DbPhoenix

The following may be of help. Once you have the concept, you can apply it to any bar/line interval for any instrument. SwingsPt1.pdf SwingsPt2.pdf

The dots don't mean anything other than that I have to post ten characters before the software will accept the message.

You're over-complicating it. You're also forgetting the fact that those who are trading are doing so in the midst of historic events. But even if one were to ignore events, this is really pretty simple if one focuses on concepts. A, it's not unusual for volume to be low during the summer. B, it's not a bear leg but a rally off what had been an important hinge. But the rally couldn't even make a higher high. It came to rest, again, at the level of the hinge, emphasizing its importance. How quickly it got there, or not, is not particularly important in hindsight. There was, however, nothing unusual about the volume. It wasn't even higher than it had been the previous two weeks. Price rose because there was little selling pressure. Buying pressure alone could have made a new high. But it didn't. That's all that matters. Even if one had interpreted the "box" in July as accumulation, he would have found nothing in the "breakout" to confirm his interpretation. If nothing else, the failure to make a new high would have negated such an interpretation. How much the market has lost up to now isn't important. The Nasdaq lost 85% of its value in 2000. There must be evidence that serious buying is coming in, and there was some the third week of September, but it wasn't enough. Perhaps those who bought realized their error and threw their shares back onto the market. That with the changes in short-selling rules may have exacerbated the decline. Again, it doesn't matter. Anyone who saw that as a climax and waited for the test would not have been caught up in it. The fact that price can be marked down "fast & hard" serves to highlight the difference between distribution and selling. Distribution is quiet. This selling has been anything but. As for a new mark-up phase, yes, that will require a lengthy accumulation period. The one we went through at the beginning of all this took a year. But we aren't anywhere near there yet.

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Flojo provided a fine answer and I have little to add other than that FW's box is drawn around the springboard that formed after the BO from the climax and various tests in 2002. Since this also coincides with the bottom of the range which I posted earlier, there may be a nice rally around here. However, I see no particular reason why we shouldn't test the long-term trendline at around 7500. As far as commenting on current market action, I'm happy to do so. But the site veered off toward indicators and Forex some time ago and there's been little interest shown in "plain" trading. If anyone who's gone through the material has a question, I'll give it a shot. If anyone who has a question has not gone through the material, I suggest that as a first step.

As I have pointed out repeatedly, though VSA is based on Wyckoff, they are not the same thing, any more than a lunar rover is the same as a tricycle. Beyond that, the idea of "works" is irrelevant to Wyckoff.

I found this post on "Re: VSA : Crock or Not?" interesting and have nominated it accordingly for "Topic Of The Month October, 2008"

Depends on the population you're targeting. If you're looking at where investors made their purchases, then you will likely have to go back to the last important accumulation phase. In the case of the Dow, this was 2004-5: Of course, this may all be crap and it may all be pure coincidence that we're bobbing up and down in this area. But maybe not. On the other hand, if you're more interested in traders, then the more recent "congestions" may be more likely to provide opportunities.

Commentary: Bankruptcy, not bailout, is the right answer By Jeffrey A. Miron Special to CNN Editor's note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan. CAMBRIDGE, Massachusetts (CNN) -- Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown. This bailout was a terrible idea. Here's why. The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk. Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared. This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle. Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets. The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government. The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company. Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable. In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources. Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time. Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen. Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents. The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion. If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth. The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients. Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets. So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending. The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer. http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/

But the biggest unknown is whether the government’s pledge to help homeowners at risk of losing their homes will be any more effective than past efforts to slow the pace of defaults and foreclosures. Until that tide begins to turn, the housing market will continue to be bloated with big inventories of bank-owned houses put back on the market at fire-sale prices. That puts downward pressure on all home prices. And until home prices stabilize, it’s impossible to assign a value to the troubled investments at the heart of Wall Street's problems. http://www.msnbc.msn.com/id/26931454/

