DbPhoenix

For those who'd like to pursue the subject, it's been addressed at length in a number of threads, primarily Price Action Only and Real Time Price Action.

LOL indeed. Why am I not surprised? Like I said aquarian, keep your wallet in your pants.

And I'm sure that ehorn will be delighted to demonstrate the "truth" of all of this to you in real time in our chat room. Until then, keep your wallet in your pants.

I strongly suggest that those who are eager to characterize the current market action as either the beginning of a new bull market or nothing more than a bear market rally spend some time analyzing past bull and bear markets. Here are some charts to play with:

Wise? Price action has been central to the auction market since the first Sumerian traded his first pot, if not before. Remarks such as these serve only to detour the beginner down paths that will waste his time and his money, perhaps for years.

Sure. Though you may find the price action easier to see if you remove all of the extraneous indicators, etc. If you're interested in pursuing this, click here.

1. If the TD is occurring somewhere other than S/R, it is, for trading purposes, meaningless. However, if there is an obvious and dramatic TD at some level other than S/R, it's a good idea to recheck one's charts real quick to see if there is actually some S or R level there that was missed during the prep. 2. Regarding the test of 1106 and the "tradeable TD", there was in fact a test, even though it took place only a few seconds later, i.e., price did not just touch 1106 and reverse, but bounced around there for several bars before breaking up through 1108. However, when dealing with hindsight static charts, I prefer to err on the side of safety. Yes, one could take this, but it would be an aggressive trade, and those who are new to this should at least start out on the conservative side, and that suggests a more obvious test. 3. As to the value of any particular summary bar, whether 1m or not, I really can't answer that question. You'd have to choose whatever you want to work with and draw your own conclusions. For me, I choose not to trade off summary bars. I miss too much of what's going on. Rather than watch price move, I'm watching it rise and fall inside a bar, like a bird whistle. That tells me nothing. Of course, if you want to use tick charts and your charting program won't let you, then you can either request this option from your provider or get a different charting program. In any case, assuming that I'm reading your chart correctly, the points you're using to judge divergence are fifteen minutes apart. I look for divergences at the point of reversal. On a tick chart, this is much more leisurely than the single doink of a 1m -- much less a 5m -- bar chart.

Last question first. Regardless of whether one is a novice or not, if whatever one is looking at is not clear, then, yes, he should stand aside until it becomes clear. Otherwise he's trading out of boredom, or because everybody else in the chat room appears to be trading (which is often a misperception), not according to any sort of well-thought-out -- much less consistently profitable -- strategy. As for the range on which you're focusing, the limits are not defined by points but by levels. And while the levels are of course the result of points (i.e., those prices at which price reverses), it is the levels (the forest) which is more important. As to whether or not it's well-defined, it is, at least as far as I'm concerned. Price has repeatedly found support at or about 55 and repeatedly found resistance at or about 66. However, it is not "filled", i.e., price does not regularly bounce back and forth between these two levels. If you "eyeball" it, you will see that there is more trading going on between 60 and 66 than there is between 60 and 55 (you've also noticed that 60 is the midpoint of this range). This means that there is more interest in the upper half of the range than in the bottom half. Does this mean that price is more likely to break out of this range to the upside than the downside? Some would say so, and since this is all hindsight by now, it would be easy to say oh yes of course it's going to breakout to the upside isn't it obvious? But there are no guarantees when it comes to whatever thousands of traders the world over are going to do at any given moment at any given price. The fact is that there are more trades in the upper half of the range than the lower. What one concludes from that is a judgement. Whether or not these are the "best levels" that price has to offer as of right now, I wish you'd asked this question before the open. Since it's now all hindsight, the "oh yeah right" response is to be expected from some quarters. However, the process one goes through to evaluate the dependability of the S/R levels he located the night before is the same every day, and going into it in more detail may help you tomorrow morning, premarket. You located your general area of interest, 55 to 66. But these are broad strokes, and it's up to the individual trader to fill in the blanks himself according to his style. For example, does the trader prefer reversals or breakouts? If he prefers breakouts, then breakouts from what? The high of the range? The high of the extreme, if there is one (in this case, there is: 71)? Does he prefer to buy the breakout itself, or wait for a retracement? If the latter, where does he enter the retracement? How wide a stop does he use? Is he trading trend or scalping? What's his target? And on and on. But since you are interested in trading S/R and you're interested in how price "behaves" around these levels, I assume you're also interested in making more than a couple of points. So I'll make some assumptions regarding your objectives. When you're getting ready for your trading day (which need not begin at 0930 NYT), you need to look at what price has been up to while you were asleep. Here you can see that price found its comfort zone between 60 and 64, and since you've already determined that 60 is the midpoint of your range and that more trades have occurred above 60 than below and that price is again bouncing between 60 and 64, this should elicit at least a Hmmm. Traders test the waters below 60 just before 0700, then above at 0730 and 0815, then test 58 again just after 0900. But then price settles in between 59 and 60 and remains there until the open. This is your midpoint. Will price launch itself off of this level or will it drop through the floor? And here's where you have to be sensitive to PA and forget about bars. Note that at the open, traders take price up to 61, but this immediately reverses and price drops. To what? 59. Again (if you're watching this in real time, you can see price moving and forming the bar; if you're not watching it in real time, you'll have to refer to a tick chart). At this point, one can place a sell order under 59 and a buy order above 60. If he were to do so, the sell order would never be triggered, but the buy order would, and since price never approaches 59 again, all he has to do thereafter is manage the trade. As to your "Is this swing low contributing to support" question, what is it telling you? That traders looked for selling interest below and didn't find it. Instead they found buyers. That alone, in and of itself, is not extraordinarily important unless one is scalping. What is more important is that when this level is tested again just after the close, it holds, and it's never tested again.

