Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.
-
Content Count
3789 -
Joined
-
Last visited
-
Days Won
1
Content Type
Profiles
Forums
Calendar
Articles
Everything posted by DbPhoenix
-
This is not a "failed" hinge. A failed hinge is one beyond which there is no directed move, i.e., one that trails off into a patternless sideways nonmove to nowhere. In your example, you had a poke to test for buying interest. There wasn't any. Therefore, it is not surprising that the sellside would take over (if it didn't, then you'd have a patternless sideways nonmove). As for a warning, I have Teresa Lo's admonition imprinted on my brain: "if it doesn't move, you don't want to be there". In this case, the move was aborted immediately, Therefore, you don't hang around and hope for the best. As for a midpoint bounce, I don't see one. Perhaps you're placing your buystop in the wrong place.
- 4899 replies
-
In all fairness to Vad, the last paragraph in the post above is me, not he, from something I posted four years ago. Funny how these things resurface.
- 4899 replies
-
Sinces hinges are springboards but are not boxes, the hinge discussion is technically off topic. In order to avoid confusion, I've created a separate thread for hinges. Please divert the discussion of hinges to that thread.
- 4899 replies
-
..........................................
-
Racking My Brain with VSA, Please Help!
DbPhoenix replied to herkfsu's topic in Volume Spread Analysis
Regardless of what approach you choose to follow, rely on your native intelligence, common sense, logic, which seem in your case to be in working order. If something you read makes no sense to you, then it's probably BS, most likely of the sort that's going to end up costing you money. Volume is trading activity, period. It has no meaning in and of itself. If price rises, demand/buying power/buying pressure is greater than supply/selling power/selling pressure. If price falls, supply/selling power/selling pressure is greater than demand/buying power/buying pressure. If price doesn't move, then demand/buying power/buying pressure and supply/selling power/selling pressure are more or less equivalent. That's it. You can keep it simple, or you can make it extraordinarily complex. That's entirely up to you. -
Read it all again. Now that you have some experience, the content of all the books will have changed.
-
Commentary: Is it 1929 all over again? By Maury Klein Special to CNN Editor's note: Maury Klein is professor emeritus of history at the University of Rhode Island. He is the author of 15 books, including "Rainbow's End: The Crash of 1929" and most recently "The Power Makers: Steam, Electricity, and the Men Who Made Modern America." (CNN) -- Friday marks the 79th anniversary of the day that launched the stock market crash of 1929. As an unprecedented wave of selling threw the floor of the New York Stock Exchange into pandemonium on a day that became known as Black Thursday, a show of organized support by a coterie of leading bankers halted the panic. But on the following Monday, the market collapsed in a tsunami of selling. Every intense convulsion of the stock market raises primal fears spawned by the Great Crash of 1929 and the ensuing Great Depression, which dragged on for a full decade and has haunted Americans ever since. The Panic of 2008 is no exception. In the past year, the market's fall has at times rivaled that of 1929. Are there connections or similarities between those earlier national traumas and our current crisis? First some facts about that earlier experience. The Great Crash and the Great Depression were two separate events. The Crash was a financial panic, the Depression an economic downturn. The one does not necessarily lead to the other; the market has collapsed several times in American history without bringing on a depression. The Crash began in October 1929, and the worst of it was over in three weeks; the Depression did not fasten itself on the nation for another year. To this day, the connection between them remains unclear, which makes it difficult to draw lessons or analogies from them. The Dow plunged 39 percent between October 23 and November 13, 1929, but it regained 74 percent of that loss by March 1930. Only when the economy failed to gain momentum in the spring did the market slip back. By fall the country had slipped into a depression, and the market resumed a downward course that did not touch bottom until July 1932. It did not again return to the levels of 1929 until 1954. The Depression did not end until increased military spending revived the economy in the spring of 1940. The bull market of the 1920s was unique in that it marked the first time large numbers of ordinary people participated. The market moved from Wall Street to Main Street and aroused intense interest even among people who were not active in it. The new investors, or "fish" as the pros called them, were prone to panic when the market fell sharply. Could it happen again? History never repeats itself, but historical patterns do -- though always in a new context. Here are just a few of the similarities and differences between the earlier crisis and its modern version. During the 1920s, the financial industry