets the following day. Better to exit, hang around, watch, and re-enter on the better opportunity on the 30th. (4) In order to make these judgements in real time, you have to know exactly what a springboard is, why it forms, what it's supposed to do, i.e., what's in traders' minds. Otherwise, it's just another triangle, another pattern, and the probabilities in playing it are not much better than flipping a coin. Here, you've had a real clunk toward the bottom, then a fairly violent rally. Then, suddenly price contracts, volume contracts, and you know, because of all the activity that's been going on and that has suddenly been choked off, that something is going to happen. Yes, price could just go out for a stroll and meander sideways, acting all innocent and diverting attention away from itself, but the probabilities are that something is going to happen, and soon. That something could be a move either up or down, in this case, down, but you have to be prepared for either. I assume he means tapering off on the advances. You'll note that volume is lighter on the advances and stronger on those days when the day closes well off the highs. In other words, sellers are allowing price to advance without putting up much resistance on the light days, but when they enter the market more aggressively, buyers don't have enough muscle to push price higher anyway. They instead retreat. Their failure on the 9th is especially clear. They were able to push price to a new high, but then got smacked down forcefully and decisively. I'm not channelling W, but I agree that the 14th is certainly an indication. But, yes, he's decribing the entire downmove as an indication, not plotting a big green Buy Here arrow on the 19th. Though he has not yet gone into demand and supply lines, the supply line isn't even broken. This isn't a required precondition for entry, but it's worth thinking about if you have issues with trading countertrend. If more people studied this stuff as energetically as you have, they'd likely have much more success with it. If you're trading intraday, you're welcome to join the chat room (see your toolbar at the top of the page). If you're trading EOD, feel free to post charts and questions to the EOD thread. It's become pretty cobwebby. This is one of those instances where hindsight can really mess with your head. Even if you're especially good at reading a chart from left to right, you know damn well what's coming next, even if you printed the chart blindfolded and covered it with a blank sheet of paper. First, W was not hung up on jargon. Dead center, equilibrium, balance, springboard, hinge, etc all meant pretty much the same thing. What mattered most of all was context, not this bar or that bar or how it looked or what volume bar it was associated with. W is all about price and volume flow, not bars. Bars are simply the means by which price and volume flow are illustrated (he also used P&F). Therefore, if one were looking only at bars and applying the "selling climax/technical rally/secondary test" scenario as a template, he could argue that the 21st was a selling climax and that the 25th was a test. However, during this interval, you've had a downward ride of 30%. This is all going to reverse in just a few days? Possible, yes. Probable, no. Even so, you can cover your bets by placing your entry above the test bar, and the entry doesn't get triggered, whereas just jumping in could result in quite a lot of pain. Beyond all that, the bars throughout this bounce are quite long and volume continues to be quite high. All this indicates that buyers and sellers widely disagree on what is "value", and this is more likely to lead either to a violent trading range or a move downward that continues until both sides are satisfied. Note, for example, how much more buoyant price is during the first week of October. Whenever price appears to have an anchor chained to its ankles, you're probably too early. Same to you.

I've known people who've participated in forums for years, years mind you, dispensing wisdom, giving advice, acting as veritable mentors to a continuing stream of newbies and yet who have never placed anything other than a paper trade. The better ones talk the talk in such a way that you'd never guess, unless you paid very close attention, which is unlikely if one has any sort of life. But regardless of the integrity of the fiction, it remains a fiction, and when the rubber meets the road, these actors are nowhere to be found. But that's one of the elements of anonymous forums and there's nothing that can be done about it other than to become and remain forever skeptical.

To me it's noteworthy, though perhaps for other reasons. We commented throughout the day on how far price was going on so little volume. There seemed to be little or no resistance on the part of sellers to the advance. These charts bear that out. And the fact that "up" volume was less than it had been on the previous efforts (in red) suggests that the victory did not mean quite as much as it would have if it had been hard-won. This doesn't mean that there may not be a hell of an advance, but I don't believe we're done, any more than we were done with the "selling climax" discussed in the SC thread.

