DbPhoenix

Jokingly, of course

I don't think so. The AD is the difference, not a ratio. For example, if 150 stocks advance and 100 decline, the difference is 50. The ratio would be 1.5:1. But I didn't intend for anyone actually to do it. I thought there might be some site that does it already. It's a PITA to maintain, which is why I stopped doing it.

A reminder, tho, that the stock canary is for the Dow. The sector canary is for the S&P. And the Dow and S&P have been weaker than the Nasdaq. My comments in chat regarding the weakness in the Naz had to do with new highs and upvol for the past two days. The canary for the Naz was put together hastily. If someone can provide me with a list of the 30 highest percentage gainers in the Naz or NDX from May 9 to June 10, I can confirm its accuracy.

As regards hesitation and missing trades, at some point one has to settle and face himself. He has to be able to say that he accepts the risk involved in the trade, that he knows where he's going to enter, where his stop is going to be, where he's going to exit (more or less), and that he doesn't care one way or the other how the trade turns out. Hesitation is often the result of an inability -- for whatever reason -- to accept the risk. If one can't accept the possibility that the trade will be a loser, and if one can't be detached from the outcome, then he is right not to take it.

Depends on how you define "optimum". I don't just jump in, though some do. If I'm looking to go long, I set an entry above price. This does not give me as good an entry as it would if I were to jump in at or just before the deciding move (assuming that price does in fact move in the desired direction), but it does provide me with a little extra time, it forces price to move in my direction, and it enables me to set a stop that is nearly what it would have been if I had jumped in at a lower price (we are, after all, talking about only a few ticks here). Once I'm a few points away from my entry, I switch to the 1m chart to manage the trade, not because there's anything particularly attractive about the 1m chart, but because I can zoom out only so far with the 1t chart, and following the trend is more difficult there. Once the opposite side of the trade is approached, I begin looking at the 1t again to see how price is reacting, if it's stalling, reversing, resting, etc. But none of this is about how I trade; it's about whether or not one followed his plan, if he has one, and if he didn't, why he didn't, and what he could have, would have, and/or should have done differently. After all, only a handful of those who "trade intraday" are actually trading intraday fulltime and thus are able to follow the charts in real time. The rest are popping in as they can while focusing otherwise on their real jobs. I don't find this sporadic and episodic approach particularly conducive to learning how to trade intraday, but people do what they believe they have to do. The point of this thread is to help them figure out how to do it.

Shifting from a 5s chart to a 1t is essentially the same as shifting from a 5m chart to a 1m: the closer you get to actual price movement and the farther you get from summaries (i.e., anything more than a 1t), the easier it is to see what traders are up to. Head's explanation of this using the chart he posted after your request is as good as what I'd offer. The key to trading off pure price action rather than bars is trusting that price moves by design and is not just random. If, as Head explains, price finds S and R in a narrow band and traders poke below that band once or twice or more looking for trades and don't find them, then logic demands that traders will look elsewhere -- higher -- for their trades. And if the line of least resistance is up, that's where traders will go. One can see this in how rapidly and how easily price moves through what one had pegged as resistance, in this case the move above 3.5. One common problem that novices have with this sort of thing is the indoctrination that so many receive with regard to the evil market makers and specialists and "smart money". They spend so much time and mental effort looking for tricks and traps that they fear to take the most obvious trades, often resorting to scalping because they are in continuous anticipation of being slapped down by those ill-defined figures lurking in the shadows (this accounts for the great and otherwise inexplicable pride that one feels for taking 3 points out of a 30pt trend day, snatched from the clutches of the "smart money", like scraps from the banquet table). If one doesn't understand the nature of price movement, he can easily adopt the belief that it is all random, it's all gambling, that the best-laid plans are a waste of time (assuming he ever takes the time and trouble to develop a plan at all: see Stages of a Trader, first post in this thread). But if one opens up the back of the watch and studies how it all fits together and works together to create movement, he will more likely eventually reach the point where he can take advantage of the opportunities which the market presents to him.