underwent a great expansion, bringing into the business many inexperienced people and new investment vehicles -- most notably the investment trust, the forerunner of the modern mutual fund. Nobody knew what impact they would have on the market with their buying and selling on a large scale. The business world hailed the 1920s as the "New Era," one with new rules in which the old pattern of cyclical depressions would no longer occur and prosperity would be continuous. Compare this delusion with the "New Economy" of the 1990s. The 1920s marked the beginning of the consumer economy, and with it a broad expansion of credit. Installment buying made its debut on a large scale. Credit also was used to buy stocks on margin, greatly increasing the market's volume and volatility. The banking system was shaky throughout the 1920s, and failures escalated steadily after 1929. The Crash exposed many cases of fraud that led to investigations and passage of the most significant banking reform in American history. The Glass-Steagall Act of 1933 created the Federal Deposit Insurance Corp., or FDIC, gave rise to the Securities and Exchange Commission, or SEC, and separated investment banks from commercial banks. The latter reform was repealed in 1999, giving banks free rein to perform both activities once again. Some differences between the eras are worth noting. Prior to 1933, the federal government played virtually no active role in relieving the banking crisis of the 1920s. The stock market did not have giant institutional buyers moving huge blocks of stock. Nor did it operate on a global scale, though it was deeply influenced by international events. After the crash, the banks had plenty of money to lend but no takers, the opposite of today's situation. Deflation became the mortal enemy as people removed their cash from banks and hoarded it. A familiar pattern emerged from these events. Business and the Republican Party in the 1920s demanded and got a "free" market unrestrained by government. Neither Wall Street nor the New York Stock Exchange was regulated by the government. The resulting disaster prompted outraged demands that Washington "do something." Regulation was then forthcoming. Later, as prosperity returned and the market began soaring, the restraints were gradually removed and the pattern of excess began anew until it collapsed once again in our own time. With the fall comes renewed pleas for government to "do something." Finally, it is important to remember that psychology plays a huge role in financial markets. Every panic has been at bottom a crisis of confidence. So too with the economy. As Frederick Lewis Allen observed, "Prosperity is more than an economic condition; it is a state of mind." The trick is always to find out what exactly is needed to restore it. We are still fishing for the answer to that riddle. http://www.cnn.com/2008/US/10/21/klein.depression/index.html
-
Sorry, I didn't trade on Friday.
- 4899 replies
-
Sorry, but how does the bullish percent index relate to Wyckoff's notion of selling climaxes?
- 4899 replies
-
Exits from hinges are not always dramatic and they're not always easy to recognize in real time, much less trade in real time. Most often, one has to take the breakout on faith that it will be successful, and if he's read it correctly, it likely will be. However, price often comes back to the midpoint or apex, as it does here. Therefore, if one is going to maintain a tight stop, he has to be ready to re-enter if price retraces then resumes the advance.
- 4899 replies
-
Which goes to show that even with a selling climax and two successful tests (or preliminary support, a climax, and one successful test), it can take a while.
- 4899 replies
-
The selling climax appears to have come in July '02 and the market broke out of its range in June '03, so let's say July '02 to July '03.
- 4899 replies
-
Can't find it. But I'm interested only in the "90" days. If you don't have that already, it would be a lot of work. If you do, I'll put together a chart like the one above.
- 4899 replies
-
Do you have data for 2002 and the first half of 2003?
- 4899 replies
-
- 4899 replies
-
We're at "a" bottom, but not necessarily "the" bottom (look at what happened in 1930). And a "snapback" or "technical" rally are both driven by strong demand. If they weren't, price wouldn't rise. What distinguishes a snapback or technical rally from a genuine rally is whether buyers intend to keep the shares or are buying them just to cover short positions and whether the "hands" doing the buying are weak or strong. If weak, the shares will be tossed back into the market at the first sign of trouble, which is what the test is all about (if none of the shares were thrown back, you'd have a "V" bottom). What both Desmond and Wyckoff counsel is to avoid buying too soon, and both provide ways (essentially the same ways) of enabling the investor to avoid doing so. As for a lengthy period of consolidation, the bottom six years ago took at least six months to form. Traders looking to invest may want to focus on bargains that pay dividends so that they are at least somewhat compensated for the time they spend waiting for their stocks to begin to re-appreciate.
