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DbPhoenix
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Everything posted by DbPhoenix
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Yes, I'm assuming that one is long when price hits 1990 because he ought to be long if he's paying attention. If he isn't, then the twists and turns you get caught up in with regard to "1990" are irrelevant to the task. And, no, there was no way of knowing that today would be a trend day. One shorts resistance then follows the line of least resistance. That's it. But since you refuse to study any of this, or practice, it all continues to be a mystery to you. As I've said repeatedly, you don't understand support, resistance, price action, the relationship between price and volume, nor have any sort of defined and tested setup to enable you to take advantge of whatever you might learn if you were to study and practice. Instead, you prefer to take direction from message board posts. If you refuse to do the work, you're going to continue to be confused. And there's absolutely nothing I can do about that.
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No problem. You should understand, however, that Wyckoff and Livermore did not just keep all this in their heads. While they were sensitive to pace and share size, they also used a kind of P&F shorthand to keep track of support and resistance levels. Therefore, there is no inconsistency between "tape reading" and using a tick -- or close to it -- chart to do so.
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No, one should have traded what was in front of him, buying a test of support at or around 1015 (in the case of the NQ), waiting through the midday sideways movement, then following the trend upward until the close.
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No reason not to buy the midpoint at 1990, if that's a part of one's strategy. However, doing so would not be "key" to playing the trend day, and the trend day provided the sideways midday movement that I referred to and that I've noted several times in previous posts on the subject. Or one could stubborly hold to a bullish bias, ignore the test of resistance, and stand by while watching most or all of his long profits evaporate. But that's the difference between trading reality rather than dreams. An update to the ES chart I posted last week:
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The key words were -- correctly -- "for now", which is an aspect of this that the pundit wannabees continue to miss. While they may pay lip service to the idea of taking it all "day by day", they are also compelled to "make calls" in order to demonstrate how much they know. Or, actually, don't know. And thus get it wrong yet again. We are now back where we started at the "selling climax", and those who bought here and stopped thinking have now watched all their profits evaporate. Or at least ES and YM (NQ has given back only 75%). What will be interesting now is how they react.
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On a day like today, i.e., a trend day, it's easy to come up the wrong conclusions regarding volume since the smaller waves are pretty much irrelevant to the larger. The key here is shorting resistance at 2005. After that, all you have to do is follow the line of least resistance by means of trend lines and swing points. Typically, price will move sideways during lunch on days like this, and it did so today. Since it rose above a prior swing point only once, at 1300 (ET), you needn't do anything more than just wait and watch your profits increase.
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Yes, this is accurate, as far as it goes. Many people consider Time and Sales to be "tape reading", just as many people consider DOM to be "tape reading", but neither have much to do with tape reading. Tape reading entails focusing on completed transactions, not intentions.
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You should see it without the airlines:
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As long as the Inds and Trans are going in the same direction, they needn't be making new highs together. As for breaking down the transports, I'm not referring to stocks but to groups within transports, e.g., Industrial Engineering, which makes the trucks and railcars and engines; Containers and Packaging, which is self-explanatory; Delivery Services; etc. And it's useful to look at Industrial Transportation, which is nearer to the original constitution of transports. It's the same thing as the transportation average only without airlines. One can also look at trucking alone or marine transportation alone and so on to determine just where the strength lies: in this case, rails and trucking. Which is why I mentioned containers and packaging. If trucks and rails are strong, why aren't containers and packaging equally strong? And does it matter?
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It might pay to break down the transports the way we break down the industrials. I wonder, for example, if containers and packaging can act as a warning regarding the strength of the transports per se:
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Wyckoff, however, didn't base his approach on geometry but on behavior. The "midpoint" to which he paid so much attention represents a return to equilibrium, what some people call a reversion to the mean, what MP calls the value area and the POC. If price doesn't return to the level at which one might expect to find equilibrium, one can interpret that as strength, which may lead to a higher level of equilibrium. If it drops below that level, one can interpret that as weakness and a search for a new, lower level of equilibrium. As to whether or not anything one draws or plots can have any statistical significance at all is a subject best left to a general trading discussion. For the purposes of this thread, the only "pattern" per se is the hinge, which, again, is the result of specific trader behavior, and therefore exists outside the trader himself.
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The key word being "seem". Most likely is that we're just throwing virgins into the volcano.
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I don't. I'm more interested in the (potential) support and resistance that are provided by the market -- such as a swing point -- than I am the imaginary support and resistance that are provided by a line that I manufacture. But Wyckoff used these lines to help him track demand and supply, momentum, and stride, and all of that is perfectly legitimate. The trap lies in persuading oneself that the lines one has drawn begin to provide support and resistance themselves, which is (a) illogical and (b) not the point of drawing the lines in the first place.
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Too many to get into. Primarily, the original course is much simpler and more straightforward. The Wyckoff material I've provided here and in my Blog is from the original course. But the course is 500 pages long. To compare and contrast would take an enormous amount of time.and would serve no practical purpose. I learned long ago to focus on source material. What the originators say about their own work is often quite different from what others say about it and do with it (assuming that the "others" acknowledge the sources of their work in the first place, which is not common). That's why I have a first edition of Schabacker and a fourth edition of Edwards and Magee (before editors started rewriting it). When I was playing with indicators, I read Wilder and Appel. There's certainly nothing immoral about Tom Williams or any of these other people offering their own interpretations of Wyckoff's work. One must keep in mind, however, that one is not trading Wyckoff but someone's version of Wyckoff, and the two may be worlds apart (if one is trading at all; one can learn to provide impressive chart analyses and yet be completely unable to trade them).