When one is trading S/R, he will most likely have to be satisfied with noting those levels where buyers stopped buying and sellers stopped selling. Of course one has to think about what he's doing and what he's looking at, but if he overthinks it and tries to figure out the why of buyers' and sellers' behavior, he will very likely find himself unable to act, for there are hundreds of thousands of reasons why traders choose to buy or sell at any given level. And, when it gets down to the trading decision, the why of other traders' decisions is not particularly relevant. The trading ranges occur when price stops advancing and moves sideways. Sometimes these trading ranges last only long enough to provide S or R to subsequent movements, such as a retracement once price has begun advancing again. Sometimes they are far more substantial, and the more substantial they are, the stronger the S or R. But you needn't go into the entire history of the S/R of whatever you're trading. All you need to look at are those levels which are most likely to affect your day's trading. Today, for example, since we are now at 61, the following levels are the more important. This last "trading range" which began forming this week has been troublesome because it's not yet really a trading range but rather a series of higher highs followed by, yesterday, a lower high. If we move down rather than sideways, we'll have a "mountain" top. This has its own levels of potential S and R, as I've noted, but these aren't necessarily as strong as those provided by a more easily-defined, rectangular trading range. The more emotional traders are, the less "pretty" the chart will look. If you understand this emotional component (such as that which we are now experiencing) and can trade it, that's fine. If you don't and can't, then best to let things settle into a "pattern" that you recognize -- e.g., a well-defined trading range -- and then resume trading.

One could have entered at noon, but there was no TQ div.

Springboards are addressed in sections 4, 7, 8, 14, 16, and 21, among those sections which are posted here. To save time, use Ctrl+F. There is also a section in my blog on springboards (if this doesn't work, try this)

There was a lot of discussion regarding this action today in chat, and I don't know quite where to post these charts as they draw from several threads. But that's as it should be if all the pieces fit to make an integrated whole, so here is as good a place as any. First, the support zone was from 28 to 31, established all day yesterday. The trade occurs at 1312, Why? The TQ divergence. And it's managed according to trendlines and swing lows. The green arrows designate scale-out points (the more contracts you trade, the longer you last). Details on this can be found in the Trend thread. That chart above is practically impossible to read. I've posted another below with an exaggerated aspect ratio so that you can see what the hell is going on:

