DbPhoenix

For those who are playing bounce the ball, the focus for this morning is so far 1434. Fasten your seat belt and keep your arms and legs inside the elephant at all times.

Just google it. Complete title: The Undeclared Secrets That Drive the Stock Market

OTOH, volume can be helpful. Matinthehat understands this stuff as well as anybody and better than most. I suggest that those who are interested look up his old posts.

There are no mentions of anything "hidden" in Wyckoff. Williams does, however, refer to, for example, "hidden buying" in Undeclared Secrets. Since Master the Markets is essentially promotional literature for a software company and The Undeclared Secrets That Drive the Stock Market is Williams' original work, it might be better to rely on Undeclared Secrets so that everybody is on the same page.

That's pretty much what I presented here yesterday, only without the TICK overlay. As you say, all you have to do is ride the trend. Thanks for the contribution. Colorful.

Master the Markets is largely a promotional tool for a software company. The Undeclared Secrets that Drive the Stock Market is Williams' original work. So it depends on what you want. Google either one.

James would prefer that we not provide links to other trading forums. I'll send them to you via PM.

You don't get to keep any. It all goes to atto.

Have you read trader dante's stuff?

Harkening back to post 96, I did a quick and dirty on recent action here.

Posted on 12 July. The lack of interest in these canaries has been disappointing because an understanding of what the market is doing and an understanding of what the groups are doing are so vital to implementing the Wyckoff approach, even if one is daytrading. Therefore, I'm going to tie everything together here in case someone reads this at some point in the future and wonders how the puzzle pieces fit. To start, there is the "groups" thread, particularly post 6. There are then the updates on the weekly charts posted in the "dailies" thread as well as posts 95 and 96. Those who read this linked materal as well as the posts to this particular thread (there are only a few) will be more likely to understand what is to follow. The point of following the canaries can be seen below. Using the canary for the sectors, one can see here that while every sector but XLF and XLY was making new highs in early June (ignore if you can the colors and the MAs and the volume; removing all of that takes a lot of time) ......... the sector canary was not. The trader/investor following this would at least entertain the possibility that the failure of the canary to confirm these higher highs -- coinciding as they did with the major averages bumping up against heavy resistance (see the linked posts above) -- might signal trouble for the long side, and he would at the very least work out a contingency plan for the short side, keeping in mind all the while that there might be a sudden and inexplicable rally. He would note that XLF and XLY were the first to break their trendlines and begin there. But he would also follow the weakest stocks in the other sectors. And when every sector but XLV and XLU followed the weakness in the sector canary (XLV dropped below its trendline but quickly recovered; XLU eventually broke its trendline a month later), he'd already know what he wanted to short and when and why. That, then, is the purpose of these canaries, or Wycoff Waves: to provide advance notice of moves by revealing the activity that's taking place "underneath" and which is not obvious or even visible to the casual observer (much like the means by which one can anticipate moves in various trading instruments through analyzing the support and resistance provided by trading ranges).