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Actually it's common on trend days. Price will drop till lunch time, then waffle around, then continue on in the afternoon. The last swing point provides the boundary of the waffling. Therefore one should not be too concerned about the trendline break.
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I don't know that I'd call it capitulation. Price is travelling from the extreme back toward a search for a "value area". There's one potential support area in yesterday afternoon's consolidation, which in turn sits on top of EOD consolidations during the previous two days, all of which means that there's loads of support between 1400 and 1410. This is not to say that price can't cut through all of this like a hot knife through butter all the way back to 1385, but that's not likely to happen today. And it may not happen at all. In the meantime, I manage this as I've suggested before: begin scaling out at potential support, then the trendline break, then the breach of the last swing high. However, price held at the last swing high in both ES and NQ, so there's no reason to bail. Yet. And EOD traders needn't bail at all.
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An interesting "interior" channel on the daily ES. There are several uses for trendlines and demand/support and supply/resistance lines. The most obvious is to tell you in which direction you're going, up or down. And how fast. And sometimes a trendline can provide a trend "channel". This is determined by first drawing the trendline, then copying it and placing it parallel to the original line in a location where it coincides with what may be the opposite side of a channel. Oftentimes, this doesn't work. There's just no pattern. But sometimes it does, and this can provide clues as to effort, momentum, less obvious S&R, and potential trouble. Here you have a channel that has been unusually predictable (though not at the beginning, of course). Note that after the channel became established, it found resistance at previous swing points, first at the outer edge of the wider channel, then at the outer edge of what has become an inner channel. Whether the channel lines themselves provide support or resistance is less important than their use in monitoring when and where demand and supply kick in. To more closely monitor this, W also drew interim lines, such as the dotted lines drawn here. These provided an early warning if, for example, supply came in prior to price's reaching what had been the supply line. If price could not breach this line, this indicated slowing momentum and a possible turning point, particularly if other indications manifested themselves (such as longer-term resistance levels). In this case, one can angle a demand line upward and a supply line downward into what pattern people might call a "rising wedge" (W wasn't into patterns). When price violates one of these, and it will, the fact of the violation won't matter as much as the manner in which the violation occurs, e.g., with high or low volume. In any event, any one of these lines can provide clues as to levels of support and resistance that might not be otherwise obvious.
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It's difficult to pick and choose what are most important in this article. Whenever I've tried, I end up bolding practically the whole thing. There are few if any wasted words. But with regard to #4, one must not overlook the following: "Stay in the trade until your target is reached, you have an exit signal, or the reason for your entry is no longer valid." In the Zen thread, there was mention of novices wanting results now, e.g., if they sell something short, they not only want it to drop immediately after the entry is triggered, they want it to plummet. Even though they may intellectualize that this is unreasonable, they still freak as soon as the stock or whatever pauses, much less begins to retrace. They simply cannot wait for a wave of any length or depth against them to expend whatever energy it may have and ride the resumption of the move they traded in the first place. They admit the unwelcome thought that they really don't know what they're doing or what they're looking at and they bail. All of which is why one must preplan every trade and be very clear about what to look for. Otherwise, one will either resort to cutting profits short, or sit there, frozen, letting a reversal signal go by unheeded while his profits turn to losses.
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For some reason, this chart got deleted yesterday. Since the editing window has closed, I can't make a correction to the original post. Therefore, this morning's activity is included. Whether or not one takes the short, of course, has to do with his strategy, his timeframe, and how comfortable he is with trading channels.
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Your opposing views are not the issue. You make a continuing series of inappropriate short trades, then look for reasons for your lack of success outside yourself, i.e., rather than seek to solve the problem, you elect to rationalize. You ignore most of the questions put to you and shrug off all offers of help while making no effort whatsoever to help yourself. You've done this across several threads, this one being just the most recent. No one here is going to tell you what to trade or when or how. Those who frequent the VSA thread may be willing to do so. Again, brownsfan has offered to mentor you in his forum. I suggest that you seek help where help will be forthcoming. The Seven Habits of Ineffective Traders
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Again, if you couldn't find any such references, that is no one's problem but your own. Clearly this thread is not for you. I reiterate my suggestion that you take brownsfan up on his offer of free mentoring. If you refuse that as well, then perhaps you should return to the VSA thread.
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Since the thread wasn't initiated until three weeks ago, there's no particular reason to rehash March events that were thoroughly covered in other threads. As for higher highs and higher lows, all of that has been addressed as well (that is, after all, what creates a trend channel). If you haven't been able to find references to any of that, perhaps your own biases have prevented you from finding them. If you have finally found your niche in EOD trading, I couldn't be happier. Given that brownsfan has offered to mentor you at the Candlestick Corner, I suggest you take him up on it
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What you view as a "downside bias" is simply data. New highs in stocks are keeping up with new highs in the averages in the indexes or they aren't. Volume is heavier on the upside -- or downside -- or it isn't. X sectors are participating, Y sectors are not. As to the selling climax, why didn't you see it yourself rather than rely on someone else to point it out to you? What you do with all of this information is entirely up to you, but what you believe is irrelevant.
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What you or anyone else "believes" is irrelevant. All that matters is the data. In any case, if you "believe" in the long side so fervently, why do you continue to trade short? Were you long yesterday? If not, why not?
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It has the shape of a hinge, but volume remained fairly high throughout, suggesting that there has been and is still a lot of supply. Moving up, therefore, may be a struggle. If I had bought this on the "breakout", I'd keep a stop just below the breakout level.
