All language subtitles for Session 02-WTC (January 14, 2019)

Hello, everyone. Today is January 14th,
and this is our session number two of

the Wyckoff Trading Course.

We had a really good session. First
session, it was a lecture session.

Today, just because we haven't covered a
lot of new material last time, or at

least as much as I planned to cover,
we're just going to probably be still in

the lecture mode today, but starting
from the next session where we will

The homework on accumulation,
specifically Home Depot, that would be

study for us for homework.

Then I will start pulling out people and
we'll start conversing and we'll start

talking and we'll start analyzing. So
we'll get to this point. Don't worry

this, guys.

The main thing to remember is that once
you have the homework, what I really

would like you to do.

and this is going to be extremely
important to us, is to submit your

a specific way.

One file, either PowerPoint, PDF, or
Word doc, and

then put your first name with the last
name initial in the name of the

file. Email it to me, to my personal
email.

I've sent out instructions for the
homework.

And I've mentioned that my personal
email, simplecard at hotmail .com, is

one that you should use.

I will remind you again. I will email
you again. I will also email you tonight

the homepage for our class.

So this page usually will contain the
videos and the slides.

So I will email you the link to this
page because it's unlinked, so you

see this page on our website.

And then I will email you the password
to that page. It's password protected.

And I would like to ask everybody to be
confidential about the access

information. It's only for your use.

Okay.

Let's talk about what we're going to
cover today and what's coming.

So session number two, we're still on
the price structural analysis.

We're going to talk today about the
change of character. This is a very

concept, very elegant, and very
powerful.

So we will explore the reasons of why we
need to understand the change of

character.

what it leads to and what kind of
assumptions, deductions we could make

that on the analytical front.

And then once we will understand that
shift, that change of character provides

from one environment to another, we're
going to reside for a while in the

environment, in the non -trending
environment with the bias to the upside.

So both accumulation and reaccumulation
will be discussed.

There, we will be discussing Wyckoff
events, Wyckoff phases, and we'll talk

about the phase analysis a little bit
today.

On the reaccumulation, we will have a
conversation about conventional and

alternative labeling, so we'll revisit
that, and that will be extremely helpful

for your homework.

So, guys, please pay attention,
especially those of you who are going to

homework. And then, time permitting,
we're going to start covering...

structural analysis points that are
going to be related to both accumulation

distribution, but there are certain
things, certain events, certain phases,

certain shortcuts that I'm going to give
you, and we'll talk about different

characteristics for different Wyckoff
events.

So this conversation starts today.

For your homework, this is the one that
we haven't done.

for this class so this is going to be an
accumulation labeling and as i

mentioned it's going to be off the home
depot all right and then um in

the next class which is going to be a
january 21st we're still covering price

structural analysis we will review

So there will be a lot of questions
every cycle. There are so many questions

students send in their emails with their
homework.

This is fine. You can do this.

Just don't expect me to answer those
emails, you know,

via emails, because I just don't have so
much time to answer each email

that comes to me.

My promise to you is that I will look
through all of your homework.

That's number one.

Secondly, I will identify what is the
common theme for mistakes that we are,

a group, conducting.

And therefore, those are going to be the
primary questions that we're going to

answer in our homework review.

Also, with the homework review, this is
the chance for us to establish that

communication where I open up the
microphone and somebody steps in, a

and then we go through the chart first
and we go through the logic of labeling,

how we're labeling the chart, what's
going to be the first thing to label,

what's going to be the next thing to
label, and so on and so forth.

So please be prepared.

for this type of the conversation, for
the discussion of the homework in the

next class. Then we're going to continue
exploring all of the price structural

analysis points, distinctions, something
that

we're either going to cover more or...

We're going to cover, in general,
there's going to be some distributional

that I'm going to add to this as well.

And next session also will be devoted to
distribution.

So we'll talk about work of events
there, work of phases, the psychology of

distribution, and so on and so forth.
And the homework is going to be,

obviously, on distribution.

So you will have six, seven, eight
charts that you will have to label.

And then we will review this homework in
session number four. So that's the plan

for today and for the next session. As
you could see, it always changes. It

depends on how much time we have each
session, how much material we cover.

Sometimes we slow down because something
is very important and we need to

understand those concepts. Sometimes we
actually, you know, speed up.

So we'll see how it's going to go. It's
always kind of like a live and breathe

organism.

Okay, so the first concept that we'll
talk about today is going to be a change

of character.

And that concept is going to be
discussed for both accumulation and the

distribution.

So let's talk about the theoretical
portion and the

theoretical...

concept of the change of character.

And we're going to start with a very
simplistic explanation as to

what are we actually looking for in the
market as we look at the price

structure. And we definitely realize
that there are two types of environments

that we're expecting.

First environment is the non -trending
environment.

This is the environment of a
consolidation.

We also will call this environment a
trading range.

We also will intermittently call this a
non -trending environment.

So all of these semantics regarding the
trading range or consolidation

are valid for us. So when you're going
to say something like, okay, I'm looking

at the trading range, I'm looking at the
consolidation, I'm looking at the non

-trending environment, I know instantly
that we're discussing a trading range

which is confined between the levels of
support and the resistance and

predominantly which is going to have
some kind of horizontal

a range where the price deviates around
the mean horizontally.

We'll discuss later on some other
trading ranges, which are going to be

upsloping and downsloping. So we'll give
the definition and also I'll give you

the rules as to how to construct those.

But for now, we are either discussing a
non -trending environment or a trending

environment. A trending environment is
going to have two types for us, an

uptrend and a downtrend.

So that's how simple I want you to think
at this level. And these are kind of

like the basics.

These are very simplistic stuff, but at
the same time, I want everybody to be on

the same page.

So the biggest question that we have
about these two environments, obviously,

for the non -trending environment, you
know, we want to understand the bias.

We want to understand the timing of when
the price comes out.

that environment and such trend.

We also want to understand the character
with which the price will travel out of

this consolidation.

So those are the goals for us to explore
analytically in the non -trending

environment. And then in the trending
environment, obviously, we would be

assuming that we're already in the
position.

And if we're not, then we would be
looking for another trading range, which

going to be a reaccumulation range in
the uptrend. And this is where we would

looking for to establish the position.

And we want to understand the character.
So character is extremely important.

And then the last thing about the
trending environment is we want to

where the stop in action occurs,
reversal, and a switch.

into a non -trending environment.

So those are kind of like the priorities
for us with trending environments.

Having said this, when we are in the
main thing between these two

environments is that switch that I
already mentioned.

So we want to see, let's say, a non
-trending environment.

then we want to identify some kind of
switch which would lead us to a trending

environment.

We want to do this in reverse as well.
From a trending environment, we want to

identify the switch that will give us an
understanding

that we are going into now non -trending
environment.

So what is this switch?

How would it look?

How would we see it? Well, first of all,
the name for the switch is going to be

a change of character.

And the change of character, if you
think about the name, a change of

So it seems that one environment had a
specific...

character and then it changed.

So what has changed?

What would give us an indication that a
change of character has happened?

So obviously a change by itself, as the
word assumes, kind of like

a minion of something is going to be
happening in a different way than the

how it happened before.

So when we talk about, let's say, one
environment which in this case on the

schematic is a downward trend.

And we would be thinking what kind of
character of a trend it would be.

So obviously the legs to the downside
are gonna be much more pronounced than

let's say the legs to the upside where
we are gonna have a tenth.

to reverse and to actually cover the
ground that we lost in the

downtrend. And obviously those rallies
are going to be smaller.

They're going to be populated with some
pockets of increased supply. This is

where more selling is going to occur.

And then additional selling is going to
come.

So it will not allow the price to go up
significantly.

And that's going to be... you know the
main price characteristic the main

characteristic of the downtrend is going
to be all about the increase of the

supply on the reactions and then
diminishing volume signature or

demand signature going into a rallying
mode and then every time we're going to

have some kind of consolidation in the
downtrend we're going to structurally

jeopardize

the support area, and we're going to
break to the downside.

So that's going to be repeated behavior
until we actually exhibit a stop in

action, which is going to be labeled by
us as a selling climax.

So then this is what we're going to have
in the downtrend. And this behavior is

not going to change until a certain
point.

So what is that point?

That's the biggest question that we want
to address.

And that point is going to be...

a change of character, and think of this
in reverse.

I've just shown you how a downtrend
would behave.

Then think about that change of
character.

So if in the downtrend we had the price
going down more than up,

then obviously in the change of
character environment, we want to have

that's going to start outperforming.

That's number one.

And probably on this rally, we want to
see the increase of the demand. We want

to see the presence, you know, of
buying.

And usually that presence, because it's
so early in the trading rights, it's so

early in the accumulation process, it's
mostly going to be associated with the

contrarian buying by huge institutions.

We'll talk about this a little bit later
on.

Let's come back here to the change of
character. So the rally should change.

The behavior of the rally should change.

And we're going to say that the distance
of the rally should increase relative

to the distance of rallies that we've
experienced before on the way down.

The upspread should increase.

That's what's going to kind of propel
our view on how buying is unfolding.

That's what's going to increase the
distance. That's what's going to

also the velocity and the momentum
behind buying.

And we obviously want to see the change
in the volume behavior.

So we want to see the demand increase.
We want to see volume increase in

because it would...

signify to us that it's not only selling
by weekends that we're experiencing on

the way down into the climactic action,
but also there is some buying behind

this. And also on the automatic rally,
that first change of character, first

change of behavior, we want to see the
volume increase. We want to see the

demand increase as well.

So it's in this area.

after the stopping action that we are
going to see the best rally that

we have seen in the downtrend.

And right away, when we think about this
rally and we think about

that this is a possible change of
character, we're always thinking that

change of character will lead to the
change of the environment. So we were in

the downtrend environment.

So now we would change that to some kind
of consolidation.

So we know that the trading range is
going to unfold.

We still don't know the bias at this
point.

And this is a little bit more of the
advanced studies that we do in the

practicum. There are certain things,
certain ways of how you could identify

possibly the potential bias of the
consolidation in phase A.

I will give you some of the shortcuts as
to how to logically think about the

bias even in phase A and as we go
through phase B and specifically in

and D.

But at the beginning, usually we're
going to be questioning as to what kind

bias we have.

We also will not know a specific
specificity like a duration of the

range that's going to unfold.

Again, in the practicum, just because
it's more for the advanced studies, we

will create kind of like an
understanding as to how we would measure

potential duration in the consolidation.

So I think it's extremely important as
well.

And obviously, you know, it's important
to also understand the character.

with which the consolidation could
unfold.

Is this going to be a long -term range
or a short -term range? How is supply

demand going to behave?

What is the behavior of institutions and
weak hands around the edges of the

trading range of the support and the
resistance and form support?

So quite a few things to address.