As far as important price points go, the stickies should be of help. The "Cajas" and Support & Resistance threads should also be of help. As far as defining "important" volume, that will be a problem since you won't likely be able to do it on a discretionary basis (that is, judgements of "important" volume are made on a discretionary basis, but you won't be able to incorporate that into a mechanical system). This pdf on volume may also be useful.

A few adds to the honorable atto's superlative commentary. This chart isn't much different to what I've posted previously, so I won't bother to redraw the boxes. However, the "POC" line is worth noting, as is the convergence of the channel line with the last November swing point at 1400. As to the channels, I'm still not persuaded as to their reliability. However, lots of people do watch them, and there must be some self-fulfilling prophecy dynamic going on there. In any case, they do serve to track changes in momentum. What is most important, however, is a break through congestion, which we appear to have accomplished today, though volume, 90% or not, was pretty anemic. As to the NAUD, it is useful also to look at the NAUPV and NADNV separately. One can often gain insights there which might otherwise be overlooked.

Remember the kid who went on and on about "hidden" buyers and sellers or whatever it was and had a website where he was selling his system and we kept pushing him to come to the chat room and demonstrate how he traded all this hidden stuff and he finally agreed to come and didn't and was never heard from again? In any case, 868 makes all his money in a few seconds with huge size, so I doubt there'd be anything to show in a chat room. He'd be all done by 0935 anyway.

Could the lol be on the other foot?

Well, kid, I agree with just about every point that FW and HLM have been trying to make through the smoke you've been blowing up everybody's skirt, particularly with the title of the thread, and I've been making a living at this since 1989, so I am in a position to make such a statement. For someone who's trying as hard as you claim to be to avoid insulting people, you certainly are doing a bang-up job of it.

Why not? So you're looking for the same type of information that you'd get from point & figure but with volume?

If they do, I hope that they will define "fundamentals" accurately and not as "news" or "information". Fundamentals have nothing to do with what is being discussed here, and beginners who confuse a focus on news with anything having to do with fundamentals is going to end up in a lot of trouble. Beginners should also note that "technicals", at their core, have very little to do with 868's characterization of them. See the Price Action thread.