Okay, but everyone please understand that this has nothing to do with coding and indicators, so if that's what you're looking for, you may want to just breeze on by. Tasuki extended the invitation, so it's all his fault. OTOH, those who just can't code may find this to be an acceptable alternative. First, the context, as always. You were talking about thrusts and sucking longs into bad trades. It's worth knowing that distribution has been going on all month. And this is fortunately real simple. (Though it's not classic Wyckoff as it splits the volume; one can detect this stuff with a regular chart, but it's more subtle, and I can guarantee that Wyckoff would have used this split volume if it was available to him because he liked an indicator similar to OBV.) Note here that the NYSE and the SPX track each other pretty well. And if you're wondering So What?, it's because data providers split up volume and down volume for the NYSE and the Nasdaq. Matching up the Nasdaq UD volume with the Nasdaq is no problem. But there is no UD volume for the SPX. But the SPX and the NYSE track each other so closely that it's not a big deal. And that's so what. So here we have the up volume -- that is, the volume of advancers -- for the NYSE plotted below the SPX (is this starting to make sense?): Note that even though that first push up at the beginning of June looks pretty good, the up vol is pretty lame. And it gets lamer and lamer as the month rolls on. Finally, Friday, we get this huge push up in up volume that results in zip movement. This is not good. At least for longs. And all of this is a clue as to what to anticipate regarding today's action (not predict; anticipate). Now without going into a lot of details regarding support and resistance (such as that the midpoint of last Wednesday's range was 907), note here that the market tells you that it's finding, or trying to find, support at 907 to 907.5 (this is NY time). When price finally drops below this level at 0824, note how pitiful the volume is when traders try to push it back up above this level, from 0825 to 0829. This is a further indication that the line of least resistance is going to be down: Where one finally makes the decision to short is a personal one, but there are many places to do so. An aggressive trader might short under the above failed attempt to get back past support (now become resistance). If he wanted to wait for the market open, he could short at any of the places I've indicated: Once you're in, it's just a matter of letting the trend do the work. The trend, after all, as we know, is your friend. Like the policeman. As long as the trendline hasn't been violated AND the last swing high has not been exceeded, all you have to do is sit back and relax. No muss, no fuss, no ulcers. As for whatever thrusts or volume anomalies may take place in the meantime, who cares? It doesn't really matter as long as that trend is in place. .

Hello, Tasuki. I saw your post in the VSA Forum regarding your post above. I'm not a VSA expert, though some people think so. But I doubt that a VSA expert would advise looking for thrusts with an interval this small. But then, who knows? As to whether or not VSA is based on Wyckoff, there's been a spirited discussion about that over the past couple of days. If you'd like a Wyckoff take on this, let me know (Wyckoff was a tape reader, so this kind of interval would be no problem for him). But it won't involve indicators, so it may be wildly off-topic. Either way, I'm glad this is working out for you.

Though note I also said that one must define "successful". Turning a profit is not quite the same as making a living. Look, for example, at the following:

Given that the last few posts (now moved) have taken a detour toward P&F, I'm moving them to the P&F thread so that the P&F posts are all in one place.

Please note that this forum is focused on Wyckoff's original course, The Richard D. Wyckoff Method of Trading and Investing in Stocks: A Course of Instruction in Stock Market Science and Technique and The Richard D. Wykcoff Method of Trading in Stocks: A Course of Instruction in Tape Reading and Active Trading. Wyckoff died in 1934, and his course passed into other hands. The provenance of the material and the relative quality of subsequent additions, deletions, alterations and so forth is not the concern of the forum but rather the study of the original material, the belief being that by studying the original material, the individual is in a better position to evaluate any other approaches, methods, systems, etc that are "based on Wyckoff", whether they make that claim or not. Without access to the material, the individual is in the position of having to take somebody's word for the content and intent, and that's not the best basis for beginning a trading strategy. All threads which contain sections of the original course or pertain directly to the original course are designated with an arrow in a green circle. Enjoy.