- 4899 replies
-
In 2002, Paul Desmond won the 2002 Charles H. Dow Award for his work in identifying market bottoms and new bull markets. Since this work nicely supports Wyckoff's hypotheses regarding selling climaxes, technical rallies, and "secondary reactions", or tests, I've posted Desmond's study below in pdf form. I've also excerpted several points which are particularly pertinent to Wyckoff's aforementioned hypotheses and which will act as an introduction to the study. Please note that all bolding is mine. To spot an important market bottom, almost as it is happening, requires a close examination of the forces of supply and demand – the buying and selling that takes place during the decline to the market low - as well as during the subsequent reversal point. Important market bottoms are preceded by, and result from, important market declines. And, important market declines are, for the most part, a study in the extremes of human emotion. The intensity of their emotions can be statistically measured through their purchases and sales. [P]anic selling must be measured in terms of intensity, rather than just activity. It is essential to recognize that days of panic selling [in which Downside Volume equaled 90.0% or more of the total of Upside Volume plus Downside Volume, and Points Lost equaled 90.0% or more of the total of Points Gained plus Points Lost] cannot, by themselves, produce a market reversal, any more than simply lowering the sale price on a house will suddenly produce an enthusiastic buyer. As the Law of Supply and Demand would emphasize, it takes strong Demand, not just a reduction in Supply, to cause prices to rise substantially....These two events – panic selling (one or more 90% Downside Days) and panic buying (a 90% Upside Day...) – produce very powerful probabilities that a major trend reversal has begun…. Not all of these combination patterns – 90% Down and 90% Up – have occurred at major market bottoms. But, by observing the occurrence of 90% Days, investors have (1) been able to avoid buying too soon in a rapidly declining market, and (2) been able to identify many major turning points in their very early stages – usually far faster than with other forms of fundamental or technical trend analysis. Impressive, big-volume “snap-back” [technical] rallies lasting from two to seven days commonly follow quickly after 90% Downside Days, and can be very advantageous for nimble traders. But, as a general rule, longerterm investors should not be in a hurry to buy back into a market containing multiple 90% Downside Days, and should probably view snapback rallies as opportunities to move to a more defensive position. The following is of course a chart of the Nasdaq over the past few months up through yesterday and is intended as an example. The calculations are not guaranteed to be accurate. Anyone caring to verify them and point out any errors is welcome to do so. Readers are encouraged to read the study in its entirety. 2002DowAward.pdf
- 4899 replies
-
Topic Of The Month October, 2008
DbPhoenix replied to Soultrader's topic in Announcements and Support
I found this post on "Re: Woodies CCI technique." interesting and have nominated it accordingly for "Topic Of The Month October, 2008" -
Topic Of The Month October, 2008
DbPhoenix replied to Soultrader's topic in Announcements and Support
I found this post on "Re: Woodies CCI technique." interesting and have nominated it accordingly for "Topic Of The Month October, 2008" -
[VSA] Volume Spread Analysis Part II
DbPhoenix replied to Soultrader's topic in Volume Spread Analysis
Actually, the comment was something along the lines of "VSA has nothing to do with Wyckoff", which is largely true since each takes an entirely different view of the market. But, as suggested, one can review old posts if one is interested. Most of them are still here.- 2244 replies
-
- technical analysis
- volume spread analysis
-
(and 2 more)
Tagged with:
-
How it all began: But the Great Depression chastened consumers. After World War II, and the explosive growth of the suburbs, consumption rose sharply. But the modern era of easy credit really began with the deregulation of the late 1970s. In a 1978 Supreme Court decision, banks won the right to charge whatever interest rate their home state allowed and to do so across state lines. States repealed usury laws capping interest rates. Banks began pursuing consumers in ways they hadn't before. When inflation soared in the early '80s, banks aggressively marketed credit cards to struggling consumers as a good deal. The interest rates were high, but not as high as inflation. In the recession of 1990-91, banks who saw their profits tightening seized on the margins available by lending more to consumers. When Congress eliminated income tax deductions for interest on credit cards, banks pushed home equity loans, encouraging people to take money out of their homes to pay off the credit cards. As families took on debt, they were encouraged to follow a rule of thumb: It's OK as long as you don't devote more than 25 percent of income to borrowing costs. Lenders, though, found a way around that. The 20-year home loan was repackaged as a 30-year loan and lenders stretched three-year car payment schedules to seven, masking the extent of the debt load. Consumers "think they're doing fine by their parents' standards," Manning said. "But boy, have they fallen far behind." The industry came up with subprime loans in the 1990s, then used them to encourage consumers with checkered credit history to buy homes. When very low interest rates early this decade sent home prices skyrocketing, and Wall Street demanded even more lending to feed a market for mortgage-backed securities, lenders went into overdrive. Consumers could buy with no money down and no documentation of income and were encouraged to borrow against the rising value of their homes. Before the housing bubbled popped, many consumers were pulling money out of their houses to pay for expenditures — from boats to big-screen TVs — well beyond ordinary living expenses. Over the years, economists have tried to figure out when, if ever, consumers might finally reach their debt limit. But each time, Americans have proven far more resilient than pessimists imagined, financing their spending by borrowing. The credit crunch, though, may be the breaking point. http://news.yahoo.com/s/ap/20081013/ap_on_bi_ge/end_of_easy_credit
-
Not to rain on anyone's parade, but this is all veering further off the subject of this thread, and is only partly relevant to Wyckoff. Those who are interested in indicators, Fibonacci, etc. will likely have better luck elsewhere in the Technical Analysis Forum.