Once upon a midnight dreary, fingers cramped and vision bleary, System manuals piled high and wasted paper on the floor, Longing for the warmth of bedsheets, Still I sat there, doing spreadsheets: Having reached the bottom line, I took a floppy from the drawer. Typing with a steady hand, I then invoked the SAVE command and waited for the disk to store, Only this and nothing more. Deep into the monitor peering, long I sat there wond'ring, fearing, Doubting, while the disk kept churning, turning yet to churn some more. "Save!" I said, "You cursed mother! Save my data from before!" One thing did the phosphors answer, only this and nothing more, Just "Abort, Retry, Ignore?" Was this some occult illusion? Some maniacal intrusion? These were choices undesired, ones I'd never faced before. Carefully, I weighed the choices as the disk made impish noises. The cursor flashed, insistent, waiting, baiting me to type some more. Clearly I must press a key, choosing one and nothing more, =20 >From "Choose Abort, Retry, Ignore?" With my fingers pale and trembling Slowly toward the keyboard bending, Longing for a happy ending, hoping all would be restored, Praying for some guarantee Timidly I pressed a key. But on the screen there still persisted words appearing as before. Ghastly grim they blinked and taunted, haunted, as my patience wore, Saying "Abort, Retry, Ignore?" I tried to catch the chips off-guard -- I pressed again, but twice as hard. I pleaded with the cursed machine: I begged and cried and then I swore. Now in desperation, trying random combinations, Still there came the incantation, just as senseless as before. Cursor blinking, angrily winking, blinking nonsense as before. Reading, "Abort, Retry, Ignore?" There I sat, distraught, exhausted by my own machine accosted Getting up I turned away and paced across the office floor. And then I saw dreadful sight: a lightning bolt cut through the night. A gasp of horror overtook me, shook me to my core. The lightning zapped my previous data, lost and gone forevermore. Not even, "Abort, Retry, Ignore?" To this day I do not know The place to which lost data goes. What demonic nether world is wrought where data will be stored, Beyond the reach of mortal souls, beyond the ether, into black holes? But sure as there's C, Pascal, Lotus, Ashton-Tate and more, You will one day be left to wander, lost on some Plutonian shore, Pleading, "Abort, Retry, Ignore?" Author Unknown

This is not a bear market. Certain sectors such as tech have had large downward moves, but the market as a whole is only down about 7.5% for the year as measured by the NASDAQ and only 9.3% with the Dow Jones Industrial Average. That doesn't make a bear market. And there are good reasons why this market won't get much worse. A bear market doesn't just happen. There are circumstances that develop that make investors nervous. When they get nervous they sell, in quantity. The most common elements are: - High inflation rates. While the government announced last week that it had been under-reporting inflation rates because of its calculations for the Consumer Price Index (CPI), but the revised numbers show an increase from 2.7% from 2.6%, nothing of consequence. To counter inflation, the economy needs strong productivity. It certainly has that. Until prices on everything act like the price of gas, inflation isn't part of the picture. - High interest rates. Rates are relatively high when compared to the last few years, but that's because the economy has been growing a little too fast for the Fed's comfort. The Fed has stopped raising rates for now. They won't seriously consider raising them again until after the election. If they give a strong warning of concern about the economy growing too fast and raise the rates another notch, this could be troubling. But that isn't the most likely scenario, according to many analysts. - War. When we're at war, the government spends a lot of money. The demand for goods and services competes with normal demand and pushes prices higher. We're not at war, and there doesn't seem to be any saber rattling at the moment. - High anxiety. The general feeling that there is too much uncertainty in the future or there is an exogenous shock to the economic system, such as the oil price escalation in the 70's. While oil has gone to extreme highs in the last year, because the economy in general is doing so well, it has not been unsettling. Also, there's the belief that oil production will increase, and prices will decrease over time. - Earnings slow down. If reported earnings, in all sectors of the market, slow down, and the forecasts suggest even further slowing, then the bears come out in droves. Right now, there are a few large companies that have seen a slow down in the rate of growth of earnings (Intel is the best example), but not everyone. Furthermore, they are still growing. The growth hasn't stopped. Of course, there are other reasons for the market to go into a tailspin, but those are the major ones. We don't have any of them to any magnitude that would cause a bear market. What we do have right now is a concern over some of the bell weather stocks coming up short in earnings or revenues. And they're taking quite a few of the other stocks down with them. If those companies can turn their current concerns around and report good earnings and revenue growth again in the fourth quarter, these same stocks will be rocketing ahead again. It's impossible to tell what they'll do in the future, but if the past is any guide, better days are definitely ahead. - Ted Allrich, Online Investor, September 29, 2000 Aren't gurus wunnerful?