I'll never understand those who ignore the premkt, much less those who decline to trade during the first half hour. The S&R created this morning were so clear, and your CWS for trading them is well-thought-out. Note, however, that the situation presented to you this morning does not occur every morning. So don't let your "failure" to take this morning's trade push you into taking another trade that doesn't meet your requirements. This trade worked because of how it was setup. Without the setup, it would not have been so clean. I suggest you create a 1t (one-tick) chart and see how your 5s bars look. You may smack yourself again for not having taken the trade you believe you should have taken, but you may also gain further insight into just what traders were doing when they were testing all these levels at the time you wish you had entered.

Here's one for the Nasdaq (the above are for the Dow stocks and the S&P sectors). But I can't guarantee its accuracy.

Up vol was weak yesterday as well, as were new highs.

Your mention of the "final" climax and shakeout taking place at support should not be overlooked by those who read this. Many novices search for selling climaxes at every swing point that has higher than normal volume. But it is not unusual to find swing points with higher than normal volume. That's in large part what makes them swing points in the first place. So how does one differentiate between "climactic volume" and a selling climax? Because the selling climax will take place at or near an important support level. One must understand that just as distribution takes place on the way up and not just at the top, accumulation takes place on the way down and not just at the bottom (this is why price will sometimes spend very little time at the bottom before reversing and taking off in the opposite direction). The "climactic volume" that occurs when buyers attempt to provide "preliminary support" signals an effort toward accumulation. Weak holders will throw their shares/contracts back on the market when price continues to fall, but stronger hands will continue to slow and eventually halt the decline. This is what creates the bottom in the first place. Price does not just stop as if it were hitting the sidewalk after being dropped from a highrise. Its fall is gradually slowed, as if brakes were being applied, until it comes to rest. The accumulation which made possible the rise from 1400 to 1440 did not occur just in those few minutes after the shakeout. It began long before, from the first time buyers tried to halt the decline. There are those who claim that volume is useless, and if one doesn't understand what it is, then it is indeed useless to that individual. But if one understands that volume is a measure of trading activity, it becomes an invaluable aid at key points and levels, providing that extra added insight into trader behavior which can make the difference between a successful trade and a failed one.

They can be applied to anything that is freely traded in an auction market.

Actually the most appropriate action -- given that nothing is being sold -- is to leave it alone. Novices cannot be saved from themselves, and if one chooses to spend years trying to learn this, that is his choice. At some point, he will either get it, give up, or go broke. But those who post here already have mothers. There are threads here and everywhere that are pure gold. There are also threads here and everywhere that are complete nonsense. But it is up to the individual to decide which is which for himself.

Unless they all failed miserably, the results wouldn't shock me. Anyone who can tell the difference between up and down ought to be able to learn this in a much shorter time than is generally claimed (usually by those who have something to sell). Children learn quite well and quite easily, until they go to school....

Yes, it was a good day to see these concepts play out, and fun in a twisted, geeky sort of way to see it happen. Because today was almost a template for Wyckoff -- that is, true price action -- trading, I'd like to get into the S&R of it. But I don't want to mark up your charts, and I want to back up a little bit in order to explain further what I mean about planning these trades in advance. So...... First, we back up to the larger timeframe: Because of where the overnite action took place (again, there are no gaps in futures) and where price lay just prior to the open, it isn't necessary to plot those S/R levels which aren't likely to affect price after the open. The most likely S/R levels to be important are 1438/40, 1425, and 1392. Extending these levels into a nearer timeframe, we see that 1403 might also be important (NeoTrader brought this to everyone's attention): And zooming in even further to get a more detailed view of the immediately-preceding activity, it's easier to see why 20 may be important. It's also easier to see the thrust that was made thru 25 (the arrow). One can also see that price made one more test of 1403. This serves to narrow one's focus considerably. And then the games begin. Here we see the same thrust only on a 1m chart. All the previously-plotted S/R lines have been brought forward. One could short at several places during or after the thrust, including a drop below 18. After that, it's just a matter of waiting until price reaches S. One could scale out at the first test of 1403 and wait on the rest to see if we dropped all the way to 92. If he did so, and if he were paying attention, he'd notice the shakeout 10m later (see the second arrow). This offers a signal that 1403 may hold and that he should anticipate the necessity of exiting entirely and going long, which he could do when price exits this congestion (I should point out that most of this can't be seen on a 5m bar chart). If the trader does go long, then his target becomes 1440. But, as atto pointed out with regard to scaling out on the short, there are also obvious places to scale out on the long, if one worked out the S/R in advance. Note here that price chokes at 20, 25, and 38. Surprise, surprise. Even at the first test of 38, however, one needn't exit his position entirely, assuming he has more than one contract left. The trendline isn't broken, and the last swing low at 35 has not been breached. So if he wanted to try to squeeze out a few extra points, why not? The risk is clearly determined (one or more ticks below 35 or a break of the trendline). One can then be satisfied and quit, or hang around and hope for another trade. I suppose that depends in large part on the weather.