But the main thing with this new rally,
with the better rally, is that the

change of character is possibly
unfolding.

That would mean that from a downtrending
environment, we are going to change

into a non -trending environment where
we have to define the bias, where we

to understand the duration and the
timing when the price is going to leave

trading range, and then the character of
the trading range itself.

The confirmation of this change of
character is going to come on the next

attempt to push the price lower.

will fail and it will create a test,
what we will call a secondary test.

I often call this a local test to the
local event, which is the climactic

action. We will discuss the selling
climax later on today.

But for now, just keep in mind that this
final test

of the change of character, this is an
attempt to continue a downtrend.

which will always fail.

And even if we have different secondary
tests, we could have a secondary test

that is going to be, like shown here on
the schematic, a higher low. We could

also have a test that is going to be a
lower low.

And we also could have the test which is
basically going to be at the same level

as the selling climate.

So in all three cases, this is a
successful test.

Even though the lower low is being
created, the lower low just basically

us that there is still some supply
available or demand is still relatively

and that's what brings the price below
the support.

But all three are going to be successful
tests.

Why? Well, because they recover.

After the test, they reverse and they
come back to the area of the resistance,

therefore finishing the downward swing
and reversing that swing.

So again, something, you know, for the
future for us to remember.

So let's come back again to the change
of character.

As we're experiencing our first change
of character in the consolidation, and

there are, by the way, two of those.

One is...

on the way into the trading range and
one is on the way out of the trading

change of character you could also say
the first one is in phase a so what is

happening here as well um well we said
that the price is going to look

the volume signature is going to look
different and then it's going to be

confirmed on the secondary test well why
is all of this happening let's quickly

kind of like you know talk about this

Well, the first assumption that we have
of

why the change of character is happening
is that the behavior of market

participants has changed.

So if we talk about strong hands, and we
obviously would be thinking about

hands like composite operator, huge
institutional trend followers.

big money contrarian type of traders.

What are they seeing here around the
climactic action? Well, what they see in

panic by weekends, which

basically leads to, on the very
technical, physical level, increase in

volume signature, and therefore

a very substantial increase in
liquidity.

And by liquidity, I mean the
availability of shares in big

We always think about the CEO as being
limited by certain rules, by certain

regulations even.

What are those?

Well, because of their big size, they
want to open big positions.

How do you open a big position in the
stock that might be maybe like illiquid,

right? So they would never go to this
type of the stock.

They need to be in the stock that is
liquid, number one, and they need to

at the spots in the price structure that
is liquid.

Imagine the big institution is trying to
establish a position on a sign of

strength or on the breakout or in the
uptrend.

What would that produce?

that would produce such a big jump in
price because of their size.

So they need to cover their steps and
open the position when they can,

when liquidity is available to them,
when shares are available to them and

readily available.

So a panic by weak hands where either
public

or professional hands that are on the
wrong side of the trade, institutions

are on the wrong side of the trade,
they're having a panic, meaning that

capitulating and they're getting rid of
their holdings quickly, without any

doubt that there could be a stop in
action soon, and they're willing to do

at any cost.

So that's what produces that increased
volume.

signature, acceleration of the price to
the downside, and that's what creates

the liquidity that is needed by
institutions.

The next thing that they really need at
this point is some kind of value

proposition.

They need this stock to be at the price
that has a long -term value

for them because still thinking about
the whole process of absorption of the

supply that is available in phase A,
they might be thinking that it's going

take some time for the price to
stabilize and then for the price to

actually going up.

So they have an understanding of the
time horizon that they will need.

And one of the biggest two requirements
to get into this position is

also going to be the value. Is it worth
it to me at this point of time with this

price to get into this position
substantially or at least start scaling

the position?

If the price is attractive, if the
stock, in their opinion, is undervalued,

they're going to come in and establish
this position at least incrementally.

And because of their size, what's
happening, is whatever increase of the

that was produced by the weak hands on
the capitulation is going to start

gradually being observed.

And we could observe some of the
situations where big institutions, CO

contrarian institutions are already in
the buying mode, they are accumulating,

and yet some other institutions and the
public, the weak hands, are still

selling. And that's the exchange of
shares that happens around the climactic

action and specifically selling climax.

Panic buying by weak hands produces a
lot of volume signature, a lot of

liquidity, takes the price down to the
zone of value.

And that creates those two conditions
where big institutions that are

are coming in and they're buying those
shares.

As they buy, the supply that is
presented by weak hands is being

strong hands.

And that stops the price first from
moving further down in a very

accelerated way. That's number one.

Secondly, it stops the price then from
moving further

down. And thirdly, once absorption has
happened at that local level,

then the price could actually go up and
create an automatic rally or a change of

character rally.

And that's the whole process around the
selling climax.

And that's the whole idea behind the
change of character.

So a change of character, again, is a
change of behavior.

And it's a change of behavior for both
weak hands and strong hands.

And visually, we could identify that
change of behavior, which would suggest

us a changing environment. And from a
trending environment, we're going to go

into the non -trending environment.

Okay, let's talk about the second change
of character.

That second change, as I mentioned, is
going to be on the way out. It doesn't

really matter whether it's an
accumulation or a distribution.

It's still going to be on the way out.

before the markup happens and the
markdown happens.

Actually, if we would be more precise,
we could say that this change of

character is going to be a part of the
emerging trend.

And by the way, I've talked about this
in the last class.

It's an extremely important concept for
us from the point of view of timing.

This is where the...

all of our trades are going to
originate.

And this is where I'm going to lead you
guys to both in the selection process

and also in trade management.

In our selection process, we just want
to find this moment.

We want to find the moment where
accumulation has been either concluded

the last stages of conclusion. And
therefore, we could say in the last

absorption of the supply, whatever
supply is available at that point of

And the price and the volume starts to
show a different behavior.

What is that behavior by the price and
volume?

Well, the first thing that we will
notice is that, again, on the price

want to see the difference between how
the rally, the most current rally has

been unfolding.

relative to the behavior that was
exhibited, or the same behavior that was

exhibited in the trading range before.

And here we would be comparing, again,
the distance that the rally

is increasing.

This spread, the up spread, that is
increasing as well and has a different

of look.

We also will be talking about some gap
activities there on the sign of

And then we also want to see from, let's
say, the price behavior,

the reactions on that sign of strength.

How are they going to behave? Are they
going to exhibit increase in supply? And

if they do, would that supply be
observed?

If it's going to be observed, then how
quickly it's going to be observed.

We also would like to see the volume
change as well. So rally and the volume.

So here in the volume signature, one of
the things that we're going to pay a lot

of attention is increase of the demand
or the consistency of demand.

And that would identify for us the
buying by institutions. That's number

Secondly, we want also to see what kind
of urgency of the demand is there.

That's another question, and that's
going to address the character of the

rally and of the next trend, actually.
And we'll study this more in the second

portion of the course on the supply and
demand, so we'll talk about this.

But coming back to the change of
character, the concept is going to be

as the concept.

of the change of character in phase A.

We want to see the rally that is going
to be better than what

preceded it.

So in the case of the phase A change of
character, where we had the downtrend,

we want to see the rally that was a
better rally in the downtrend.

And then we want the secondary test to
confirm that there is no further

continuation of the downtrend.

In the change of character in phases C
and D, we want, again, the same thing.

We want to look at the rally and we want
to say that this is the better rally of

them all in the non -training
environment that we are currently in.

And then as a confirmation, we want to
look at the backing up action.

And we're going to say that for the
first time, this is the reaction that is

different than...

what we've seen before in the trading
range.

On the schematic, it looks even
different.

It's more horizontal than vertical,
right, than the reaction that goes down

the support.

It still goes down to the support, but
it goes down to the support now that has

acted before as the resistance, and
that's also a big difference.

It's also a change of behavior, and that
concludes a change of character.

We also would like to see that the
supply signature is going to be

And there are quite a few variations on
the supply of how it occurs in phases D.

This is, again, something of a more
advanced study for the practical and for

second portion of the course.

But generally, we would like to see that
supply in the backing -up action or

last point of support is going to have
those contracting

or if supply comes, the absorption
happens much faster and much easier. So

talk about that.

All right, so these are the two changes
of character. Again, change of character

in phase A, that's going to be on the
way in to the trading range. Change of

character in phases C and D is going to
be on the way out. And it doesn't really

matter whether it's accumulation,
reaccumulation, distribution, or

redistribution.

It's going to unfold the same way.

It's going to have some variations. You
might have a variation where, let's say,

a buy -in climax happens, and then you
have, you know, very frustrating

increased, you know, diagonal formation
where the change of character might come

slightly later on.

And we usually talk about this in the
practicum, this is a little bit more

advanced, and then have a trading range.

So something like this, obviously, is
just a variation on the theme.

But once you identify a change of
character, then you know what's going to

happen next. Most likely, they're going
to happen as a trading range.

The same with the distribution.

We're looking for the...

climactic stopping action, and then
we're looking for the first reaction

going to be so different than any of the
reactions that we've seen before on the

way up, since the last meaningful
consolidation.

And then after that, as it suggests a
consolidation, then we will be thinking

about, okay, well, in this
consolidation, what is the bias?

and then what is the timing as to when
the price is going to leave the trading

range, and then what is the character,
and so on and so forth.

Change of character in the distribution
on the way out is going to have the same

characteristics as an accumulation is an
accumulation on the reverse.

We're going to have the reaction that is
going to be the best reaction in the

current environment, which is a non
-trading environment.

And then after that, it's going to be
confirmed by an attempt to rally that is

going to be the worst than what we've
seen in the distribution formation.

And therefore, we are confirming a
change of behavior and a change of

before they actually move to the
downside.

One last thought here on this slide.
Please note that you know, structurally,

always talk about Wyckoff layers, right?

So when we talk about, let's say,
specific volume signature should be this

such, you know, in a specific phase.

So I want you to think about the change
of character and think about Wyckoff

phases and Wyckoff events and where a
change of character usually would occur.

So on the way in, whether it's
accumulation or distribution, that's all

be in phase A.

And you're always going to be looking at
the automatic respond or automatic

rally in the accumulation and automatic
reaction in the distribution as those

first two counter to the trend events
that are going to lead you to the

conclusion that this is a change of
character and therefore we are going to

start a non -trending environment.

Secondly, in phase A, it's going to be
confirmed by a secondary test.

So that's on the way in. On the way out,
I want you to remember that the WICOS

events that we're going to discuss is
the lowest point of the trend in phase C

for accumulation, the highest point of
the trend in the distribution.

And then a sign of strength, a major
sign of strength, and a major sign of

weakness, which are going to be followed
by the small counter move to that.

So you're going to be predominantly in
phase C and D, and you're going to be

covering the major sign of strength and
the major sign of weakness as your first

change of character lag.