What's next, a ban on stock sales? By Bill Fleckenstein The Securities and Exchange Commission has a list, and it's checking it twice. It's a compendium of nearly 1,000 companies the so-called watchdog has now pronounced off-limits to short-selling. If this do-not-short list weren't such a travesty, it would be hilarious. Among the companies the SEC wants to "protect" are the ones -- Moody's and McGraw-Hill, to name just two -- that did such a horrendous job rating the mortgage paper that helped cause this debacle in the first place. The Cox virus unleashed In the end, SEC Chairman Chris Cox and friends will discover that this will turn out to be an epic example of the law of unintended consequences. They've probably just succeeded in blowing up a tremendous number of quantitative-oriented money managers and hedge funds. In essence, this targets anyone who runs a long-short fund or arbitrage fund of any kind, and anyone who manages any sort of stock basket. To distill those gory details down to their essence, what the SEC has done is guarantee that less liquidity will be available for markets. I suppose that if this doesn't work, the next step will be to just outlaw selling altogether. After all, that does seem to be the government's response to prices it doesn't like. There was a witch hunt for speculators in commodities on the long side when oil (and various food items) went higher over the summer. Obviously, we've seen that lower stock prices have also precipitated a government response. So when the bond market eventually revolts -- because of the cumulative effect of the Federal Reserve’s monetizing any and all pieces of paper the Treasury buys -- is the government then going to ban the short-selling of government bonds? Will it eventually say you can't sell dollars? How is any rational person supposed to plan for where the government may draw the line as to what sort of "manipulation" it may condone? Meanwhile, one item you'll likely never see on the SEC's to-do list: leading the charge on reforming financial statements. Scrutiny of IBM would be a perfect start, as the company has shown itself to be a financial engineer of the first order. Nevertheless, IBM last Tuesday begged its way onto the do-not-short list. This happened even as IBM has been borrowing money to buy back its own shares while it crows about what good shape it's in. The stock is off only about 15% from the highest price it's ever traded at. And it sports a short interest of 10 million shares -- not that much more than IBM trades on any given day and microscopic relative to the 1.354 billion shares it has outstanding. Any real, untroubled company would be completely embarrassed to be on that list. Thus, in my opinion, IBM's actions are perfectly fitting with how it operates. The on-closer-inspection rejection Of course, anyone with any knowledge of history and an IQ above room temperature knows that many of the financial institutions now in trouble have themselves, not the short sellers, to thank for their plights. I'd like to offer the following example, via a recent Bloomberg story headlined "Ten days changed Wall Street as Bernanke saw 'massive failures'": "The storm in the markets began with a long-deferred nod to reality by Lehman. The 158-year-old, New York-based firm had possible acquirers inspecting its books. They discovered that Lehman hadn't yet written down its portfolio of subprime mortgages . . . as aggressively as some other Wall Street firms." So, in all likelihood, what the short sellers are being blamed for is the harsh reality that Lehman shareholders would just as soon not take "ownership" of. That is not to say there wasn't any short-selling, but rather that short interest in Lehman was never large. In fact, short-selling was rather modest. As of the last reading, it had dropped to just less than 28 million shares from almost 54 million in June. (For reference, the company had 689 million shares outstanding.) Security says, 'Remove your shoes -- and your shorts' Nonetheless, despite any and all facts to the contrary, the SEC and the government have resolved to pursue their idiotic "solution" in terms of banning short-selling of certain stocks for the time being. They also have demonstrated that rules don't mean anything, because they are willing to change them whenever it suits their purposes, no matter how disruptive or foolhardy those changes may be. A friend summed up the situation by commenting that we're in an environment where "short sellers . . . are risking private money betting against badly run businesses and governments are risking public money betting in favor of badly run businesses. You don't need a Ph.D. in finance to know which group of folks believe in truth and free markets. . . . You can expect to see all foreign banks move their toxic waste to their U.S. subsidiaries for delivery to Henry's Helpful Handouts." One wouldn't have to be too cynical to conclude that we now know the real reason Treasury chief Hank Paulson decided he needed a $700 billion bazooka. I don't mind him helping out old friends at Goldman Sachs, and I would prefer that the financial system not implode. But I find this bailout bill completely outrageous. Though I won't hold my breath, I hope it doesn't get enacted as currently proposed. The silver lining: Halting a money-fund run If I were to try to find the piece of last week's actions that was least objectionable, I would say it was putting a halt to the run on the money market funds. I know that places at a disadvantage all the people who prudently owned government-only paper, like many of my readers. But just as, when push came to shove, American International Group had to be bailed out, a run on the money market funds would have been devastating to too many innocent bystanders. The bottom line is that the government has decided it doesn't like where the prices of houses are, where the prices of mortgage-related debt securities are, where the prices of commodities are and where certain stock prices are, so it has elected to change them all by fiat. It won't work, and one of these days, the bond market will be absolutely shattered. If Congress manages to agree on a bailout bill, the financial crisis will probably be over (but I'll reserve judgment until I see the action in all markets in the wake of the legislation).To that extent, the government's actions will keep the economy from getting "extra-worse" on the back of a stock market crash and a run on the money funds. Having said that, when folks discover just how weak the economy is, especially now that we've blown out all kinds of participants in the stock market, we may still get some sort of a crash or serious sleigh ride south, though it's really hard to draw conclusions at the moment. We obviously have been close to a crash in the stock market and a seizing up of the financial system. But regardless of what the "experts" say (most of them, after all, saw none of these problems coming), my fear is that the worst is still in front of us. http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/whats-next-a-ban-on-stock-sales.aspx