That's true. They can't.

Maybe you could do the same thing, atto. Think of it as missionary work.

No offense intended, but if you're undercapitalized and still struggling to learn, you don't need to keep your positions small; you need to stop. Develop a consistently profitable trading strategy through research, study, and simtrading. Then go live in increments. Otherwise you're just wasting your time and your money.

Would you mind posting these in the Trading The Wyckoff Way thread as well? A simple copy-and-paste will do (if I do it, my name will be on it). I have some comments to make about S/R, but I'd rather make them there, given the floundering I see with regard to several other approaches, and the possibility that the simplicity of this might be more appealing to some than what they're currently bogged down in.

Well, all the jargon and "patterns" sell books. And software. And seminars. And DVDs. Picks and shovels.

For those who are interested, I wrapped up the canaries thread here.

How "complete" a trading virgin are you? Do you know what a stock is, what it represents? If so, do you know how the price of a stock is determined? If so, do you know why the price of a stock goes up and down? If so, do you know why stocks suddenly reverse and take off in the opposite direction? Do you know what a broker is? If so, do you know why he is necessary? Do you know what commissions are? Do you know what "slippage" is? If you don't know or are uncertain of the answers to any of these questions, I suggest you postpone the sophisticated and philosophical stuff for later. At the bottom of the page I linked to in my last post, there are two books which I recommend to "complete virgins": The Wall Street Journal Complete Money and Investing Guidebook and/or Standard and Poor's Guide to Money and Investing. If and when you understand what's in these books, you'll be in a position to move from A to B.

Edited: nlp..........

By posting here, I didn't intend to get into a debate on the pertinence or quality of any given book or books, and while I appreciate the remarks made about my own book and about the thread mentioned by thales, I still don't know anything about "minted" nor about what he knows nor about his level of experience, if any. So, I'll copy here a little of what I've posted in my blog with regard to first steps. Perhaps that will be of benefit to him: In order to succeed at trading, you must have an edge. Your edge begins with the knowledge you gain through your research and testing that a particular price pattern or market behavior offers a level of predictability and a risk to reward ratio that provides a consistently profitable outcome over time. Without it, one is just "playing" the market in order to have something to talk about on message boards. To get it, you have to know exactly what you're looking for and what to do with it once you've found it. This process is what the journal is all about. The journal goes through several stages depending on where you are. Once you've decided where you want to concentrate your efforts (at this level, the journal may resemble a diary), then you begin the process of developing a system (or method, strategy, procedure, whatever you want to call it). Here the journal takes on a different character. Once you've developed a tentative/preliminary system, you begin testing/trading it, and the journal adopts a still different character. The first step is to decide what kind of trader you want to be. * What do you want to accomplish with your trading? Is it recreational? Supplementary income? A part-time job? Do you want to make a living at it? Even the greenest of the green knows whether or not he wants to make a living at it, trade only part time, trade for recreation, trade for the action, trade to have something to talk about with other traders (for whatever reason), trade only long enough to earn money to do or buy X. * Do you have any idea what sort of trading is most comfortable? Long or intermediate-term trading? Short-term trading? Day-trading? Trend-trading? Scalping? (Note here that a short-term trader, for example, does not become a long-term trader just because his stop was hit and he didn't sell; a long-term trader doesn't become a short-term trader because he chickened out and sold too soon. Each of these approaches are selected deliberately and for thoroughly-considered reasons.) How patient are you? How adventurous? Are you a leader or a follower (most people think they're leaders)? The second step is to decide what you're going to trade and when you're going to trade it. * Have you found an instrument -- futures, stocks, ETFs, bonds, options -- that provides you with the range and volatility you require but also the safety that enables you to relax and trade in an objective and rational manner? * Have you yet found a time (5m, hourly, weekly) or tick (1t, 200t) or volume (1K, 100K) interval that gives you enough trading opportunities but also gives you enough time to think about what you're doing? If you want to limit your trading to the "morning", are you physically and psychologically prepared to trade all day? If not, can you shrug off whatever opportunities you may miss by limiting the amount of time you spend trading? The third step is to develop your system*. A system consists of (a) a set of rules that you use to select profitable positions and (b) a set of rules that you use to manage the trade once you're in it. (*Note: again, whether you call it a system, a method, a strategy, a plan, a scheme, an approach, a procedure, or a modus operandi is not as important as sitting down and doing it.) And so on. If one cannot answer even the most preliminary questions, then he needs to address those preliminary questions. If he doesn't do it now, he'll have to do it eventually, but by then he will likely have wasted a considerable amount of money.