All right, any questions, any comments
on this?

And by the way, at any point of time,
guys, if you feel that you have

just type it in or just say, I have a
question and I will come back to you and

can unmute you.

But if there are no questions, I'm going
to assume that everything is fine here.

So let's go to the next slide.

And let's look at the examples.

of a change of character and how it
unfolds. And I'm going to show you here.

Oh, okay, great. We have some questions.
So let's just address some questions

first.

Okay, let's go to Eric.

Hey, Eric.

Eric AE.

Okay, so what's the question?

Okay, Eric, I'm trying to unmute you.

So you have to unmute yourself.

Okay, check.

Hello, Roman. Yes, hi. How are you
doing? Hi.

My big question is in the phase A, in
the change of character.

The secondary test, you say that can go
below of the

selling climax.

Okay, so I gave you three scenarios for
the secondary test. We're discussing

this spot right here. So still phase A,
the secondary test acts as a local

test of the climactic action.

It basically tells us the story of the
supply.

Is there still a lot of supply left or a

story of the demand? What kind of demand
we have there? And again, three types

of secondary tests that we could have,
right? So a test that goes and creates a

low low, a test that goes and creates a
high low, and then a test that is

basically on the same level.

So what's the question?

Well, the question is when the secondary
tests go below the selling climax.

So how to identify in the volume that
the price will go up?

Again, to the trading range, well, it's
like the

dove that I have. Okay, I got it. I
think I understand the question.

Okay, so the question is, how do we
know, let's say if it goes to the low,

do we know that this is a legitimate
secondary test?

So that's the question.

Thank you.

Sure, okay, I'm going to, okay, so
you're muted. Okay, great.

So the first thing, there are a couple
of things here that I want you to think,

and we are definitely kind of like
jumping a little bit ahead, but that's

I like the inquisition of the mind even
at this point, so that excites me.

There are two things that we should
consider here. The first one is if we

correctly identified a selling climax,
which is going to be a stop in action to

a downtrend.

And then we correctly identify the
characteristics of the automatic

rally, rather, in the accumulation.

Then our assumption that the secondary
task is going to come and it's going to

be confirmed are probably very high.

And even if it's going to create a lower
low, you know, that's totally fine. We

just don't want this lower low to be
significantly lower.

So we don't want the price to fall
another 50 % and then say this is a

test. No, that's not going to be the
case for us.

It has to be relatively close to the
support.

So the action by which we identify a
potential stop in action and automatic

rally should lead you to the conclusion
that even a lower low could be a

secondary test.

The second point here is all about

supply and demand and the price reversal
around the area of the support.

So we will be observing specific price
reversal patterns that are being

confirmed with the volume signature.

So for instance, the reversal of the
last significant bar, we will talk about

this more in April, March.

And then increasing demand signature.
That would suggest that demand is

coming in and it, not only observes the
supply, it actually pushes the price

back above the support level.

And that's when we're going to say that
now we see a confirmation of the

reversal, therefore we're going to have
a rally up, therefore secondary test is

confirmed.

So we'll talk about this process, but,
you know, a good question.

All right, let's see some other comments
here.

A question from Rami.

Automatic AR, is this an automatic
rally?

Excuse me.

Depending on the context.

Okay, so there are three ways of how I'm
going to address automatic.

a rally or automatic reaction, I'm going
to say in general terms,

automatic response.

So it's the same, you know, the same
letters, A, R,

but obviously we want to say automatic
rally for accumulation

and reaccumulation.

And we want to say automatic reaction
for distribution and

redistribution.

And then, obviously, in the
reaccumulation and redistribution, we're

change that, and I'll talk about that.

But for now, I just want you to remember
that AR, this rally right here,

It's basically an automatic response.
Automatic response to what?

It's an automatic response to the change
of behavior that we have around the

selling climax.

So in a way, it's an automatic response
to the selling climax itself,

what is happening at this point.

We also sometimes mean that automatic,
meaning that it's almost like a

rally, right? So what would constitute a
technical rally for us? A technical

rally is something that happens just
because there is a

close of positions in the direction of
the previous buyers. So we had a

downtrend, and a lot of professional
traders were short in this market.

Once they see that the conditions are
changing at the bottom of the selling

climax, what do they do?

They close their position.

So therefore, their short positions are
being converted into the market

position, which is a buy order.

And therefore, they are not betting
necessarily and gain the

profits from the market potentially
reversing and going up short term on the

automatic rally.

But what they're betting on is that this
is going to be the low and I need to

get out of this position because this
trade is done.

So in a way, their behavior is an
automatic way of pushing the price up.

sometimes I think about automatic
response is that, you know, automatic

of the short position by those who have
profited on the way down. So that's why

it becomes an automatic response.

Okay.

Should we wait for stop in action or
selling climax before we get out of the

existing position long and short?

From Nilesh. Okay. I'm sorry if I
mispronounce your name, and I'm glad

joined us for this session, so that's
great.

So we will address this a little bit
later on.

Then the next question from Joe. Is
there any big news usually associated

what, Joe, with the selling climax?

Was the secondary test?

We'll talk about this as well.

Okay. Okay, was the selling climax?

Okay, well, as long as we're here, let's
just address this, and then we will

come back to this slide.

Yes, selling climax is going to be
associated with a big event, and that

event usually is going to be the price
action itself.

So for those of you...

who watch, let's say, CNBC, right?

I usually don't watch it that much at
all.

Only watch it at the points of interest.

CNBC or any other TV shows could act as
a contrarian tool, could act as a

sentiment tool.

And usually when, let's say, a stock is
exhibiting some kind of panic,

where the price is going down so quickly
and there is a lot of selling by weak,

strong hands, how do you think it's
going to be portrayed on the TV?

So usually they're going to say Apple
has a gap down like it has recently had,

and overnight action is going to show us
the gap to the downside at the open.

The volume is very high.

And it's going to be in the news,
especially a stock like Apple. I mean,

obviously, a small stock, an interesting
stock, nobody would even care. But

something like Apple will have a spot on
the TV show as it consumes.

So that would be a big event for the
stock itself.

Having said this, what obviously Joe
meant is the event

is something like earnings.

or the reaction to earnings, a change in
management, some kind of big numbers

that are coming out on the revenue, on
the sales, and so on and so forth. So

those could all be big events and they
could produce a lot of volatility up and

down, a lot of liquidity, and so on and
so forth. So yes, selling Climax could

be potentially one of those spots.

And when we say big events, we usually
think big volume, big liquidity. And

selling climax is exactly that type of
event.

Big volume, big point of liquidity, a
lot of value.

So it could be both. Event as a price
event by itself and then some kind of

catalyst event that are going to produce
that price action.

Yeah, really good questions today. I
really like that.

Okay. from ml are there a limit to the
number of secondary tasks in the trading

range before the spring how do we
identify a spring versus a secondary

okay again so um inquisition by your
minds at this point

you know bringing us a little bit faster
to you know where we should be

So I welcome all of these questions, but
at this point, let's just kind of like

note them, and we will answer as we go
as we uncover this stuff.

Let's come back to the change of
character.

Let's look at some of the examples.

So this is Yahoo.

You guys don't see this, but this is
Yahoo, and this is what, 2012, 2013, 14.

And Yahoo actually was such a great
trade out of 2012.

There was a management change that came
aboard, I believe, in 2012.

There was quite a big trading range that
came out of the oversold condition.

And then we went into the accumulation

range. And out of that, We're looking at
the latest phase C right here. It's out

of that that we have the first leg to
the upside.

And this acts as a sign of strength in
the backing up action. So by itself, it

looks as a change of character relative
to the environment that we've been in

before.

Do you guys already see where is the
high probability point of entry for us?

It's not necessarily...

in the area of the emerging trend.

It's actually in the area where trend
has been confirmed.

So where do you think the trend has been
confirmed?

Write it down really quick.

Where do you think the trend has been
confirmed for Yahoo?

Give me the timestamp, like a month and
a year.

What is the highest probability spot for
us to participate? And let's move to

the upside.

Okay, backing up and last point of
support.

So somewhere here, December, January of
2013, backing up of

2013, February, mid -October, high
volume.

Okay, great, great. So I will come back
to October in a second, but everything

else sounds really good.

So what are we looking for?

as kind of like this final, final
confirmation. It's the confirmation that

should be giving us, you know, a high
level of confidence to follow up with

trade. It's probably going to be in a
spot here, after the major sign of

strength, which basically tells us that
the character now is to move the price

to the upside and have small reactions,
very, very small reactions.

And this major sign of strength confirms
the uptrend, and the backing up action

confirms the change of character.

So anything around this area where we
could identify a potential C in a

trading range, that's number one. Where
we see the breakout, that's number two.

Where we see a smaller backing up
action, that's number three. Where we

another breakout, that's number four.

And it also presents a short -term
weakness.

after this rally so therefore it acts as
the final confirmation

especially on the breakout right here of
what's to follow so

i want you to think about this for a
second why is this so important well

because usually students come and they
say well i want to invest here in phase

could you teach me to invest here and i
usually say yes i can but before

you knowing how to do this, can you
please start identifying this spot to

You know, where you have a very high
level of confidence that there's going

be a continuation.

Once you can deal with that, could you
identify to me in the middle of the sign

of strength rally a point of entry
there?

Or maybe a point of entry on the last
point of support in phase C or even

or D.

And only after that, go for phase C. So
it has to be sequential, the

way how you educate yourself.

Because the mind is always going to be
egoic.

The mind, our minds are always going to
be based on the fear and greed. And

here, we will be thinking about greed.

We would want to go in to establish a
position at the bottom.

But in a way, it's not even greed.

It's still fear -based.

Why? Well, because if we're thinking
about establishing the position

at the lows of phase C, we're basically
saying, I'm fearful that the price will

go low from here. I always want the
price to go higher.

So fear is an extremely strong emotion
for us humans.

And a lot of the survival mechanisms are
built around fear. And our trading,

unfortunately, builds around those
surviving mechanisms.

So fear is going to be very, very
dominant.

Now there was one comment here which I
really liked from Adam.

Adam said that the high probability
place to open the position is going to

in mid -October, somewhere here, which
is based, I believe, Adam said, high

volume signature.

So disregarding even the volume
signature, which we will discuss in the

month,

This is the correct place to think about
the point of entry.

This is not necessarily the highest
probability place, and that's the only

caveat that I would add to Adam's
remark, but it's still one of the points

entry that we will be discussing in this
course.

It comes after phase C.

It shows to us a short -term ability of
the rally to come to the previous local

resistance, and look how flat this...

trading range is, this reaction is. It
doesn't come to the level of the

It's all flat.

Obviously, again, we could talk about
the volume signature here, but maybe not

for now.