It's from Wyckoff's original course (see the Resources and Glossary stickie). All the threads with green icons are from the course, and a couple of people are working toward converting the whole thing to digital, but that may take a while. In the meantime, there's plenty here to study and work with.

That's not what is meant by "daily charts". Daily charts are interday charts composed of bars which each represent a day, i.e., not intraday, just as weekly charts are composed of bars which each represent a week.

You are correct that the origins of the impulse stem from the fear of "losing" out. You then note that you developed trading rules to prevent you from following this impulse. You then use words and phrases such as "in spite of", "feel", "hope", "gut says", asking in other words for permission to set aside your rules and go ahead and follow the impulses you're working to eradicate. So, the one-word answer is: "don't".

I should probably remind readers -- i.e., those who knew this already -- that Head wasn't detoured at the beginning. He glommed onto this approach at or near the beginning of his studies and has thus been able to save the sometimes extraordinary amount of time ordinarily devoted to unlearning a lot of stuff that is irrelevant, misleading, or downright untrue. This has enabled him to make the most of his screen time. And since he is not plagued by the ghosts of nonsense, he is often able to see trades that other "more expenenced" traders have not.

Given the various mentions of thrusts and shakeouts here and there and the dearth of information on just what thrusts and shakeouts are (at least according to the guy who "invented" them), it seems like a good idea to post the section from W's course which deals with these handy-to-know phenomena. Given that there are a number of references to other parts of the course, particularly charts, the curious will find it easier to just print all this out. Otherwise, links are provided to send the reader at least in the right direction. It will be up to him, however, to find the chart, the paragraph, the footnote, or whatever else is being referred to. REFINEMENTS Section 21M In this Section we discuss briefly certain stock market phenomena which you are likely to encounter at various times. The first of these is the shake-out to which reference frequently is made in preceding pages. There are two types of this phenomenon: (1) What might be termed an ordinary shake-out and (2) the terminal shake-out. A good example of a terminal shake-out appears on the chart of Anaconda Copper, Section 16M Page 33, Feb. 26th to March 13, 1935 [see the pdf attached to the linked post]. The text accompanying that chart (Pgs. 18 to 21) explains how to recognize this action as a terminal shake-out. Another typical illustration is given in the case of Atchison, Section 20M, Page 3, Item 2 and Page 5, Item 2 [this reference is provided at the very end of this post, after the Safeway charts]. A third example is given by the accompanying figure chart of Allied Chemical (Page 6) [again, all charts follow the text, below] which likewise shows: Accumulation with a Terminal Shake-out. Accumulation in this stock evidently began around 55 in April, 1932 and continued on a scale down until the latter part of June when there was a sharp downward drive from 55 to 43. There were four support levels through May and June -- from 50 to 47. Then, support was raised to higher levels -- 48 being the prevailing figure until the final shake-out which occurred after the rally to 55. That this was a shake-out was indicated by the fact that the stock, in rising to 55 had broken through the angular formation which was characteristic of it during the decline from the March, 1932 top at 87 (not shown on chart). About the middle of May the stock began to edge up through the upper boundary of the liquidating formation that prevailed theretofore and for several weeks after that the formation was practically horizontal in the range 47-55. Preparation for a bull movement was completed by the terminal shake-out from 55 to 43. The bag holding for necessitous and panicky selling continued into July. This exhausted the available supply of stock with the result that the price thereafter edged steadily upward. Thus, the selling climax which ended at 43 was followed by relative dullness; by raising of the supporting points and drying up of volume on minor reactions. The last low point of 44 was due to the stock selling ex-dividend. Very shortly after that it got on the springboard at 47, then bulged to 49 and had a three point reaction which gave a splendid buying opportunity with a close stop. The springboard position was confirmed by ability of the stock to rise to 50 and above on increasing volume. Thereafter there was no doubt as