Stages of a Trader Stage One: The Mystification Stage This is where the neophyte trader begins. He has little or no understanding of market structure. He has no concept of the interrelationship among markets, much less between markets and the economy. Price charts are a meaningless mish-mash of colored lines and squiggles that look more like a painting from the MOMA than anything that contains information. Anyone who can make even a guess about price direction based on this tangle must be using black magic, or voodoo. But those ads on TV are so persuasive. Earn $100,000 A Week In Your Spare Time. At Your Kitchen Table. In Your Bathrobe. All one has to do is buy Hidden Secrets of Market Wizards Revealed! (plus shipping and handling). Or that software with the red and green arrows (how hard can it be?). So you open an account, subscribe to Level II, install your charting software, and are absolutely mesmerized by all the flashing lights and colors. DOM? You bet! And all you have to do to participate is . . . click. Stage Two: The Hot Pot Stage Before you’ve lost all your money, the thought that you haven’t the least idea what you’re doing may prevent you from blowing your account entirely. You realize now that this is not easy, it’s hard, it’s work, but rather than chuck it, you elect instead to take the subject “seriously”. You locate your library card and/or shop Amazon. You check out -- or take much of what you have left and buy -- all the “recommended reading”. You take the courses. You attend the seminars (box lunch included). You subscribe to the chatrooms and websites and newsletters. How-To book or notes in hand, you scan the markets every day. After a while (sometimes a good long while), you notice a particular phenomenon which pops up regularly and seems to "work" pretty well. You focus on this pattern. You begin to find more and more instances of it and all of them work! It’s all true! It Works! Your confidence in the pattern grows and you decide to take it the very next time it appears. You take it, and almost immediately your stop is hit, and you're underwater for the total amount of your stoploss. So you back off and study this pattern further. You go back to the books, back to your notes. And the very next time it appears, it works. And again. And yet again. So you decide to try again. And you take the full hit on your stoploss. Practically everyone goes through this, but few understand that this is all part of the win-lose cycle. They do not yet understand that loss is an inevitable part of any system/strategy/method/whathaveyou, that is, there is no such thing as a 100% win approach. When they gauge the success of a particular pattern or setup, they get caught up in the win cycle. They don't wait for the "lose" cycle to see how long it lasts or what the win/lose pattern is. Instead, they keep touching the pot and getting burned, never understanding that it's not the pot (pattern/setup) that's the problem, but a failure on their part to understand that it's the heat from the stove (the market) that they're paying no attention to whatsoever. So instead of trying to understand the nature of thermal transfer (the market), they avoid the pot (the pattern), moving on to another pattern/setup without bothering to find out whether or not the stove is on. Stage Three: The Cynical Skepticism Stage You've studied so hard and put so much effort into your trading, and this universal failure in the patterns only when you take them causes you to feel betrayed by the market and the books and materials and gurus you tried to learn from. Everybody claims their ideas lead to profitability, but every time you take a trade, it's a loser, even though the setups all worked perfectly before you played them. And since one of the most painful experiences is to fail when success looks easy, this embarrassment is transformed into anger: anger at the gurus, anger at the vendors, anger at the writers, the seminars, the courses, the brokers, the market makers, the specialists, the "manipulators". What's the point in trying to analyze and improve your own trading when there are so many dark forces out to get you? This excuse-driven blame game is a dead-end viewpoint, and explains a lot of what you find on message boards. Those who can't pull themselves out of it will quit. Stage Four: The Squiggle Trader Stage If you don't quit, you'll move into the "squiggle trader" phase. Since you failed with patterns and so on, you figure there's some "secret weapon", a "holy grail" that's known to the select few, something that will help you filter out all those bad trades. Once you find this magical key, your profits will explode and you'll achieve every dream you ever had. You begin an obsessive study of every method and every indicator that is new to you. You buy a whole new series of books, attend new and different courses, sign up for new and different newsletters and advisory services, register for new and different trading websites and chat rooms (you hear this guy really knows his stuff). You buy more elaborate software (100s Of Indicators And Studies!). You buy off-the-shelf systems (Guaranteed Results!). You spend whatever it takes to buy success. Unfortunately, you stack so much onto your charts that you become paralyzed. With so many inputs, you can't make a decision, particularly since they rarely agree. So you focus on those which agree with the direction of the trade you've taken (or, if you're the fearful sort, you look only for those which will prove to you how much of a loser you think you are). This is all characteristic of scared money. Without a genuine acceptance of the fact of loss and of the risks involved in trading, you flit around like a butterfly in search of anything or anybody who will tell you that you know what you're doing. This serves two purposes: (1) it transfers to others the responsibility for the trade and (2) it shakes you out of trades as your indicators begin to conflict. The MACD says buy, the sto says sell. The ADX says the market is trending, the OBV says it's overbought. By the end of the day, your brain is jelly. This process can be useful if the trader learns from it what is popular, i.e., what other traders are doing, and, if he lasts, how to trade traps and panic/euphoria. And even though he may decide that much of it is crap, he will, if he doesn't slip back into the Cynical Skepticism Stage, have a more profound appreciation -- achieved through personal experience -- of what is sensible and logical and what is nonsense. He might also learn something more about the kind of trader he is, what "style" suits him best, learn to distinguish between what is desirable