Not only that, on the relative strength
ratio line, which basically shows the

leadership of the stock relative to the
market, we've seen that the breakout

produced also a breakout in the
leadership.

which is a confirming sign as well.

And we will study that in the third
month when we'll talk about the relative

comparative performance.

So all of the points of entries are
going to be talked about, guys, so don't

worry about that.

All of the confirmations are going to be
talked about.

It's just a lot of material, and
obviously I can't give it to you right

We'll see how it's going to unfold.

So after the first rally into the major
sign of strength, we're seeing a

reaction. And hopefully, guys, you could
see this. I'm going to put the color

here, blue color.

This is the reaction that we've seen. So
for the first time in this rally, since

the lows in the potential phase C, we're
seeing the reaction that

is...

outperforming all of the reactions to
the downside.

We see how this reaction increases in
distance.

You don't see it here, but I'm quite
positive that with that increase in

distance, the downspread has increased
as well.

And we're seeing maybe a slight increase
of the supply here. It's actually not

that pronounced.

So it's more over the latest reaction.
Actually, supply level is kind of the

same as other reactions, which tells us
what?

Here is kind of like a preview on phase
A bias identification, phase A

bias. So what would we be thinking about
the bias in phase A? Well, because the

supply is at the same level or somewhat
low and doesn't produce an extreme...

move to the downside, we don't actually
go to even one half of the move that

we've done, we probably would be
thinking that the bias is still going to

reaccumulation at this point.

And that's the way how I'm going to
teach you guys.

Your first assumption about a
reconsolidation or a stepping stone

is always going to be the bias that
you've defined in the trading range

and the trend that we have had.

So therefore,

a bias to the upside and therefore a
reaccumulation.

And then we would be seeking
confirmations throughout the range. And

either we're going to confirm that this
is a reaccumulation or we're going to

reject this as an idea.

So all of these elements here just on
the price alone suggest that we're going

to go into a trading range. By the way,
now that I've talked about the bias, Let

me talk really quickly about the
duration.

This could be just a preview of what
they had for those of you who are going

kind of graduate to a more advanced
level.

Think about the increase of the supply.

Is it a lot of supply or not a lot of
supply that comes in on the exchange of

character?

Probably not, right?

So increases but not substantially.

So what could we say about the level of
the supply?

The level of supply,

is average.

So therefore, we are not expecting that
the duration of this trading range is

going to be big.

You know, it's not going to take a lot
of time to observe whatever supply is

coming. So duration is probably going to
be not that long.

And we see that on the next, you know,
attempt to go down, there is a test,

which looks like phase C, sign of
strength, backing up action.

And off we go to the next change of
character, which is somewhat hard to see

here. But if we would be thinking about
the rally into the sign of strength,

comparing it to the previous rally, we
would see that it's much better as a

rally in the straightened range, that
the reaction is more horizontal. So that

suggests a change of character.

And within the context of the previous

range, which we thought was a
reaccumulation range, and then the

uptrend. We are saying that the change
of character acts as a resumption

of uptrend.

Why is this significant?

Because this is where we're going to
originate our positions.

The resumption of the uptrend gives us a
timing.

It's a timing tool to consider that now
is the time to go in and open the

position with an assumption that there's
going to be a continuation of the swing

or continuation of the longer -term
trend.

Okay, well, imagine that we've opened
the position. And imagine that we opened

two positions.

One is a swing position and one is a
long -term.

long position, kind of like investment
position.

Or we're just trying to catch a much
larger swing.

Our entries are going to be here, here,
here, and here. Four points of

entry on the way up.

And then as we go through the uptrend,
we see the

break of that uptrend.

And then we look at the reaction. And
it's a little bit complex. It has ABC

formation or 1, 2, 3.

For those of you who are familiar with
Elliott's wave, you will recognize this

reaction. So look at this reaction and
compare this reaction to every

reaction that came before.

What do you see?

Well, I see that we definitely...

overshooting uh you know the distance
with which the price travels to the

downside so this becomes the largest
distance again downward spread is

increasing we could see maybe some
increase in the supply as well over the

previous reactions the latest reactions
but it's not as significant um and again

we probably are thinking here that this
is a reaccumulation. If distribution

would come, it probably would look
differently.

You know, supply would be more violent
and the price action would be more

violent to the downside.

We don't see that here.

But we are concerned with this slightly
lower low.

Now, what happens next is so amazing
because the next rally

suggests a sign of strength being
followed by the backing up action.

And if we would look at all of the
rallies in this trading range that

we could say that this is the largest
rally. So therefore, the price behaves

differently. And we want to acknowledge
that. And we want to say that this looks

like a change of character.

And then the backing up action confirms
that.

So here we're thinking if this is a
change of character, again, this is the

timing for us.

to find points of entry in this area as
our assumption

about the trend is such that the uptrend
will

be resumed again.

So if we are swing traders,

our tactics are going to be such that
most likely we're going to be exiting

somewhere here. This is our last point
where we're going to give up our

position. And this is going to act as
kind of like this local capitulation.

And as we're closing the position on
that particular bar, we will be a part

that capitulation.

We still will have a really great trade.

And this is the trade right here.

And for a swing trader, that could be a
great trade.

Later on in the course, I will show you,
or rather in the practical, I will show

you how to identify this action as a
potential point of exit.

This is all going to be associated with
the climactic run into the stopping

action of the buying climax.

And I'll outline to you the spots where
we're going to be exiting the position

or scaling out of the position.

But for the long -term investor, we
still would stay in this position.

If the initial bias in phase A, based on
the

supply signature, suggests that this is
still reaccumulation, then we want to

stay in this position. Actually, we want
to add to the position, and we will be

really heavily adding here and then
somewhere here on the breakout.

So these are the two spots of short

-term weakness in the context of a much
larger

trend, long -term uptrend, that we will
be looking for the

long -term investor to add to the
position and for the short -term swing

to establish the position for the next
swing.

Now, a couple of you, a couple of you,
you know, before the class were talking

about, you know, yourselves. And by the
way, guys, could you please email me,

like, one paragraph on who you are as a
trader,

what do you trade, and then what kind of
history with the Wyckoff Method you

have. And also, how did you hear
about... you know, our course. Just let

the source. I would really appreciate
this.

And, you know, send that with your
homework.

You know, don't send this as a separate
email, you know.

Or, you know, if you want to send it as
a separate email, that's fine as well.

A couple of you identified yourselves as
long -term investors. And the question

about the course was, well, is it going
to be helpful to me?

Well, hopefully, even from this picture,
you kind of could see that it should be

extremely helpful.

because we will be discussing,
obviously, original accumulations, but

the trend itself, how do you decide are
you still staying in this position as a

long -term investor or not?

Where potentially could you add to the
position?

Those are also very crucial places.

And then where do you actually exit?

So look at the next change of character
that comes.

It seems like all of the reactions here,
which is one and two,

of the same magnitude, and then suddenly
we have such a huge reaction to the

downside. This is by far the largest
reaction, not only on the last leg up,

actually since the lows in the potential
phase C here.

And not only, you know, when we look at
this reaction, we would be thinking,

okay, well, is the trend done?

Is the uptrend done?

And at this point of time, because it's
a much more substantial reaction than

what we've seen before, we probably
would conclude or make a couple of

deductions here.

Our first deduction is going to be that,
well, first of all, after the change of

character, we're definitely going to
experience a non -trending environment.

That's number one.

Secondly, because of the size of the
change of character, we're probably

to say that

trading range is going to increase the
duration than anything what we've seen

before. So therefore, the timing comes
in as an element of our analysis.

So this is not necessarily in the
methodology. This is something that I've

developed with the advanced students in
the practicum, you know, just addressing

exactly this question.

What about the duration of the trading
range?

So, and it's not necessarily common
knowledge. I know that, Bruce does

not use this.

I know that other, you know, work
effects do not actually use this, but

very hard, you know, evidence, you know,
that we see even on this slide

alone to make some kind of assumption or
judgment about the duration. The

smaller the change of character, the
smaller the duration of the rage.

the larger the change of character or
the larger the presence of the supply,

longer it takes time to absorb the
supply. So therefore, duration of the

is going to increase.

Okay, what other assumptions could we
make here?

Well, obviously, assumption on the buys
is going to be something of interest to

everyone here.

But at this point of time, we would just
have to say that it looks like the

selling has come, but it's not.

you know extremely heavy we're still
going to be under the assumption initial

assumption that this is a reaccumulation
and then we either going to confirm it

through the price action in phases b c
and

d or we're just gonna uh reverse our
bias and this bias

original bias which is to the upside is
gonna fail

And then with this failure, we're going
to say that most likely we're in a

distribution. So this has to be
confirmed as well as we go through the

trade image.

Okay.

Well, hopefully this is simple and

understandable in terms of the first
major

concept that we want to work with.

Change of character, again, is an
extremely important concept, and that's

I'm teaching this concept first.

I did not even talk about, you know, I
would say accumulation or distribution

in general.

Let's look quickly at another example
here.

Excuse me.

We are...

Again, talking about Yahoo, and this is
a daily chart.

2002, 2003 lows as a trading range.

And then look at how the first momentum
lag is identifying

urgent buying by institutions.

And those are predominantly trend
followers.

And then look at the backing up action
here.

It's not just flat. It's actually
sloping up. So there is a lot of

strength in this reaction by itself. And
it happens on the background where

supply is the lowest supply within the
whole range. So that was a really good

trade right there or a point of entry.

And by the way, for those of you who are
extremely picky about all of this

stuff, which I want you guys to be.

you know because i am the same way you
might be saying okay well where is this

uh sign of strength yeah if if you're
talking about the change of character

this is a change of character but where
is that sign of strength that should

overcome the point of the resistance
well you're looking at this in a

different way so look at the lower high
lower low so what

does this look like this looks more like
a triangle

So the backing up action actually comes
exactly to the point of that sloping

down resistance.

And therefore, you know, it's all in
line with the sign of strength and the

backing up action. This characteristic
we will study later, you know,

characteristics of apex and what kind of
sign of strength and the backing up

action there we could expect.

As the price goes up, look at the
texture.

of all of the moves up and the
reactionary textures.

So reactions are either flat or non
-significant.

And then the moves to the upside have
some kind of deterioration of the

momentum. So we have first a lot of
momentum of the low, then continuation

that momentum. We still see some bind
here.

in this area, so that's great, on the
way up, and this is how institutions,

trend -following institutions, are
getting into the position.

They're assessing, at this point of
time, the bias, the

value proposition that they have, the
liquidity that is available to them at

this point of time, and because they are
already late to establish a position at

the level of support,

What they are going to do here is
they're going to be buying on the way

And this buying on the way up is going
to look like this.

So obviously this is buying off the low,
and also we could say buying on the way

up by itself.

But after the first initial momentum buy
by institutions, this is what we're

going to see.