deVilliers was responsible for popularizing P&F at the time when Wyckoff and Livermore were hitting their stride, but I've never read his book, so I can't tell you what sort of modifications Wyckoff and Livermore made to the work, if any. But Livermore, at least, saw it as a form of shorthand, and perhaps Wyckoff did as well, though I don't recall his actually ever having said so. P&F was a solution to a problem. Traders were much more attuned to the tape back then, but keeping a record of what one was seeing was a challenge, to say the least. One could not possibly write down every trade with its volume that crossed the tape, and even if he could, making sense out of it would have been extraordinarily difficult. If one were able to get into the rhythm of the tape, though, he could see where prices were clustering, and he could detect those little pokes out of those clusters that suggested that price was about to do something. P&F, as I said above, provided a shorthand way to record these clusters in order to (a) avoid having to write down every single trade and (b) detect the moves out of these clusters. Imagine, if you will, standing in front of the board with a pad of paper -- or even just the back of an envelope -- and a pencil and noting the price level of a certain stock with an x. But you ignore fractions and you don't take any other action until there is a price change of a predetermined amount. That saves a hell of a lot of record-keeping. And envelopes. Nowadays, of course, we have streaming real-time data and computerized charting. One can track anything he likes and display the information in a myriad of ways, instantly. Even so, P&F enthusiasts like this type of recording for its simplicity (particularly since it doesn't include volume) and its elegance. For them, the behavior of price is far easier to see in a P&F display than in a standard vertical bar time chart. Many Constant Volume Bar chartists see their charts the same way. As for how Wyckoff implemented it, there is an excerpt from Wyckoff's "Forms of Charts" chapter in the original course in the first post of the P&F thread. There is also quite a lot of information on his use of it in his Studies in Tape Reading, or Day Trader's Bible (he also provides a tape reading course along with his more comprehensive course, but I find Studies in Tape Reading to be an easier read). I don't use it, and I'm hardly an expert on it, but, as I've said several times over the past year, I've been hoping that someone who does use it and can provide at least informed knowledge if not expertise would pick up the P&F ball and run with it, but so far there have been no takers. Is it useful? For me, no. But that doesn't mean that it may not be absolutely essential for somebody else, and the fact that I don't use it should not discourage anyone.

Thank you for posting this. You have no idea how pleased I am to see this kind of product.

Not so odd. As I've noted in the forum, no one is interested in pursuing it. Anyone who wants to do so is welcome to begin at any time.

Since Wyckoff didn't separate volume into bid and ask, a more appropriate location for a discussion of it would be whatever forum or thread thinks this information is valuable. There are, in other words, no Wyckoff resources for it. As to where the transaction takes place, there's not much I can add to my previous post on the subject (post 8). Regardless of the "volume" or of the price points at which it manifests itself, if buying pressure is greater than selling pressure, price will rise. If the opposite, price will fall. If equal or equivalent, price will stay right where it is. That's about as simple as it can be put.