- 4899 replies
-
What comes after the Great Unwinding? By James Saft CHARLESTON, South Carolina (Reuters) - Yes, Virginia, the banking crisis will one day end, but what comes after promises to be even more arduous. With the solvency of the western banking system seriously in question, there is a temptation to hope that if only the latest bold last ditch rescue plan will work we can go back to the good old days of 2006. But it's possible to construct an argument that the banking crisis is just the cold sweat, not the flu that follows on. The problem is not just that the banking system has been broken by an orgy of foolish lending, but moreover that huge swathes of the global economy are predicated on that foolish lending and the consumption it allowed. The bubble wasn't just in real estate, leaving the financial system holding the bag, the bubble was in consumption. That is not to say that the current scrambling to save the system is pointless; there is a very big difference in the damage that will be done by a disorderly deleveraging compared with a slightly slower, more controlled one. The banking crisis will have very serious negative effects on the real economy, and the cost will grow. This is true even if the ATM machines continue working, our deposits are safe and gold, bullets, canned goods and bottled water don't become 2008's best asset allocation choices. The core of the issue isn't even solvency. It's the way in which the debt which is causing the banking insolvency distorted, distended and hollowed out economies around the world. It caused a massive misallocation in the English speaking economies into property and into consumption that could only seem to make sense to people drunk on property price appreciation. It caused a less huge but still significant misallocation elsewhere; I think we will see that a lot of what was being produced by Europe and Asia's vibrant export industries were products that America and Britain will find they can do without, or with much less of. Don't get me wrong: the banking crisis is extraordinarily dangerous, but the changes in the global economy that are needed are even more profound. Savings rates are going to need to rise in the developed economies of the English speaking world, and consumption drop. Those economies are also going to have to place a higher priority on producing goods and services they can sell abroad. MARBLE COUNTERTOPS AND PERSONAL TRAINERS There are lots of parts of the "service economy" that very likely won't exist in two years time, or only in a very feeble way. Take for example the phenomenon in the United States and Britain of downsized late middle-aged people setting up small service businesses. Very often they used a combination of their redundancy payment plus equity extracted from their houses to provide themselves with working capital, and often to supplement their earnings. So, someone who, for the purposes of argument, used to work for IBM in the Hudson Valley starts a business installing marble countertops. For four of the last six years that has been a good business, but the people paying for it were only able and willing to do it so long as the illusion that consumption is investment could be maintained. That is over, and significant parts of the U.S. economy will need to be repurposed, and will need to do so at a time when we are suffering asset price deflation and may well get real deflation. The recession will be long and probably ugly. Or consider a very typical British story, a woman who hating the grind of her job at an insurance company and possessed of a modest house that is now worth 13 times her annual wage, decides to set up shop as a personal trainer. She's done reasonably well and had a great deal of flexibility and satisfaction. But her clients will likely cut back on personal training as times get tough. Just think about your own lives and the people you know: how many of them do jobs that didn't exist 15 years ago but have nothing really to do with new technology? Many of those jobs are enjoyable and worthwhile offshoots of a credit bubble and will have a very difficult time surviving its demise. Similarly, it will be tough for those English speaking economies' global enablers. China will need to find somewhere else to sell many of its goods. The grand bargain of China buying U.S. Treasury bonds to finance consumption in the United States will come under enormous and dangerous strain. Europe too, as well as other exporters, will hit difficulties; not just in their banking systems, which helped to finance the binge, but in their automotive and consumer electronic industries, just to name two. There is no doubt the needed changes can happen and that these innovative and creative economies can rebalance. But it is going to be very painful. http://www.reuters.com/article/reutersComService4/idUSTRE4993M120081010
-