So there's going to be fewer
institutions, that's number one.

Secondly, you know, this buying is going
to be on the way up, so it's going to

push the price up.

And as we understand these concepts of
the initial momentum buying and then

continuation of this buying throughout
the trend, then we could see that

momentum on the next rallies is fading.

And we don't see as much barn behind,
you know, those waves. So we could

some kind of stopping action, barn
climax, and then a change of character.

So how would the change of character
look like? Well, obviously, it's going

look different from what we've seen
before, from the reactions that we've

before. Look at those.

Do you see how different the latest
reaction is? So right away...

We are noticing that. We are making a
note here. And at this point, we are

to say we're going to make a couple of
deductions. Change of character.

And here also, a small break of trend as
a confirmation of that.

It means that it's going to be a trading
range.

We don't necessarily see a lot of volume
signature that is different.

on the reaction.

So we're going to assume at this point
that the bias is still up.

And again, remember what I said.

Don't take only these words from me.

That the first thought is going to be,
oh, it's the same bias as the trend

before, just because supply is not
there.

We need either to confirm or reverse our
bias as

we go through the range.

And the reversal of the bias could
happen many times in a lot of stocks

because it's not always there's going to
be some kind of

continuation of the previous trend.

So at least here, what we could deduct
is that we've experienced a buying

climax, a change of character.

and therefore an automatic response or
automatic reaction in this case.

And we could form a trading range by
applying the parallel

lines to the buying climax, and this is
going to be our resistance, and support,

which is going to be defined by the law
of the automatic reaction.

Our next assumption is going to be a buy
-buy caution structure.

We're going to ask ourselves a question.

What comes next?

Well, obviously, if there was a
climactic stop in action, there's still

be some momentum to the upside that we
need to check.

Right? So we're expecting a secondary
test in phase A.

And as we've talked about secondary
tests to the selling climax, that

there are three types.

We also...

think that there could be the same
situation for a distribution where we

say that buying climax is going to
define the point of resistance, and then

could have a secondary test that's going
to have a higher high, or a secondary

test that is going to have a lower high.

or a secondary test that is going to be
kind of on the same level or close to

that of the buying climax.

So the same structural options on both
accumulation and the

distribution. And you kind of could see,
guys, already where I'm leading you

with this.

If you understand Wyckoff context, if
you understand what I call Wyckoff layer

on the analysis, on the structural
analysis of the conventional technical

analysis, you could anticipate things,
the way how they should unfold, the

character of those things to come, and
more importantly to understand, should I

be trading in this environment or not?

And if I'm trading, you should be
understanding how you should be trading.

So for instance, if I have been in this
position and I'm a swing trader, then my

decision making here is going to be very
simple. I'm just basically looking for

the points of exit. I could exit on the
way up into the climactic action.

I could exit on the change of character
bar. I could exit on the change of

character reaction.

I could exit on the way up into this
secondary test rally.

There are quite a few spots to exit that
we will be discussing as a part of this

course.

If I am a long -term investor, I'm still
in this position.

I still need to go through the whole
trading range to define the potential

and either to confirm that bias or to
reverse this bias and therefore start

scaling out.

If I am a short -term trader and I'm not
in this position and I'm looking at

this potential phase A as it unfolds and
I look at this change of character, I'm

saying there is no swing opportunity for
me here. This is just phase A. I still

have to go through phase B and then
phase C and to define that bias

going into phase C. So I will not be
participating.

as a swing trader in anything that's
unfolding right now.

Having said this, a much shorter swing
trader might be thinking, okay, well, I

see that we've experienced automatic
reaction.

I'm looking for the secondary test.

I see that supply is somewhat the same
than at other spots, other reactions,

and that the initial change of character
actually was not that pronounced.

as we're experiencing a secondary test
most likely this test is going to be

strong and therefore a higher high and
will create probably some kind of

opportunity so how do i trade that well
i want to establish position here

somewhere on the intraday basis and then
trade through the resistance and once i

see first intraday signs of distribution
i will be out But again, this is

somebody who is going to trade on the
intraday level, on the very, very short

-term swing trading level.

So in here, I went through all of the
possible, you know,

traders and their requirements as to how
they would be thinking about the

Wyckoff structure at this spot.

Well, let's see what happens next.

So we said that, you know, supply was
not that impressive, and then the change

of character was not that impressive
either, you know, relative to this whole

move. So most likely the secondary test
rally is going to produce some kind of

up -to -rush situation with the higher
high. So that was great. We were correct

on that.

But we know by the Wyckoff context, by
the Wyckoff layer and structure, that...

Phase A is going to conclude with this
secondary test, and we're going to go

into a very volatile and predictable
phase B.

As we go through this phase, and here is
my

honesty and authenticity and my
commitment to all of you guys,

and more importantly, even to myself.
And for those of you who know me for a

while, and I see that some of you guys
here are alumni.

First of all, great to see you here.

Great to have you in the class.

Don't forget to give me some feedback as
you've listened to me and to this

course maybe a year ago, maybe two,
maybe three years ago, maybe even more

that.

Let me know how the course has improved
and how else we could improve the

course. I'll be very curious to hear.

My commitment to you guys is of the
highest honesty.

I'm going to tell you exactly how I'm
conducting my trades. I will not hide my

losses. I will not hide my mistakes.
This is not my intent to do so.

So when I say something, usually take it
for what it is. Usually this is how I

think and this is the most honest answer
that you could get from me. So looking

into phase B environment.

And looking at the higher lows, I still
as a long -term

investor would be thinking that the bias
here is to the upside.

There is really nothing distributional
about this pattern in Phase B.

Nothing. You don't have a lot of supply
coming in. It's somewhat mediocre,

average.

And it doesn't produce, you know,
anything larger than the change of

which is by itself is not such a big
retracement from the lows to

the highs of the buying climax, from the
lows of fade C into the buying climax

high. So I'm still going to be thinking
that this is a potential reaccumulation

at this point. The only question here is
just... the timing are we in phase b or

in phase c if this is if we're thinking
in phase c then we should wait if we uh

i'm sorry if we're in phase b we then we
should wait if we're thinking that we

are in phase c then you're going to
originate a trade somewhere here

and your point of exit is going to be
this bar right here

so basically you're going to have a
break -even trade again this is

that i don't mind for my own trading and
for the trading of my students what

this trade does it creates two levels of
understanding um

the failure of this trait creates two
levels of understanding the first one is

going to be that the analysis is
actually incorrect and it doesn't matter

whether the analysis is incorrect
because it didn't really show us what

going to be in the trading range itself
sometimes the bias is so evident even in

phase a you can't really think anything
else but then in some instances like

this one you're going to see a lot of
elements of outperformance like yahoo

exhibiting in 2005 in phase b and phase
c and you might not distinguish this as

a potential distribution

In the first class, in the first
lecture, I have shown you an actual

Novodea that I did just recently where
Novodea as a leadership stock was

exhibiting elements of reaccumulation in
what turned out to be a distribution.

The same here with this stock, the same
with Yahoo.

Why is this happening?

Well, because there is a lot of
leadership characteristics on the way

And they are not going away really fast
in the trading range that turns out to

be a distribution.

So therefore, a trade like this, the one
that I'm showing you here, is actually

an okay trade. If you're not okay with
this trade, then you're greedy.

And something you've got to check with
your ego.

Because we're never 100 % right in this
craft.

Trading is not about being right all the
times.

Trading is about making money.

There are no other goals. There are no
other intentions but to make money. If

you're spending time on this, you should
be making money. If you're not making

money, then you should make some kind of
adjustment.

Get more knowledge, get more skill, and
develop that skill.

All right.

As we go along this range, so what else
do we see?

We see an upthrust and then a failure.
So it's right here on this

failure of the upthrust. This is where
we're going to start thinking, like,

is going on?

Look how supply is starting to show the
picture of the distribution where supply

is starting to increase.

There is a lot of selling off the top.

So usually that type of selling is
always going to be institutional.

So we might be thinking here that with
the increase of the supply and the way

how the price quickly reacts back into
the trading range, we might be in some

kind of either short -term distribution
or in the much bigger distribution.

So a short -term distribution would take
us to the support level and maybe even

below that level.

that could be a trade by itself.

You can establish a position somewhere
here on the failed signal and then

continue with this position until you
see some kind of low or low. So exit

or somewhere here would be okay.

And then you could wait.

You don't necessarily have to continue
with the short trade here.

You could wait and you could see how the
last point of supply

It's going to unfold.

Or is it going to be possibly a spring?

Because in some of the cases, we could
have volatility going into phase C of

reaccumulation and then move to the
upside.

So that's why we would want to wait and
to see if there's going to be some kind

of further failure and further behavior
that is going to be associated with the

distribution.

We talked about the changes of
character, and that's the main topic

Look at this reaction to the downside.

Compare that to the reaction that we've
seen throughout this whole trading

range. Is it expanding?

Yes. Is the down spread expanding as
well relative to what

we've seen in the current environment?

And we see that those are the big
spreads.

The only spreads like this we've seen.

on the change of character itself.

So that tells us that we definitely see
some bearish characteristics here.

Would the volume signature increase?

Yes. Would the supply signature increase
with that? Yes, absolutely.

So we see in here a synchronicity, and
this is just again, you know, a WTC

synchronicity between the downward
effort, which is expanded.

and the downward result which is
expanding as well therefore the bias at

short term at this point is going to be
bearish so please note again

let's be honest about where we define
the bias

let's be honest about even questioning
where we're defining the bias if

you're gonna say that Why not define the
bias before, let's say, the beginning

of 2006?

I'm going to honestly answer you that I
did, and my bias back then

was still to the upside in this area
until it actually showed a failure.

And this is where my bias has changed.

And there is nothing wrong about
changing your bias as long as you

why. and as long as you could use it and
make money.

So just something like, you know, as we
go through the material, guys, I'm

giving you my belief systems about
trading and about money as well, and you

should make those notes somewhere.

And just in general, a piece of advice,
for those of you who are seriously

studying this course,

For those of you who are going to be
spending hours on homework, I'm going to

push you a little bit more.

And I'm going to say that your main
homework should be not just labeling the

charts that I'm going to give you, but
it also should be making notes,

listening to the recording again and
making notes and sending those notes to

What that does is, as you can see, I go
through the material somewhat fast, and

I'm giving you a lot of material.

Yes, this material is being repeated
over and over, but still, I'm giving you

lot of material.

Our minds are just not capable of
absorbing all of the material at the

time. That's what I've seen from
students from cycle to cycle to cycle.

just you. It's very common.

I cannot observe all of this material,
even of this session, you know, like if

it would be a new material to me.

So therefore, watch the recording again,
make notes, send those notes to me.

So let's come back.

So we clearly see some bearish activity
on the possible change of character.

