Sandbox

[motorway 10]

1937 would have had another name or even joint author

 

Being I assume the second revised course Richard was working on before his death

 

which was in 1934

 

 

There is Wyckoff Inc as well

 

Author WYCKOFF (RICHARD D.) INC

Registration Date 11Dec34

Renewal Date 28Dec61

Registration Number AA168408

Renewal Id R287962

Renewing Entity Wyckoff Associates, Inc. (PWH)

 

Would not matter that Alma died. or Richard .

Copyright continues on for a certain time depending on the year of production etc

 

eg

pre or post 1978

post 1923 I think are some of the key dates ...

 

motorway

[Flojomojo 10]

Ok ppl, my copy arrived today! I'm still in contact with the library though as I'm not sure whether they accidently sent me the 1937 version isntead of the 1931.

 

Anyways from what I have, this is the list of contents:

 

How to proceed

1M Foreword

2M Basic Law

3M Judging the market by its own action

4M Forms of charts

5M Buying and selling waves

6M Chart recors

7M Determining the trend of the market - Composite averages

8M Comparing strength and weakness - Group averages

9M How a campaign is conducted - individual chart studies part I

10M How the operators intentions may be detected - chart studies II

11M Figure charts - chart studies III

12M figure chart studies - chart studies IV

13M Figure charts - NY Times average - chart studies V

14M Market technique - volume studies

15M significance of trend lines

16M Vertical line charts - chart studies VI

17M Vertical line charts - chart studies VII

18M selecting the best stocks - Position sheet - Barometer

19M How to determine the position of an individual stock

20M Buying and selling tests

21M Refinements

22M The wave chart

23M Stop orders

24M General instructions - cautionary suggestions

25M Market philosophy . cautionary suggeststions cont.

 

for those who have the course, is anything missing? Btw...the chats all seem to be in pretty good condition! long live the microfilm!

[atto 20]

I have the 1937 version. In addition to your list, there is an addenda that talks about Wyckoff's Coaching, mistakes a client made, a daily procedure, and quick conclusion. Material wise, you aren't missing anything.

 

In addition to this, there is also a (followup?) course called "The Richard D. Wyckoff Method of Trading in Stocks: A Course of Introduction in Tape Reading and Active Trading". It is nearly 100 pages. Not sure if the LOC has this too, or what the copyright status is. I can look into this if you wish. If it is public domain, I will have this digitally restored as well.

[DbPhoenix 42]

Where we are now:

 

 

 

 

 

 

[Copycat 10]

Anyone willing to help me anwering these 2 questions?

 

In Comparing Strength and Weakness (sect. 8M) Wyckoff wrote:

 

"The fact that an individual stock may be moving against the trend of its group does not destroy nor impair the value or effectiveness of the indications given by the Average in which it is included. On the contrary, such action, of itself, frequently conveys significant information which should not be ignored with respect to the behavior and position of that stock."

 

I can't figure out what kind of siginificant information it conveys. Isn't this the same as:

Market (averages) weak - stock strong = market trending down - stock trending up.

So buying would be better?

 

My other question. Should the effect of news be taken into account in your analysis? For example: If a stock is not reacting bullish to bullish news, could this be indicating weakness? More combinations possible.

 

Ugh, wrong thread. Could this be moved to the: Ask any Wyckoff related questions thread?

Edited July 11, 2009 by Copycat

[DbPhoenix 42]

 

Ugh, wrong thread. Could this be moved to the: Ask any Wyckoff related questions thread?

 

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.

 

Anyone willing to help me anwering these 2 questions?

 

In Comparing Strength and Weakness (sect. 8M) Wyckoff wrote:

 

"The fact that an individual stock may be moving against the trend of its group does not destroy nor impair the value or effectiveness of the indications given by the Average in which it is included. On the contrary, such action, of itself, frequently conveys significant information which should not be ignored with respect to the behavior and position of that stock."

 

I can't figure out what kind of siginificant information it conveys. Isn't this the same as:

Market (averages) weak - stock strong = market trending down - stock trending up.

So buying would be better?

 

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.