Michael has a lot more hair than Marty does these days.....

Commentary: Bailing out distressed workers, for a change By Michael Zweig NEW YORK (Reuters.com) -- Treasury Secretary Henry Paulson and Federal Reserve Board Chair Ben Bernanke have been in Washington demanding immediate relief for Wall Street, repeatedly emphasizing claims of impending doom for the United States and the entire globe if we do not accede to their rescue plan. Their behavior is today's equivalent of Condoleezza Rice's infamous evocation of a mushroom cloud as she played her part in frightening Americans in the pre-election (2002) stampede to war in Iraq. Now, as then, the same people who did nothing to protect the country despite many explicit warnings are demanding unlimited authority to dig us deeper into the hole. The Wall Street debacle has had the added effect of diverting Congressional, media, and public attention from the continuing mortgage foreclosure crisis, which is far from over. In the months leading up to the crashing end of the sub-prime mortgage frenzy in April 2007, increasing numbers of these mortgages were issued, with a two-year period until the terms reset. This means that in the coming eight months we will see an accelerating rate of resets and over a million more homeowners facing foreclosure. This coming tsunami of grief is only one aspect of the widespread economic distress working people are experiencing throughout the country. In a study about to be released by the Center for Study of Working Class Life at the State University of New York at Stony Brook, we report that economically distressed working class people account for 20.9 percent of all households in the U.S., nearly double the poverty rate, based on U.S. Census data. They are cashiers, home health care workers, truck drivers, janitors, retail salespeople, secretaries, and many other people we see and rely on every day. They are people whose income is so low they cannot rise above the lowest twenty-five percent of housing stock for a family of their size in the community where they live without spending more than the government standard of thirty percent of income for housing. In short, they are over sixty million people in nearly twenty-three million households with eighteen million kids who can't afford to pay for the basic necessities of housing, food, medical care, and transportation. We must not allow the financial drama now gripping the country to obscure and push aside the need working people have for real and immediate relief. Congress should act to forestall the foreclosures and to increase income support programs like food stamps, housing subsidies, unemployment compensation, and the Earned Income Tax Credit. They should send money to the states to relieve their budget deficits and restore cuts to Medicaid and other state-based programs for economically distressed people. And while they are throwing hundreds of billions of dollars at Wall Street, they can well afford $110 billion to send an average $2,000 check to each of the fifty-five million households earning less than $50,000 a year, half of the country. We need to recognize and alleviate the crisis in working America. . http://www.reuters.com/article/reutersComService4/idUSTRE48O8JD20080926

I doubt it will have any effect at all. There is, always has been, and always will be a never-ending and infinite supply of people eager to lose money in the markets, and a li'l ol' transaction tax isn't going to stop them. What I love about all of this is how badly Bush and his posse bungled the whole thing and how it's all playing out to the full benefit of the Democrats without their having to lift a finger.