We're assuming that this is a sign of
weakness and that the next rally, which

not going to be extremely strong, is
going to be a last point of supply

We're looking for the points of,
confirmation of this information and

bar actually gives us exactly that.

By itself, this rally as a last point of
supply rally is better

than any of the rallies that we have
seen on the change of character.

So therefore, we might be even thinking
that there could be another trading

range here before we continue to the
downside with the bias, with the overall

bias that started with the up thrust
here.

So therefore, we could be either
entering a position right here. This

our point of entry.

But the very vibrant rally suggests that
demand is there, and this demand

is probably of weak hands.

But increase of the demand as increase
of the supply will always have to have

some kind of test or retest.

So we are thinking that maybe there's
going to be some kind of test.

Again, at this level. And there's going
to be another point of entry for us

here.

Okay, well, let's see what has happened.

Oh, and I don't have this.

How come?

Okay, apologies.

So if I remember this correctly, you
know, you guys could check out on Yahoo.

think it's been discontinued, but still.

I believe we had some kind of trading
range here, and then we went to the

downside, so that was the history.

Okay. All right. So important concept on
the change of character.

If you did not fully understand it,
please...

rewind the recording, listen to the
recording again, stop the thoughts that

don't understand, rewind it, listen to
it again. If you don't understand still

and have a question, email me and we'll
just go from there.

Okay. All right.

Let's talk about accumulation. So that's
the next question for us, right?

Because as we think about a change of
character, which is

basically from, let's say, an
accumulation, a downtrend changing into

-trending environment, into the trading
range.

As we enter the trading range, In phase
A,

the biggest question from students, and
it's just funny how it is, I would

actually never be thinking about this
question because there are so many

that are going to still unfold as
consolidation unfolds by itself.

But that question is always about the
bias.

So students always want to know what is
the bias.

Again, as I mentioned before, the
advanced studies, which we're going to

the practicum course. I'm going to
address this question to a certain

not necessarily to the fullest degree,
but to a certain degree.

But for now, what I want you to do is
just to think of a change of character

a change of the environment. And then
once we're in the trading range, that's

when we want to observe how it unfolds
and we want to solve this problem of the

bias.

The timing, when the price is getting
out, so therefore identifying phase

C and D correctly.

And then the character.

And usually the character is going to be
all about the leadership and the way

how the price is going to travel, you
know, what kind of structure it's going

give us.

So how would we do this?

How would we define accumulation?

Well, there are a couple of things that
are going to help us out. The first

helpful thing that Wyckoff method, and
this is the value of the Wyckoff

methodology, by the way. I was talking
to Bruce the other day, and I was

him that if you think about the Wyckoff
method, you know, all of the elements,

the most important concepts are all on
the level of

price structural analysis.

Everything else is just more in -depth
on the technical analysis concepts, and

recognize it could be more in -depth.
Let's say when we talk about the volume,

you know, I meet very rarely people who
don't know about Wyckoff, and

they talk about the volume on a very
high level.

But majority of volume guys are going to
be all about,

you know, some kind of Wyckoff
background.

But predominantly, it's all about the
structure and how it unfolds.

So we'll talk about the phase analysis.

And phase analysis is extremely
important because phase analysis

gives us the timing.

it gives us to a certain degree the bias
as well.

But more importantly, it guides us
through the process of how trading range

unfolds.

And we know that a specific phase is
going to have specific Wyckoff elements,

specific Wyckoff events, and those
Wyckoff events are going to unfold in a

specific way, and that could give us a
hint for the bias as well.

So what do I mean by that? What do I
mean by this phase analysis and how

everything happens kind of in the same
way?

Well, let's talk about phases and let's
start with phase A. And we spent some

time already on phase A. We said that in
phase A, we have the conclusion

of the previous trending environment, in
this case, a downtrend.

And it's going to conclude with four
points.

The first one is going to be...

Always failed attempt to stop the price
from moving further down, and it's going

to be our preliminary support.

So here is on this slide something that
I want you not only to read, but I want

you to remember.

I want you to memorize this, the
majority of it at least.

I want you to memorize this sequence.

of events that are going to come in the
trading range. This is one of the

mistakes that students make a lot.

So I want you to understand that first
is going to be preliminary support.

That's going to be followed by the
selling climax.

That's going to be followed by the
automatic rally.

Then secondary tests and so on and so
forth from one phase to another.

I want you to remember this sequence of
events, how trading range unfolds.

Come into phase A.

coming back to phase A.

Preliminary support is the first attempt
to stop the price from moving further

down. And usually, this is still going
to be an institutional activity and some

institutional buying.

Institutions at this point of time
already seeing some kind of value and

them just a little bit more.

premature entering the position, which
is totally fine with them because their

time horizon is so long and big that
even if they bought here

and they sold somewhere here, this is
still a profitable trade for them.

Also, please think that they could be
scaling in into this and they could buy

more at the selling climax and kind of
average down.

and then turn out to be averaging about
one half of the trading range or even

below that.

So quite a few different ways of

how institutions could start to
accumulate, and preliminary support is

be one of those initial first points
where institutions could establish a

position.

this preliminary support definitely
going to fail. Preliminary support,

preliminary supply points will always
fail. You will always see either a lower

low for the selling climax or a higher
high for the buying climax.

If you are labeling it as a preliminary
support, which is the lowest point

on the chart like this, this is wrong.
So this is incorrect right away.

So a selling climax is going to come, as
I mentioned, as that panic from weak

hands. And again, weak hands at this
point, and this is more of the general

capitulation.

So at this point, weak hands are not
just public.

And this is what's been taught to us,
that weak hands are going to be public.

No, that's not correct.

Get this out of your head, especially
those of you who've been studying the

methodology for years and years.

Weak hands are not necessarily just
public.

Weak hands are always going to be public
plus institutions.

Otherwise, we would not have such a huge
volume signature on the selling climax.

Public cannot produce over -extended
volume spikes like that.

So on this general capitulation, the
volume signature is going to increase

dramatically.

Supply is going to increase
dramatically.

Demand is going to increase as well. And
that increase of the demand, that's

what's going to start absorbing the
supply.

This is initial absorption.

And who is absorbing?

CO, composite operator, composite man.

And then as this absorption happens,
initial stopping action happens. And

stopping could be having such different
variations.

Momentum could slow down, but price
could still go down at the same time.

You could have situations where, let's
say there is a deterioration of the

supply, price still goes down.

You could have a stopping action by
itself where you have a spread that is

decreasing by the spread daily spread

and it decreases significantly at the
same time the

volume signature is spiking up so what
does it mean that means that there is a

force that pushes the price down there
is a force that pushes the price up so

supply and demand increases at the same
time volume signature increases

dramatically but yet there is no
progress the result is kind of the same

that is a stopping action and then um
you know another one on the increase of

the demand you could start seeing the
price actually not just stopping but

moving up so that's the whole process
behind the selling climax again

the most interesting part about this is
the exchange of shares between weekends

and strong hands at this point of time.

Both groups have different intentions.

One group wants to get rid of the
position because the emotional pain is

much. Another group is trying to
establish a meaningful position because

is a point of liquidity and value to
them.

All right.

After the selling climax, As the supply
is being observed, that produces

automatic response, which has not just
the buying by institutions on the way

but short covering by professionals that
pushes the price up.

And that establishes a change of
character and establishes the high for

automatic rally, the low selling climax,
and therefore establishes the

boundaries for the trading range itself.

establishes the resistance and the
support line.

This is a very valuable piece of
information.

Actually, I've given you today so many
great tools on how to think

about the change of environment and how
to establish the trading range and how

your decision -making at those spots are
going to be tested by all of these

events. So I want you to understand all
of this. I want you to memorize all of

this. Because as we go along, and we're
going to go into much deeper stuff,

especially with supply and demand, I
want you to think about the definitions.

want you to know them.

So very valuable information with the
resistance and the support lines.

Why? Well, because for the majority of
the duration of the trading range, this

is where the price is going to reside.

It's going to have some points where
it's going to go into the oversold

condition or overbought condition, and
it's going to create low lows, higher

highs, but that's not that important.

The majority of the deviation of the
price is going to be still around the

that was created by that phase A.

You might have some slope to the upside
to the downside, but predominantly it's

going to be horizontal.

So therefore, think about the trading
strategies that you're going to have

If you're an option trader, your
strategy is going to be collecting of

and very short duration kind of weekly
options type of

directional trades.

If you're a long -term investor, your
goal is here to identify the bias of the

whole formation and timing.

identifying phase C and phase D as your
potential points of entry on the

emergence of the trend.

If you're a swing trader, then most
likely this is not even going to be the

candidate for you even to be in. But if
you're a very, very short -term trader

or just oriented for this specific
stock, then you could have some

trades, and those should be originated
at the points of resistance and support,

so around the edges of the range.

All right.

So as we conclude our phase A with
secondary tests, which is, again, a

test of the climactic action, it
basically asks a question, do we still

lot of supply left from the downtrend
and the last lag in the downtrend, the

capitulation into the selling climax?

And if we don't, if we don't see that
continuation and we see the reversal,

it confirms.

a change of character by itself. It
confirms the idea that we are in the

range. And we also will start thinking
about phase B and how that phase should

unfold.

We will be talking about the intentions
of the phases in the trading range. And

that is also something that I want you
to remember by heart.

The intention behind phase A is all
about stopping the previous trend.

In the accumulation, you will be
stopping the downtrend.

In the distribution, you will be
stopping an uptrend.

And therefore, the intention is just to
stop the previous trend.

In phase B, we're doing two things.
We're building a cause, and

building of a cause happens because
there are so many...

fluctuations in phase B that we could
observe.

And those fluctuations are just a kind
of reflection

of buying and selling by different
groups.

And through this buying and selling,
what is happening in phase B in the

accumulation, it's the further process
of

absorption of the supply.

that is going on that is happening here.

And it's not going to be extremely
visible.

And again, this is something that I'm
going to be extremely, extremely honest

with all of you guys.

This is not a linear craft.

This is not a linear analysis. This is
something that...

It only could become linear if you
understand all of the variables. And

unfortunately, we can't even comprehend
the number of variables that influence

the movement of the price of a single
stock.

But what we could comprehend is the way
of how patterns should unfold.

And we're obviously saying the pattern
will unfold with different variations.

And those different variations is going
to create different structures, and we

have to make sure that we understand the
process with which the trading range is

going to unfold.

So in phase B, there's going to be still
in accumulation that process of

absorption that is not going to be
extremely visible to us. In some

it's going to be extremely visible.

We might have some elements of strength,
let's say, as a sign of strength, and

we're going to say this is a minor sign
of strength, and it acts as an...

upthrust action in the possible
accumulation.