Richard Wyckoff was a pioneer of technical analysis. While Dow contributed the theory that price moves in a series of trends and reactions, and Schabacker classified those movements into chart patterns, developed gap theory, and stressed the role of trader behavior in the development of patterns and support/resistance, Wyckoff contributed the study of the relationship between volume and price movement to detect imbalances between supply and demand, which in turn provided clues to direction and potential turning points. By also studying the dynamics of consolidations or horizontal movements, was able to offer a complete market cycle of accumulation, mark-up, distribution, and mark-down, which was in large part the result of shifts in ownership between retail traders and professional money. Wyckoff sought to develop a comprehensive trading system which (a) focused on those markets and stocks that were “on the springboard” for significant moves, (b) initiated entries at those points which offered the highest probability of success, and © exited the positions at the most advantageous time, all with the least possible degree of risk*. His favorite metaphor for the markets and market action was water: waves, currents, eddies, rapids, ebb and flow. He did not view the market as a battlefield nor traders as combatants. He counseled the trader to analyze the waves, determine the current, “go with the flow”, much like a sailor. He thus encouraged the trader to find his entry using smaller “waves”, then, as the current picked him up, ride the current through the larger waves to the natural culmination of the move, even to the extent of pressing one’s advantage, or “pyramiding”, as opposed to cutting profits short, or “scalping”. What distinguishes Wyckoff from all of the various Wyckoff knockoffs in circulation are (1) the emphasis on the continuity of price and (2) the lack of "setups". Continuity of Price: Wyckoff began as a tape reader. By the time he incorporated daily charts into his trading, the continuity of price movement via the tape, tick by tick, had become so ingrained that he could see price no other way. Even though he might be looking at a series of daily bars on an end-of-day chart, he saw price as continuous. Thus the bar itself was irrelevant to him, and he was just as comfortable using line charts as bar charts. The line chart, in fact, more closely conforms to this continuity. "Setups": There are no "setups" in Wyckoff, at least insofar as we commonly use the term. He did not say that if price does this, you buy and if price does that, you short. Rather he stressed that the trader must be sensitive to imbalances in buying pressure and selling pressure, particular at levels where these imbalances might most likely result in profit opportunities, e.g., reversals. Therefore, the "trading signal" is not, for example, a "double bottom" or a "higher low" or a "climax bottom" or even what some call a "spring" (not a Wyckoff term); the trading signal is provided by the imbalances between buying pressure and selling pressure (which is why software won't work), and if one does not view price as a continuous movement and is not sensitive to these continuous shifts in balance/imbalance, he will not understand what it is that he's supposed to do. *Risk is minimized by (1) focusing on liquid markets, (2) monitoring the imbalances between buying pressure and selling pressure at those levels of “support” or “resistance” where price is most likely to reverse its trend, (3) entering on reversals (or, if necessary, retracements) rather than breakouts, and (4) getting out when the market tells you to. WYCKOFF LITE Wyckoff's original course** came in two "divisions": The Richard D. Wyckoff Method of Trading and Investing in Stocks: A Course of Instruction in Stock Market Science and Technique, which amounted to about 400pp, and The Richard D. Wykcoff Method of Trading in Stocks: A Course of Instruction in Tape Reading and Active Trading, which added 97pp, Those who are intimidated by the prospect of working their way through 500p of a century-old course and/or those who are skeptical of the value of the course at the outset may be game for an abbreviated course, not a shortcut, but an "essence". This can be accomplished in two phases. The first is targeted toward those who may be interested but first want to know what this is all about. This amounts to about 45p (that's the best I can do) from Division 1: The Basic Law of Supply and Demand (Section 2), Judging the Market by its Own Action (Section 3), and Buying and Selling Waves (Section 5), the application of all of which are demonstrated by Wyckoff himself in a year-long study (Determining the Trend of the Market, Section 7) of the market from the end of 1930 through 1931 and an 18-month study of a stock, from 1934 through 1935. If after reading this tenth of the entire course, you think there may be something to all this after all, step in to phase two. This amounts to the four sections above plus the Forward (Section 1), Volume Studies (Section 14), Significance of Trend Lines (Section 15), Refinements (Section 21), Stop Orders (Section 23), General Instructions: Cautionary Suggestions (Section 24), and Market Philosophy (Section 25), about 90 additional pages all told. SEARCHES You may search Wyckoff's course (links provided above) just as you would any pdf. Open the pdf, click Ctrl+F, and enter your search term, e.g., trend or trendline or whatever. Once the function has found the first instance of your search term, click Next to go to the next instance. WYCKOFF LITE-R Given that you are in charge of your own learning, you have the option of skipping the Wyckoff course entirely, except perhaps as a resource, and skipping ahead to the Wyckoff and Auction Markets thread. Whether or not this will work for you without ever consulting the original Wyckoff material is a matter of cloudy prognostication. But not all roads are smooth. GLOSSARY Note: Included in this glossary are what I call "abbreviations of convenience", e.g., AOC (abbreviation of convenience). Wyckoff didn't use them; he spelled everything out. But then Wyckoff didn't post to message boards. So please understand and forgive their use. They save a lot of wear and tear on the fingertips. Accumulation: An area where stoc]ks are purchased – or “accumulated” -- with the intention to mark up prices at some later time. Every traded stock is in one of four phases: Accumulation, Mark-up, Distribution, Mark-down. Absorption is a form