I try to avoid it, because one can easily begin a type of curve-fitting. However, I might draw a box too soon. Or the market may show me that I've drawn it incorrectly by its subsequent behavior. I will then modify them so that I know what to do next, not so that they act as some sort of evidence as to the efficacy of this means of finding support and resistance. They are, after all, a tool, not a "method". The point of all this is to understand what the congestion is and why it's occurring. These congestions may not be as important in Forex as they are in futures and stocks, in which case drawing the boxes will be of no value. Examining old data might answer this question, but I don't have any of that.

Hindsight's a bitch. But what I probably would have done in real time is shown below. The first box is pretty straight-forward. I would then have drawn the second, then the third, then perhaps joined them, though joining wouldn't have been necessary. As for the second set of boxes, if one doesn't have "volume", which you don't, he must be careful not to trivialize time. The amount of time spent at a given price or in a given range can be as important as the "show-off" volume which attracts so much attention with regard to the quantity of shares, contracts, etc, traded. In other words, if price spends a great deal of time within a given range, that activity can be more important than that which accompanies the short-lived spikes. The swing highs and lows, particularly in spikes, can be important, particularly since they draw so much attention to themselves. But they do not necessarily imply a great many trades, and perhaps not nearly as many as have been made during those long and boring and seemingly pointless sideways movements. Therefore, I would focus on the more "filled" ranges (that's not advice; I'm just telling you what I'd do). Note also that the midpoint of box 7 corresponds to the low of box 5 and the high of box 6.

"Spring", no. Wyckoff was much more concerned about conveying concepts than he was about developing clever catch-phrases. In fact, he frequently used synonyms for various features. For example, "hinge", "apex", "wedge", "pivot", and "dead center" all relate to the same thing. He was far more concerned that the student understand something than in what the student called it. "Test" is used, of course, as one would expect. It would be difficult to avoid it. But there are many different kinds of tests, and it has no special meaning.

"Breaking of ice" is not a Wyckoff term. You'll have to take that subject up on the VSA thread. As for the rest, if you're not going to follow Wyckoff, there are any number of ways to suppose a change in trend and/or a reversal. Sperandeo is one. However, if you're operating in a VSA context, I suggest you'd have much better luck looking for answers within VSA.

Assuming that this is the instrument you're interested in, you'll notice that you're in the same range you've been in for three years. Zooming in, you'll note that there appeared to be preliminary support in the area marked "1". There then appears to have been a selling climax at 2, which is logical considering where it took place, then a test at 3. The downtrend was broken at 4, but this break immediately failed (5). So you are now drifting. Since this has been declining for nine months and has lost more than half its value, it is unlikely that whatever accumulation may have taken place over a day's time will have any appreciable, immediate effect on the stock price. However, price appears to have been supported in late August at or about 206, selling dried up thereafter, and perhaps price may now be being supported again. Unless you are for some reason in a hurry, I suggest you watch and wait.

Whatever is is a product of what has been. What is "suzlon"? What had been happening in this prior to the left edge? Did it drop from 850? Rise from 20?

When you said "why do we look for high volume on upsides or when at upper limit of base & low volume for downside in Accumulation", I thought you meant "downside 'and when at lower limit'", which is not necessarily the case. In any case, if price is rising, this suggests that demand is greater than supply. If volume is also rising, this suggests that increasing demand is being met by increasing supply. If price then chokes at the upper limit of the range, this suggests that the increase in supply was intended to bring price back down, or at least prevent it from exiting the range. If both price and volume subsequently fall, this suggests that the tactic was successful. I don't know what you're trying to show me with your chart, but focus less on bars and more on what traders appear to be doing and why. That will be reflected in the price movement if you're correct.