to its prevailing trend and by July, 1933, it made good the best objective forecast by accumulation across the 55 level on the 1 and 3 point charts by rising to 135. From the above and preceding examples we may formulate the following general definition: A Terminal Shake-out is a rapid or precipitous downward movement, occurring at or near the end of a period of preparation for an advance. In the case of deliberate manipulation, the purpose of the terminal shake-out is to scare holders of stock into selling out; to catch stops which may have been placed on long positions below the previous line of supports in the accumulation zone, in other words, mop up as much cheep stock as possible; and to encourage short selling around the bottom on the part of the public. After the bag has thus been held for the weak holders and amateur shorts, the strings are pulled to lock in these shorts and to shut out the sold out bulls. This may be done either by a gradual or by a rapid recovery in the price. It makes no practical difference whether a shake-out is due to manipulation or panicky selling on the part of distressed longs. In either case, the selling that forces the sharp downward acceleration of the price movement is due to supply of poor quality. And the ensuing recovery is caused by the superior quality of the demand which is taking advantage of frightened sellers. An ordinary shake-out has substantialy the same characteristics as the terminal shake-out. The principal difference is that the word “terminal” is used to distinguish a sharp downward thrust which occurs after extensive preparation for a rise and the similar phenomenon which appears at other points in the price movement as, for instance, an exaggerated selling climax (Sect. 7M, Pg. 33, Dec. 16th). A minor selling climax terminating a reaction, such as shown at “U” on the chart, Sect.9M, Pg. 9, likewise is in the nature of a shake-out. As the earmarks of a shake-out have been thoroughly explained in previous studies, the above discussion will serve our purpose here, which is to provide you definitions for future ready reference. A thrust movement is the reverse of a shake-out. Thus, a sharp run up out of an area of distribution; or a temporary bulge through the top of a trading range, which fails to hold, is sometimes described as a thrust movement, upthrust or perhaps a terminal mark-up. For examples see the price movements recorded on the vertical charts, Sec. 7M, Pgs. 33 to 35, on these dates: Jan. 9th, June 27th and 29th and Sept. 23rd and 24th. Note how inability to hold these various quick bulges, or upthrusts, was indicative of weakness in each instance. The next type of action we wish to call to your attention is the phenomenon of a sharp rally or advance out of an oversold position without the customary, or at least without immediately apparent, evidence of accumulation. A good example of this is found in American Telephone and Telegraph (Pg. 7). The figure chart alone will serve to illustrate our study, although the accompanying vertical chart (Pg. 8) reveals numerous symptoms of the change from weakness to strength which will be apparent to you from comparison with our previous review of Atchison (Sect. 20M). The particular feature of the figure chart action of this stock is that unlike Allied Chemical, no long, compact horizontal trading range was formed before the recovery from the July lows got underway. Telephone’s decline into the 70s was one of the striking events of the 1929-1932 bear market. The last phase of the liquidating movement had continued for many months prior to July -- since the stock left 135. Then, in the lower 70s a formation began which, on surface appearances, indicated nothing more than a rally of 9 points from 71-73, or possibly 19 points on the basis of the broader line of 75-76. But the valuable feature of these indications (coming at a time when the averages and the majority of other stocks were lining up for big advances) lay in the fact that even the 9 point advance to 80-82 would, if it occurred, take the stock out of that diagonal, liquidating formation if it succeeded in touching 80 on the way up. Therefore, it was not the width of this particular formation around 72-76 but the fact that the stock indicated a break through on the up side of that long bear market trend line which was the significant feature. And with such a possibility in mind, one would be justified in reappraising the whole formation down from 83, at the beginning of June and back up to 83 near the close of July, as a probable zone of support, with accumulation beginning on a scale down from the first 83 to the final low at 71. The stock made good the most conservative forecast of the 1 point chart, namely, 49 points (counted across the line of 83s) up from 71 by