of "re-accumulation" which occurs toward the end of the Mark-up phase as price approaches old resistance. Buyers "absorb" the offerings of bulls who bought at that old resistance and now want out, as well as the offerings of bears who bought on the way down to that old resistance and now see an opportunity to get out even (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, p. 8). Breakout: BO (AOC). A breakout is not just a matter of a price exceeding a previous price level. Price must break out of something, most often a trading range. Buying Climax: the opposite of a Selling Climax (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, pp. 1, 2). Composite Operator: Wyckoff’s name for the total sum of forces, including the public, that move the market. Demand: Buying power, buying pressure. Demand Line: that line which passes through two successive swing lows (the low points of two successive reactions). Also DL (AOC). Distribution: An area where stocks are sold with the intention to mark down prices at some later time. EOD: End of Day (AOC). HH: Higher High (AOC). HL: Higher Low (AOC). LH: Lower High (AOC). LL: Lower Low (AOC). LSH: Last Swing High (AOC). A swing high or low represents a point at which traders are no longer able to find trades. Whether that point represents important support or resistance will be seen the next time traders push price in that direction. But everyone knows this point, even if they aren't following a chart. It exists independently of the trader and his lines and charts and indicators and displays. It is the point beyond which price could not go. Hence its importance, both to those who want to see price move higher and those who don't. LSL: Last Swing Low (AOC). See above. Mark-down: The phase of the cycle where prices decline, from the beginning of a bear campaign to its bottom. Mark-up: The phase of the cycle where prices rise, from the beginning of a bull campaign to its top. Overbought Position Line: that line which is drawn parallel to a demand line and passes through the first point of resistance (rally top) which intervenes between two successive points of demand in an up trend (whew!). In order to cut down on the jargon, the Supply Line is used here to perform the same function. Oversold Position Line: that line which is drawn parallel to a supply line and passes through the first point of support (reaction low) which intervenes between two successive rally tops in a down trend (whew!). In order to cut down on the jargon, the Demand Line is used here to perform the same function. Price movement [price action]: the continuous tick-by-tick (transaction-by-transaction) movement of price as shown on the tape [or on a corresponding chart]. Rally: A phase in the market that experiences rising prices, that is, higher highs and higher lows. Reaction: A phase in the market that experiences declining prices, that is, lower highs and lower lows. Resistance: An area where selling pressure overwhelms buying pressure. More specifically, resistance is the zone or level at which those who have enough money to make a difference attempt to retard, halt, and reverse a rise by selling. Retracement: RET (AOC). The first pullback after a break through support or resistance and the second opportunity (the first being the break itself) to enter the trade. If price does not resume its course, the "retracement" becomes a failed breakout. Reversal: REV (AOC). A bounce off of or rejection of a support or resistance level. RT: Real Time (AOC). S/R or S&R: Support and Resistance (AOC). Secondary Reaction: The reaction following a Technical Rally. Selling Climax: A major panic that occurs at the end of a steep decline in prices (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, pp. 1, 2). Shakeout: A sudden break below a support level followed by a rapid reversal. Springboard: A stock (or group or the market as a whole) is on the springboard following a period of preparation for an advance or decline. Stop Loss: An order to exit a trade if the market does something that proves your initial decision to enter the trade was wrong. Supply: Selling power, selling pressure. Supply Line: that line which passes through two successive swing highs (tops of rallies). Also SL (AOC). Support: An area where buying pressure overwhelms selling pressure. More specifically, support is the zone or level at which those who have enough money to make a difference are willing to show their support by retarding, halting, and reversing the decline by buying. Tape: a thin strip of paper on which is printed a series of stock symbols, each print representing a transaction in that stock and consisting of the price at which the transaction took place and the volume of shares changing hands. Modern day equivalents are the "time-and-sales window" and the one-tick chart. Tape Reading: the art of determining the immediate course or trend of prices from the action of the market as it appears on the tape of the stock ticker. Technical Rally: The rally that occurs after a Selling Climax. Thrust: A break above a resistance level followed by a rapid reversal. Trading Range: A period of balance between supply and demand forces. Prices move within a range where the bottom represents demand and the top represents supply. Also TR (AOC). Trend: The line of least resistance. Trendlines: Straight lines drawn through the tops or bottoms of the price path established during an upward climb or downward pitch. They “serve to define the stride of the price movement, thereby frequently directing our attention either to possibilities of an approaching change of trend or to an actual reversal.” Also TL (AOC). Volume: Number of units changing hands in each transaction. Wave(s): See Buying and Selling Waves, Division 1, Section 5. **Please note that this forum is focused on Wyckoff's original course. Wyckoff died in 1934, and his course passed into other hands. The provenance of the material and the relative quality of subsequent additions, deletions, alterations and so forth is not the concern of the forum but rather the study of the original material, the belief being that by studying the original material, the individual is in a better position to evaluate any other approaches, methods, systems, etc that are "based on Wyckoff", whether they make that claim or not. Without access to the material, the individual is in the position of having to take somebody's word for the content and intent, and that's not the best basis for beginning a trading strategy. Enjoy.