 

My other question. Should the effect of news be taken into account in your analysis? For example: If a stock is not reacting bullish to bullish news, could this be indicating weakness? More combinations possible.

 

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.

Edited September 9, 2009 by DbPhoenix

[DbPhoenix 42]

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

Edited February 2, 2010 by DbPhoenix

[DbPhoenix 42]

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

 

 

 

 

Edited July 18, 2009 by DbPhoenix
Added footnote after the text, before the charts

[sid 10]

Hi, great post Db. What book are you getting this from and is it available to purchase or download?

 

Thanks

 

Steve

[DbPhoenix 42]

Hi, great post Db. What book are you getting this from and is it available to purchase or download?

 

Thanks

 

Steve

 

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.

[Tams 20]

just use a sheet of blank paper

[dla133 10]

I agree that it could be done as simple as that, however I thought it would be more fun to do it a bit more realistic, as in you click a button and the next chart loads.

 

Cheers

Lee

[dla133 10]

Thanks Gassah for the info. I will take a look at that website also

[firewalker 10]

There's another program which you might like, and it's called TradeMaven.

When I used it (long time ago), it was free, but it looks like they still offer a 30-day free trial.

 

You could play around with it, replay all day or a selected time. The great thing about it, was that you could fast forward those times where you don't trade (for example lunch time), and slow down or pause your focus points.

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[Guest dwcbuckeye]

If you really want to learn about the Wyckoff method and not just about Wyckoff the man, you need to visit the Wyckoff Stock Market Institute. There is a self study course you can order that is simply amazing. I highly recommend the course as it has greatly increased my trading skill set.

[DaKine 10]

Send him a PM...

 

http://www.traderslaboratory.com/forums/8353-dbphoenix/

[BlowFish 10]

Tell him we miss his posts too

[kaly422000 10]

i am kalyan from india, fascinated on volume spread analysis. with the basics of volume spread analysis i could define my entry and exit point in any scrips.as the scrips is unknown here i want to upload the charts but is there any option.

[BlowFish 10]

There is a post in the beginners section that describe how to upload charts. There is also a separate section specifically for VSA.

 

Edit: Oh and welcome

[b4gt 10]

I have been studying a lot lately and I believe I have learned a lot. I trade only with EOD data and my aim is to catch the big trends as opposed to swings.

 

I haven't read anything about Wyckoff's work. I want to learn more things about trading and I believe studying him I can expand to new (old ) ideas. Can Wyckoff's methods be applied to EOD charting? I am thinking on buying ths book Charting the Stock Market: The Wyckoff Method (Paperback)

 

Jack K. Hutson (Author)

So is it a good investment for me?

Edited April 29, 2010 by RonW
Don't need the link

[brownsfan019 17]

It's 15 bucks. Buy it and let us know what you think about it.

[b4gt 10]

No it's not. It will travel to Athens and the company that delivers the Amazon items will just drop it outside my house and let it get stolen. So I have to pay for Priority International Courier and the final price will rise to 39.50 euros.

[Kiwi 16]

Find someone you know with a PO Box and get it delivered lowest cost mail to the box.

 

I get mine sent to my PO Box in Australia and it takes 1 to 2 weeks.

[randy1953 10]

I can get almost any material ..On Wyckoff These are available for downloading.

The Day Trader's Bible - Or.. My Secrets of Day Trading in Stocks

Hank Pruden - The Wyckoff Method - Analyzing Price and Volume Movement Using Mass Psychology.

Wyckoff by the Action-Sequence Method: An Effective Way to Teach and Learn Technical Market Analysis

 

Randy

 

 

I have been studying a lot lately and I believe I have learned a lot. I trade only with EOD data and my aim is to catch the big trends as opposed to swings.

 

I haven't read anything about Wyckoff's work. I want to learn more things about trading and I believe studying him I can expand to new (old ) ideas. Can Wyckoff's methods be applied to EOD charting? I am thinking on buying ths book Amazon.com: Charting the Stock Market: The Wyckoff Method (9780938773061): Jack K. Hutson: Books So is it a good investment for me?