Commentary: Is this the start of another Great Depression? By Barry Eichengreen Special to CNN Editor's Note: Barry Eichengreen is George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley. He is the author of "Golden Fetters: the Gold Standard and the Great Depression, 1919-1939." BERKELEY, California (CNN) -- Every time the economy and stock market turn down, financial historians get predictable calls from reporters. Could this be the start of another Great Depression? Could "it" possibly happen again? My stock answer has always been no. The Great Depression resulted from a series of economic and financial shocks -- the end of a housing bubble in 1926 and the end of a high-tech bubble in 1929 -- but also from truly breathtaking neglect and incompetence on the part of policymakers. It couldn't happen again precisely because policymakers know this history. Fed Chairman Ben Bernanke is a student of the Great Depression. Treasury Secretary Henry Paulson remembers the mistakes of Andrew Mellon, Herbert Hoover's treasury secretary. We can be confident, I always answered, that there will not be another Great Depression because policymakers have read financial histories like mine. At least that was my line until recently. Now I have stopped taking reporters' calls. The first thing that made the Great Depression great, of course, was the Fed's failure to act. It basically stood by as the banking system and the economy collapsed around it. This time, in contrast, the Fed can hardly be criticized for inaction. Not only has it cut rates, but it has rolled out one new unprecedented initiative after another. Unfortunately, it has reacted more than acted. First, it provided funds to the commercial banks. Then, it targeted broker-dealers. Now, it is desperately propping up the commercial paper market. All the while however, the problem has been infecting new parts of the financial system. One thing that restrained the Fed in the 1930s was the fear that rate cuts might cause capital to flee to other countries and the dollar to crash. The danger was that the same liquidity that the Fed poured in through the top of the bucket might just leak back out through these holes in the bottom. There was a solution: coordinated rate cuts here and in Europe. Unfortunately, central bankers couldn't agree on what was needed. The result was further instability. That central banks have learned this lesson of history and now see the need for coordinated action is at least one ground for hope. The problem is that they have already used their bullets. U.S. Treasury bill rates have essentially fallen to zero, and the Fed's policy interest rates are only slightly above that level. Central banks are out of ammunition. This is no longer a problem they can solve by themselves. What is needed now is Treasury action to address what has morphed into a global banking crisis. Between 1930 and 1933, not just the U.S. but also Europe and Latin America experienced rolling banking crises. When Austria took desperate measures to prop up its banking system, its banking crisis only shifted to Germany. When Germany did the same, the crisis spread to the United States. This was beggar-thy-neighbor policy at its worst. We have seen some disturbing evidence of the same in recent weeks, as when Ireland unilaterally guaranteed all bank deposits and thereby sucked funds out of the British banking system. G7 leaders, when they meet in Washington at the end of this week [10 Oct], need to explain exactly how they will address this aspect of the problem. They need to commit money to recapitalizing their banking systems -- now, and not next week. The U.K., which has just announced a $50 billion plan for bank recapitalization, has shown how this can be done in a matter of days. But a coordinated initiative will require the U.S. to put up a considerably larger sum. My recommendation would be to abandon the idea of reverse auctions for toxic assets and instead use the $700 billion of the recently passed rescue plan for bank recapitalization. Although the Great Depression started in 1929, it took until 1933 for American leaders to grasp this nettle and recapitalize the banks. We can't afford to wait for years this time around. A final thing that made the Great Depression such a catastrophe was that some of the worst shocks occurred right before the 1932 presidential election. There then followed an extended interregnum between the election and inauguration of the new president when no one was in charge. The outgoing president, Hoover, asked his successor designate, Franklin Roosevelt, to cooperate with him on joint statements and policies, but FDR refused to do so. Meanwhile, the banking crisis deepened. Corporations failed. The economy was allowed to spiral downward. It was this disaster that led us to amend the constitution to shorten the time between presidential election and inauguration from 4 to 2½ months. The implication is clear. The two presidential candidates should be assembling their financial SWAT teams now. Paulson should promise that they will be invited into his office on November 5. This problem cannot wait until Inauguration Day. http://www.cnn.com/2008/POLITICS/10/09/eichengreen.depression/index.html?section=cnn_latest
-
I watch the volume on several bar intervals. Whether it's 5s or 1m or daily or weekly doesn't matter. The concept is the same. I don't keep track of what charts I post where, so I can't tell you where the 5s charts are, if any. If I've posted any, they'll be found here in this forum or in my blog. I suggest you start with the Trend thread since volume is generally meaningless unless support or resistance is being tested.
- 4899 replies