And then we're going to see a very
laborious move to the downside in phase

maybe into the higher low as a last
point of support rather than a sprint

the lower low or a shakeout. So those
are going to be extremely visible to us.

But in some instances, they will not be.

And what we will have to do is we will
have to make the best judgment in phase

and then look into phase C and D as a
confirmation for that bias.

And this is as honest as I could be with
you.

And one more thing that I'm going to say
here.

You will make the mistakes making that
judgment call.

And that's okay.

You make the mistake.

You post -analyze this. You understand
was this analytical mistake or

mistake or was it a trader mistake, my
mistake.

And then you address that. You make an
adjustment.

If there's something new on the analysis
part, you take that chart, put this in

your library.

You bring this chart to me. We discuss
this in, you know, either in session

number 15 or in the practical more
somewhere else.

And we will understand it better.

But, you know, those things will happen.

So phase B also, as I said, you know,
building cause through this buying and

selling wave.

And then it's all about the supply and
demand.

You know, is there absorption happening?

Or maybe supply is very dormant, but the
quality of the demand is not there.

So what does that suggest?

Probably suggest a continuation rather
than a reversal.

So again, something that we will be
discussing and practicing.

and developing the skill to recognize.

Then we go on to phase C.

And phase C is the most important phase
in the whole trading range for me. Why?

Well, because it's the last test at the
level of the support

for accumulation and reaccumulation.

And what is it testing?

Well, obviously, it's testing the
availability of the supply.

assessing the availability of the demand
and the quality of the demand at the

support level.

And if we would be just thinking about
the testing of the previous price

then the test is definitely oriented
toward testing the support in Phase B

and toward testing of the support in
Phase A.

We want to see if the price...

not only can commit to the downside, and
I'm not talking about the temporary

commitment where we have one or two
closes below the support level and then

instant resumption of the upswing.

No, I'm talking about a more meaningful
commitment to the downside.

Ironically, the current market shows a
lot of those spots where there is a

significant commitment to the downside,
and yet even that could act as a

shakeout.

And we're kind of seeing how the market
is reacting.

In the mornings, the behavior is always
sell, and then into the close, even

today, into the close, we're seeing some
kind of move up. So whatever supply

comes in on the discounted news from
overnight or from over the weekend,

it's still some buying that is present
there.

We are at the very kind of like
interesting spot where we could have a

But we also, if, you know, the price
action is going to be, you know, more

bullish, we could continue with that
move to the upside.

Or we could have a very shallow
reaction.

So we'll just have to see.

But phase C is that last test at the
level of the support. This is the test

of the supply and the test of the demand
at the same time.

And this is a test number three. I will
come back to this idea.

And this is a pure Romanism. That's how
students call this.

Because in the original course or TGU
course or, you know, whoever you, you

know, took this course before, there
probably, there is no mention of this.

But I wanted to create some kind of
shortcuts for you guys.

in order for us to just understand the
concepts. And I will develop the idea of

why test number three later on. But for
now, I want you to remember that the

first test is going to be a local test
of the climactic action to the selling

climax. That's test number one. That's
in phase A.

The test number two is going to be the
test of the support area in phase B.

And then test number three at the
support level is going to be the test.

of the last point of support, the test
of the spring, the test of the shakeout,

and it's still going to provide us the
clue that even if supply is available

here at the spot, demand is capable of
reversing the price back into the

range and then pushing the price back to
the resistance point.

Our fourth test is going to be a backing
up action.

And this test is going to be at the
level of support, but at the different

of support.

This level of support is going to be all
about a conversion, a switch from

resistance to the support.

And that test number four is going to
confirm a change of character.

Okay, well, if phase C is the last test,
and it's extremely important to observe

this test of the supply and demand at
the support level and to seek the

confirmation that the price comes back
into the trading range and has

characteristics of being able to move
the price up on the bullish volume

character, the bullish price character,
and so on and so forth, then phase D

already becomes a part.

of the markup phase or an uptrend.

And usually when we look at the historic
chart and you need to quickly identify

phase C, what do you do?

You look for the lowest point

in an uptrend

and usually that's going to be your
phase C.

That's going to be a shortcut as well.

And especially for the homework that I'm
going to give you guys.

So phase D is a part of the uptrend
already.

And in the uptrend, the behavior is
going to be different.

And we're going to experience that
change of character again. As I

before,

the rally is going to be the best rally
out of all of the rallies in the range.

And then the reaction is going to be the
best reaction in the range.

And in a lot of cases, it's going to be
more horizontal than the reactions in

the trading range itself.

And then after that, as we confirm the
uptrend with the breakout out of this

area of the sign of strength and the
backing up action, that's when we enter

phase E.

And this is where it seems, or at least
that's what we were taught, you know,

things are going to be easier.

Not necessarily the case.

The character with which the price moves
could become very dull and interesting,

and you could regret this trade. That's
number one.

Secondly, even in the uptrends, we're
going to encounter a lot of

consolidations, and we still have to go
through the same process of identifying

the buys and like of events, phases, and
so on and so forth.

Some last thoughts on this slide.

first of all, I want you to read all of
this. This is your homework.

So read all of this.

Then try to find all of these points on
the schematic.

And then also, as you read through this,
I want you to identify certain

characteristics that are going to be
useful in identification of all of

these Wyckoff events. What do I mean by
that?

Well, for instance, an event like
selling climax is going to be associated

increasing momentum to the downside,

increasing downward spread, increasing

volume signature, increasing supply
signature.

Automatic rally might have the increase
of the demand and increase of the up

spread behind it.

Secondary test is going to see the
diminution downward spread and

volume signature and specifically
diminution supply signature.

Sprint, as well as the shakeout, will
have a structural lower low.

And then we'll study the sprints.

Sprints are going to have different
levels of...

supply and price penetration below the
support, and specific failures,

like spring number one.

And then a shakeout is going to have
characteristics where the volume

is going to increase a lot. And there's
going to be a lot of commitment by the

price below the support.

And it's going to look a lot like...

a sign of weakness. So the biggest
question here is going to be to decipher

whether we are in the bullish or bearish
bias.

Sign of strength is going to have
characteristics where the upspread is

increasing, where the volume signature
in general is increasing, and therefore

demand is increasing as well.

In a lot of cases, when I'm going to ask
you, What is the definition of the sign

of strength?

You're going to give me the incorrect
definition, and instead you're going to

talk about the character of the sign of
strength bar.

A sign of strength rally is a different
beast than a sign of strength

bar on that rally, and usually...
students are giving me the character

of the sign of strength bar, not even
the definition of the sign of strength

bar. So I want to point this to your
attention.

And then the backing up action is going
to have characteristics where the

downspread is decreasing, where the
supply signature is decreasing, volume

signature is decreasing, and so on and
so forth.

So if you could see...

Each Wyckoff event has some specific
characteristics,

whether those are price characteristics,
volume characteristics, or contextual

characteristics as to where those events
are going to happen at the level of

support, at the level of resistance, in
phases A, B, C, or D.

And what it does to us, once you
understand all of this, once you get all

this, is that it acts as a roadmap for
us, not just for the

timing when the price is leaving the
trading range, but for the buyers as

You might be thinking, oh, okay, well,
shakeout looks like a sign of weakness,

so it's a bearish buy, but then the
price quickly comes back into the

range, shows some bullish
characteristics.

Would you change your bias then?

You could.

And that's why Wyckoff methodology is so
great, just because it gives you that

contextual layer that you could apply to
your analysis.

And that layer is not only for the price
structure itself.

That layer could be used for supply and
demand characteristics, and that's why

supply and demand is so huge in Wyckoff
analysis.

It could be used for the relative
comparative purposes and comparisons.

And more importantly, it will be used by
us.

with tactics.

You know, tactically, we want to
understand that the best phases for us

and D, so identification of those phases
are going to be crucial.

That's number one.

Secondly, we could bring, you know, into
with tactics a lot of the

structural events type of
interpretations where we could

open the position on the sprint itself,
on the test of the sprint, on the

breakout.

of the local sprint on the sign of
strength bar, on the reversal of the

up action, and on the breakout.

I just went really quickly through all
of the points of entry that we will be

discussing, and we will be discussing
those in more detail as to where

you know, is it at the open of the bar,
at the end of the bar, at the close of

the bar, how would we use intraday, and
so on and so forth. So that's all we

had.

So I want you to understand all of this.
So you need to read all of this. You

need to memorize this. You need to
understand the characteristics behind

event.

Okay.

And, you know, I've talked about the
different type of

variations on how, let's say, an
accumulation absorption could happen.

Let's imagine that there is a lot of
value in the climactic action

for the stock that has just very, very
big moves to the

downside, and selling Climax becomes the
lowest low in this cold range.

How is it possible?

Why would this structure be created
instead of a more horizontal, more

conventional structure that we see here
on schematic number one?

Well, we can think about this, right? So
there is a lot of value, and not only a

lot of value. This is an extreme value
for institutions.

They're just saying, wow, the value of
the stock is somewhere here, and now

just so undervalued.

So I'm definitely going to buy this
because it's almost like a free trade to

at this point of time. Even if it gets
all this and at some point it will come

to the value zone, then I'm going to
make money.

So what they're doing here at this spot
is they're buying a lot.

And because they're buying a lot and
they're willing to buy even more because

still at this point of at the higher
low, there is still extreme value for

And then at another higher low, there is
still some value for them. So they're

coming in and buying on each reaction
and supporting the price.

And that does not allow the price to go
back to the support level and even

create a lower low.

So there is some urgency in the way how
institutions accumulate in this

particular pattern.

And that's what creates this pattern,
the upsloping structure. And that shows

potential leadership in the future.

It's different than the conventional
accumulation range where we would see

stopping of the downtrend with the
buying from institutions, and then it's

of flat.

And the spring could be a low, a low.
The shakeout could be a low, a low. But

could also have a higher low here as a
last point of support.

So why is it different? Again, different
urgency to accumulate.

In the conventional schematic, the
urgency more as the price leaves the

range. This is where the value becomes
scarce.

Institutions that are late, they are the
ones that are going to push the price

up.

In the extra strength trading range,
it's slightly different. Extreme value

the point of the climactic action, and
then every time it gives the reaction,

there's still some value.

They are pushing the price up, and
that's what creates the structure.

In the continuous weakness, where we
have the lowest point as a sprint or a

shakeout, and it's different than the
conventional one, even though it's a

low as well, we kind of see that there
is some kind of downslope in structure

here.

So lower lows throughout, and those are
significant lower lows. What does it

tell us?

Even though initial accumulation has
happened here on the selling climax,

is still supply present that pushes the
price down.

And then at the lower points now, we see
the value.

And this is where institutions are
accumulating.

And that's how this structure is being
created.

The traditional thoughts are rounding up
formation.

Here, the same thought.