As far as Wyckoff goes, course? Not exactly. Free? Yes. Just check into the Wyckoff Forum. As for VSA, I can't say. I suggest you begin with the Pure VSA and Helpful Hints for Newcomers to VSA threads here. Edit: Sorry, I neglected to mention perhaps the best resource in this forum, the Summary Stickie. Those involved did an exceptional job. It's not exactly short, but it's a hell of a lot shorter than its source.

That's true, and my congratulations for consolidating all the remarks in a way that makes sense for you. Why do people get excited about volume spikes? Greed or fear. Amateur traders see volume spiking and think Oh God I'm Missing Something, and they try to jump on -- or out of -- a speeding train. Sometimes that volume can propel traders to a new level. Sometimes, at least in an upmove, it's pure distribution, and when new buyers find they have no one to sell to, price can plummet just as fast as it rose. Part of the problem with regard to discussing price and volume is that not everybody is talking about the same thing. And some people think that definitions don't matter. But they do. And if one is going to think clearly about what's happening in front of him, he needs also to be clear about the language he uses to describe it, even if that language is purely internal. Some people will say, for example, that they don't use volume, that volume is not important, even that volume is useless. But without volume, that is, trading activity, there would be no transactions and hence no price movement. That in itself makes volume important. What is often meant by statements like these is volume as an indicator, particularly a color-coded indicator, and those who feel that this sort of volume is pretty useless may have a point. There is also the matter of volume as trading activity (which is how Wyckoff looked at it) and volume as "intent", which is essentially what bid and ask "volume" are about. But the trader who trades according to what people intend to do may not make the same decisions as one who trades according to the transactions that people are actually making. I may intend to sell the strawberries in my refrigerator for $100 a pint, but nobody's going to give a damn unless somebody actually meets my price and we conclude a transaction. That then becomes the price. But is it the correct value? And mixing price with value is another area where traders tend to trip themselves up. Going back to your first post, a trader may have shares that he thinks are worth $10. But he can't find a buyer who thinks they're worth more than $5. The seller's price is $10 because that's where he's placed their value. The buyer's price is $5 because he's placed their value at that level. But that doesn't make either $5 or $10 the "price". The price is determined through negotiation until there is an agreed-upon amount, maybe $7.50. And if the two parties conclude their negotiation, the transaction takes place and $7.50 becomes the price, even if only for a few seconds. Therefore, if intent matters to you and you believe that bid and ask "volume" truly reflect intent, then the bid and ask volume may be useful to you. But none of this has anything to do with the volume that is trading activity which in turn is the result of actual transactions which in turn result in prices that are printed on the "tape". If there is no transaction, there is no volume, and everybody just stands around holding hands. Once a transaction takes place, then you've got something concrete, a benchmark to go by, and some clue as to the action you should take.

Not looking for a fight at all, just correcting a misstatement. As for derailing the thread, I would be very happy to see the VSA Forum focus on VSA. You are, of course, welcome to delete all of these posts.

You've made it clear that you never grasped the importance of the continuity of price flow in Wyckoff's original course. But it is that which is the foundation of his wave metaphor. As for "boxes", they are drawn around trading ranges in order to highlight them. Wyckoff originated the idea of trading ranges and of support and resistance. As for Ticks, what do you think a print on a tape is? And though certain ideas of Wyckoff's may have been incorporated into VSA, it is derived from SMI, not from Wyckoff. That you believe that there is no difference does not mean that there is none.