advancing steadily to 121 in September, 1932. The 3 point figure chart gave a count of four on the 73 line, indicating 83-85; six on the 76 Line, indicating 89-94 and twelve on the 83 line, indicating an optimum objective of 119. Previous formations on the 3 point chart did not break out of the bear market stride line, but a break through finally did occur when the stock reached 83 on the way up from the July, 1932 low. Further confirmation of the change in trend was given in the fact that for the first time in many weeks the stock was able to rally vigorously on increased volume. The chart of Safeway Stores (Pg. 10) illustrates the vital necessity of studying volume behavior when attempting to judge the implications of figure chart formations. Observe how an uninformed or calculating machine type of “chart fiend” might easily mistake the long horizontal formation on the one point figure chart (Pg. 9), in the range 37-42 during Jan. - Sept., 1935, as a “beautiful” base for a tremendous rise. Yet any intelligent student who took the precaution of making a real analysis of that formation by constructing a vertical chart, would immediately be put on notice that the stock was not acting right. Its behavior was not at all such as to confirm the mere figure chart presumption of “important accumulation.” Proper analysis of the vertical chart, on the contrary, plainly marked the figure chart formation (37-42) as an extended trading range wherein small changes in the forces of supply and demand were neutralizing each other for a considerable period (Sect. 15, Pg. 4, Par. 4* [sect. 15, on Trendlines, is not provided here; for information on trend, see the trend thread and this blog entry]) until, finally, supply gained the upper hand and brought about an abrupt collapse. Note how the characteristically sudden volume surges accompanying occasional rallies in this trading zone, plus the lack of consistency in price movements clearly forewarned an alert observer to forego long commitments in this stock, particularly as it remained persistently unresponsive to strength in the rest of the market after nearly eight months' supposed accumulation (that is, accumulation according to a purely superficial reading of the figure chart). *The reason why you must be especially careful about trying to apply trend lines to minor moves is this: Every congestion area (horizontal formation) which develops on your charts cannot arbitrarily be regarded as either a zone of accumulation or distribution. Many of these formations may be nothing more than trading ranges which might be extended indefinitely; they may represent zones of comparative equilibrium; areas in which only small forces are at work, hence minor dips and bulges (small rallies and reactions) tending to neutralize each other.(See Sect. 14M, Pg. 12, Pars. 2, 3 and 5.) Bear in mind that a decisive price movement cannot be expected to occur until there is evidence that the forces of supply or demand have been built up, and then become unbalanced, sufficiently to generate a sustained swing. Therefore, take care to analyze the behavior of an average or a stock while it is forming these congestion areas to make sure that such formations actually signify accumulation or distribution. From Sect. 20M

Just out of curiosity, what compels people to trade during the day when they're unable to trade during the day? What does one learn by viewing the action only intermittently? Why not just trade off the daily charts?

Yes, I liked "His style of trading also seems very busy", as compared I suppose to, say, logging on every couple of hours or so to see how one's "daytrade" is going Then there was the one about "semantics". He never did understand what the others (or I) were talking about. But my point was made, at least to a few people. Perhaps at some point in the future I will have saved them from the clutches of nonsense. Amen. (But I do find being quoted like this sort of creepy)

Thank you. This makes more sense. And it does confirm what we've been seeing at least the past two days with regard to non-confirmations in new highs and upvol.

Ready for a hoot? The Quotable DbPhoenix :: Move the Markets :: Entries :: Don't you love it? :haha:

For some reason, this isn't working. The number for each day should be a point, not a bar. For instance, the difference between advancers and decliners for day one is "253". For day two, it's "312". For day three, it's "284" (or whatever). Then these points are connected with a line, like connect-the-dots. But, again, the highs-lows and upv-dnv info should be plenty. The AD Line is just something else to look at and possibly confirm what these are saying.

What would it look like on a daily chart for the past six weeks? Incidentally, upvol and new highs for the Naz are still crap.