and what is practical. But the vast majority of traders never leave this stage. They spend their "careers" searching for the answer, that perfect setting, that ultimate tweak to their backtest, and even though they may eventually achieve piddling profits (if they don't, they will of course eventually no longer be trading), they never become truly successful, and this perpetual not-quite-failure not-quite-success can have debilitating consequences for the psyche. And in case you're wondering, the following chart is not a joke. Stage Five: The Inwardly-Bound Stage The trader who is able to pry himself out of Stage Four uses his experiences there productively. The trader learns, as stated earlier, what styles, techniques, tactics are popular. But instead of focusing entirely on what's "out there", he begins to ask himself some questions: What exactly does he want? What is he trying to accomplish? What sort of trading makes the most sense to him? Long or intermediate-term trading? Short-term trading? Day-trading? Trend-trading? Scalping? Which is most comfortable? What instrument -- futures, stocks, ETFs, bonds, options -- provides the range and volatility he requires but is not outside his risk tolerance? Did he learn anything at all about indicators in Stage Four that he might be able to use? And so he "auditions" all of this in order to determine what suits him, taking all that he has learned so far and experimenting with it. He begins to incorporate the "scientific method" into his efforts in order to develop a trading plan, including risk management and trade management. He learns the value of curiosity, of detached interest, of persistence and perseverance, of taking bits and pieces from here and there in order to fashion a trading plan and strategy that are uniquely his, one in which he has complete confidence because he has tested it thoroughly and knows from his own simulated trading and real-money experiences that it is consistently profitable. This eventually becomes his “edge”*. He accepts fully the responsibility for his trades, including the losses, which is to say that he understands that losses are inevitable and unavoidable. Rather than be thrown by them, he accepts them for what they are, a part of the natural course of business. He examines them, of course, in order to determine whether or not some error was made, particularly one that can be corrected, though true trading errors are rare. But, if not, he simply shrugs off the loss and goes on about his business. He understands, after all, that he is in control of his risk in the market. He doesn't rant about his broker or the specialist or the market maker or that vast conspiracy of everyone who's trying to cheat him out of his money. He doesn't attempt revenge against the market. He doesn't fret. He doesn't fume. He doesn't succumb to hope, fear, greed. Impulsive, emotional trades are gone. Instead, he just trades. *the knowledge proved through research that a particular price pattern or market behavior offers an acceptable level of predictability and risk to reward to provide a consistently profitable outcome over time. Stage Six: Mastery At this level, the trader achieves an almost Zen-like trading state. Planning, analysis, research are the focus of his time and his effort. When the trading day opens, he's ready for it. He's calm, he's relaxed, he's centered. Trading becomes effortless. He is thoroughly familiar with his plan. He knows exactly what he will do in any given situation, even if the doing means exiting immediately upon a completely unexpected development. He understands the inevitability of loss and accepts it as a natural part of the business of trading. No one can hurt him because he's protected by his rules and his discipline. He is sensitive to and in tune with the ebb and flow of market behavior and the natural actions and reactions to it that his research has taught him will optimize his edge*. He is "available". He doesn't have to know what the market will do next because he knows how he will react to anything the market does and is confident in his ability to react correctly. He understands and practices "active inaction", knowing exactly what it is he wants, exactly what it is he's looking for, and waiting, patiently, for exactly the right opportunity. If and when that opportunity presents itself, he acts decisively and without hesitation, then waits, patiently, again, for the next opportunity. He does not convince himself that he is right. He watches price movement and draws his conclusions. When market behavior changes, so do his tactics. He acknowledges that market movement is the ultimate truth. He doesn't try to outsmart or outguess it. He is, in a sense, outside himself, acting as his own coach, asking himself questions and explaining to himself without rationalization what he's waiting for, what he's doing, reminding himself of this or that, keeping himself centered and focused, taking distractions in stride. He doesn't get overexcited about winning trades; he doesn't get depressed about losing trades. He accepts that price does what it does and the market is what it is. His performance has nothing to do with his self-worth. It is during this stage that the "intuitive" sense begins to manifest itself. As infrequent as it may be, he learns to experiment with it and to build trust in it. And at the end of the day, he reviews his work, makes whatever adjustments are necessary, if any, and begins his preparation for the following day, satisfied with himself for having traded well. (from Bo Yoder, Vad Graifer, and Mark Douglas) 1. I walk down the street There is a deep hole in the sidewalk I fall in I am lost, I am helpless It isn't my fault It takes forever to get out 2. I walk down the street There is a deep hole in the sidewalk I pretend I don't see it I fall in again I can't believe I am in the same place But it isn't my fault It still takes a long time to get out 3. I walk down the street There is a deep hole in the sidewalk I see it there I still fall in....it's a habit My eyes are open I know where I am It is my fault I get out immediately 4. I walk down the street There is a deep hole in the sidewalk I walk around it 5. I walk down another street Portia Nelson

I found this post on "Re: All You Need... is a Chart" interesting and have nominated it accordingly for "Topic Of The Month January, 2009"

Same thing that always happens in these cases: either people buy because they're elated that the cut was more than expected, or they sell because things must be much worse than they thought they were if such an unexpected cut was necessary. Either way, it's all in the chart, so why bother?