Whatever books I might recommend, if any, would depend on where you are and what you want. If you know absolutely nothing about trading or the markets and have absolutely no idea what you want from trading, I would not recommend Reminiscences nor Weinstein nor O'Neil. They are well beyond where you are. If you have some knowledge of and appreciation of how the markets work and what trading involves and what you want from the markets and how you plan to go about getting it, that's a different matter. So......

Since this was related to Section 8 in particular, I moved it to this thread. And since this thread is much shorter, your question is much more likely to be noticed. It depends (but you probably expected that answer). First, don't forget to include the paragraph following what you've quoted: In like manner, by comparing the behavior of the various Group Averages with the action of the whole market — the way they respond or fail to respond to advances and declines, rallies and reactions in the Composite Average [the Dow, S&P, etc] — you may gain valuable additional information on which to base your stock market campaigns. When W refers to the "Average" in your quote, he means the Group Average. So, yes, barring all other considerations, if your stock is among the strongest in its group, it becomes a prime candidate for purchase. However, the market holds the trump. One always begins with the market, then the group averages, then the stocks. If both the general market is weak and the group average is weak, then you are swimming against the current by trying to profit from a particular stock, regardless of how strong it seems to be. This is not to say that obtaining a profit is impossible, but doing so is so much easier when trading with the general trend. Incorporating the trend of the market, the trend of the group, and the trend of the stock become more beneficial to you at or near turning points. For example, when the market appears to be approaching a bottom, or is already in the bottoming process, which groups are already showing signs of exiting that bottom? And out of those groups, which stocks are the strongest? Or at tops, which groups are weakest? And out of those groups, which stocks are in turn the weakest? And if the market happens to be "rotating" or "churning", not moving significantly one way or another, turning to the groups can tell you whether leadership is moving from one group to another, and, if so, which are the leading stocks in those groups which are assuming leadership. Applying all of this to the current market, you have to decide whether we are topping or rotating. One way to look at this is to incorporate the Wyckoff Wave. Or you can monitor the nine major sectors, as I've posted above (far easier to do now than in W's time). If there is observable weakness in most of the sectors, then we are likely topping. But if there appears to be a hand-off, with some sectors weakening while others are strengthening, then we are more likely rotating. If we are topping, then buying is not the best idea. If we are rotating, then assessing the relative group strengths can put you at the front of the line for taking a position the best stocks in the strongest groups. No. But it depends (again) on what you mean by "not reacting bullishly" and "indicating", which in turn depends on your strategy and your goals. If, for example, any weakness at all is going to push you out of the stock, then your expectations may be too high. On the other hand, if you're willing to hang on as long as the stock maintains its overall trend and it hasn't, for example, dropped below the last important swing point, then its temporarily bearish behavior in the face of bullish news may be irrelevant. But how you behave in this situation will also depend in large part on where you entered and whether or not that entry was timely or late. If you entered late and the stock's behavior puts you underwater, then you may not be willing to give it the room it requires to adjust to the news. That, however, is not the stock's problem, but yours. If the stock's behavior makes you so nervous that you can't be objective about it, get out. It's easier to be objective when you're out and trying to decide whether or not to get in than to be in and try to decide whether or not you should get out.