Even though selling climax is at the
high level, still there is some elements

the supply that push the price lower,
lower. We're testing it. And then until

the last test is showing some kind of
deterioration, we will be testing it and

still we'll be looking at this as a
downtrend.

It's when the change of character
happens and then we start seeing the

behavior, higher highs, higher lows, and
the volume signature is going to

exhibit this type of the behavior.

that's when we're starting to think
about this pattern as well.

So again, I don't want you guys to be
linear in your thinking about how we

approach this analysis.

You've got to be flexible.

Your minds have to be dynamic.

The only way how to behave linearly
about this are two ways.

Take just one small event and there you
can say, yes, this should unfold this

way. And if it doesn't, then it's a
failure and I'm going to trade it in a

different way.

And secondly, if you are capable of
thinking thousands of variables at the

time, then you can think linearly.

If you could analyze so many data
points, then you can think linearly.

So what I would like you to do for your
homework, going to the previous slide,

going back to the previous slide, print
it out, have it for your library of

slides, have it in front of you as you
do your homework.

and use it for your homework as you
start labeling.

And then also look into this schematic
right here, or schematics rather, and

then print those out as well and try to
identify as you go through the homework

as to what kind of range you have there.
Is there extra strength or extra

weakness? Is there some kind of specific
formation that you

see? in your homework, and that would be
the best.

All right.

Reaccumulation. Yeah, let's go through
the reaccumulation. This will be really

helpful for the homework, and then we'll
discuss the homework, and then we'll

probably stop at this point.

So usually I jump right into the
distribution, but this cycle I decided

going to go about this in a slightly
different way, and you kind of see how

creating this sequence. So going from a
change of character that basically tells

us how the environment changes.

So from the down environment to
accumulation.

You know, this is the change that we've
described, a change of character.

And this is a change, change of
character.

And those are the spots where we're
going to make majority of our trading

decisions.

In between, we said that we need our
phase analysis

to define the bias,

timing, and next character.

But once we're in the trend, we could
also go into non -trending environment.

And obviously, at this point of time,
you would be thinking, is this a

distribution or a reaccumulation?

We're going to concentrate today on the
reaccumulation, just concentrating on

bullish patterns for now.

So reaccumulation is different from
accumulation in the way what preceded

So on the way up, we have an uptrend for
the reaccumulation.

In accumulation, we actually had a
downtrend, and that's the only

whenever I'm going to ask you what's the
main difference between accumulation

and reaccumulation, that's how you
address this question.

Accumulation had a downtrend before
that.

Reaccumulation had an uptrend before a
consolidated environment.

So we want to look into reaccumulation
and specifically label it. How are we

going to label it?

And then, you know, as we go further
into the studies of the bias,

then we'll talk more about
reaccumulation and the difference, you

reaccumulation and the distribution.

So let me take a picture of this.

Okay.

All right.

So what are the reaccumulations, the
areas of reaccumulations?

We definitely should understand that

there are different cycles as to how the
price moves.

There are cycles that are very short
-lived cycles, and they exist on the

intraday timeframe.

The longer cycles would be existing on
the daily time frame, and then weekly,

and then monthly, and then you could
even go further with the quarter way and

yearly.

And within those cycles, within large
cycles, like a monthly cycle,

a monthly move to the upside, you are
going to have your original areas of

accumulation.

You're going to have some kind of moves
to the upside.

And then areas of a reaccumulation that
would

have some elements of the distribution,
which are going to be short -term lift

elements, that will also have elements
of absorption.

But once the reaccumulation has been
concluded and ran its course, then we're

going to resume an uptrend, which now
becomes a very, very...

much long -term uptrend. And we're going
to go into the uptrend and the

resolution of that uptrend.

It's this spot, the trading range, the
consolidation within the structure of a

much larger price cycle where the price
stops,

exhibits some temporary weakness, which
is being

produced by temporary selling and we
could discuss more the reasons of why

selling would occur at those spots and
then um absorption of that supply

absorption of those distribution
elements and the resumption of the

those what we are going to call stepping
stone reaccumulation trading ranges

could occur on different time frames and
at different points

of the uptrend. So here we're seeing the
same magnitude reaccumulation ranges

on the way up.

And then we see a different magnitude of
the reaccumulation range.

And we will have to make that
distinction because we will need to

we trade in this.

If I'm a short -term swing trader, then
definitely small trading ranges are the

ones that I'm looking for, and these are
the swings that I'm looking for.

If I'm a long -term investor, I really
would like to exploit this opportunity,

which is a long -term value proposition
to me, as I am a long -term investor.

And this is the position that I will
establish and then hold on to it for

some time.

I also would be looking for the points
to add on the way up.

So we would just have to be very mindful
as to

the stepping stone recognition triggers
occur, how they

unfold, and then what kind of trades are
available out of those spots to us.

Okay, well, let's look at...

the example of labeling.

So this I've taken from Hank's book,

which I hope that you all

are already in possession of. Again,
with Hank's book here.

Chapters 3 to 7 are the chapters that I
want you to read.

If you read it throughout the course,
this is fine as long as you read it.

So definitely a really good case study
on the introduction of the Wyckoff

itself. And here we're seeing what I
call a conventional

way of labeling a reaccumulation. We
start with the preliminary supply,

then buying climax as a stopping action,
biggest reaction to the downside

as a change of character.

which is also labeled as automatic
reaction.

And then a secondary test rally would
conclude phase A.

Phase A, remember, the intention is all
about stopping. What are we stopping?

We're stopping the uptrend from further
movement up.

The change of character phase A defined
the non -trending environment, the

trading range.

and then throughout the trading range
again we're going to go and define

different points like of events we're
going to try to define phase c anything

between in between is going to be phase
b sign of strength backing up action so

from this perspective everything looks

the same as an accumulation with an
exception of the bind climax, automatic

reaction, and secondary test.

It's almost as if it's reversed, right?

So here is the accumulation, selling
climax, automatic rally, secondary test.

So we have a reversed mirror image of
that accumulation in the

reaccumulation in phase eight. But
everything else is the same.

We're still going to have secondary
tests in phase B. If those are lower

then this is going to be identified as
minor sign of weaknesses.

We're still going to have in phase B
upthrust attempts or upthrust actions.

We're still going to have phase C with
the last point of

support as a higher low or sprint or
shakeout as the lower low.

We're still going to have a sign of
strength in phase B and a backing up

in phase D. I'm sorry, not phase B,
phase D, sign of strength in the backing

action.

So all of this is going to be the same.

Here is an example. It's not that great
because this article has been written

quite a long time ago, more than 20
years ago.

I believe it was written, oh, look at
this, 1992.

And it was written by Jim Forte.

And in my opinion, this is the best
article on price structural

analysis that has been written not just
recently.

And I know that Hank wrote on that.
Bruce wrote in the blog.

But to me personally, it's Jim's article
that is extremely important.

This was the homework for you for today,
to read this article. If you haven't

read this article, go to our website, go
to the resources page, and you will

find that article. It's a requirement
for this course.

This is the most comprehensive article
on price structure analysis that I've

encountered. And if you don't believe
me, here's the story.

you know, about this article.

I went in 1914 or 13 to

Singapore to the IFTER conference, which
is the International Federation of

Technical Analysts. And I met there John

Bollinger. And you know all John, you
know, with his Bollinger Bands.

And we were chatting, we were just
chatting at the break, and he's like,

know, the best article on Wyckoff, on
the structure, was by Jim.

And Jim was in the class with me, and
actually multiple classes when I was at

Golden Gate University. So if you don't
take my word as a confirmation of the

value of this article, then take the
word of John Bollinger.

And he said to me that I actually keep
it handy.

I keep it close to me because it acts as
a reference point to me when I look at

the structure.

So Jim has done a tremendous job with
this article.

And here is an example, which I actually
think is not that great.

So he talks about the shakeouts here.
Well, maybe a shakeout attempt, but

definitely looks more like a sprint.

Actually, I would do more of the...

horizontal down flocking range like this
but the principles are going to be the

same phase a is going to be a stop in
action of the previous uptrend then

b is going to be multiple tasks at the
support at the resistance level and then

phase c is going to be your third test
and then the resumption after the sign

strength and the backing up action i
would actually identify sign of strength

little bit higher because this looks
climactic to me oh he has two arrows

so this is great okay so um yeah really
good studies by

jim um so i started thinking about
different variations on the

range and in anticipation that students
are going to have questions, you know,

I'm kind of showing you something that
I've developed

in a slightly different way.

A lot of the times, the first move to
the downside of the change of character

is going to have characteristics of a
shakeout.

And then the next rally is going to look
like your regular automatic rally in

the accumulation.

And then your next reaction is going to
look like a secondary test.

So I started thinking that a lot of the
reaccumulations are going to kind of go

through a very quick phase of
distribution on that first

shakeout move.

And you could think of...

2010 May 6th flash crash as

an example and I should bring this to
your attention.

So a flash crash like this and then a
quick recovery as an automatic

reaction and then a test, a secondary
test.

So here we are kind of dealing with the
issue that

We have two changes of character at the
same time. We have the change of

character on the way down and then on
the way up.

So that suggests that the automatic
rally is still here.

Then how would we label this? Well,
obviously, this looks more like a

Or sometimes I'm going to put a sell in
climax as a climactic action. So your

downtrend is very fast.

within the context of a reaccumulation.

In some instances, you're going to have
a push to the upside, climactic action,

very small distributional pattern, which
would point on the PNF that there's

going to be some kind of downtrend, so
you have to go through this, and then a

local selling climax, and the regular
accumulation labeling

is going to be applied to this.

But within the context of a much larger
trend, this is just a reaccumulation by

itself.

So different timeframes, right?

Different timeframes on a secular,

big, or cyclical uptrend.

And then much, much shorter -term
weakness and a downtrend.

within the context of a much larger
trend up.

So again, just slightly different
labeling that you could apply.

If you're seeing all of the shakeout
elements and elements of the automatic

rally in the secondary test, then I'm
actually okay if you label it like that.

I'm definitely okay and I'm going to ask
you to label it exactly like this if

you're going to have a small
distribution pattern.

a down move, and then a local selling
climax, automatic rally, and secondary

test.

And again, this is something that you
will encounter with your homework and

we'll discuss with your homework review.

Again, different, it seems to be the
same concept, right? A concept of

accumulation, a concept of a
reaccumulation.

Another reaccumulation, another
reaccumulation, another reaccumulation.

And yet, look at the different
variations on the same bullish bias.

The first pattern shows to us that in
2008, there was a

short -term downtrend. And I'm thinking
about the 2000 real low for Apple. And

this is Apple.

So this 2009 low on the secular basis
acts as a reaccumulation

low rather than a downtrend. But on a
short -term basis, we are in the

downtrend right here. So here is that
schematic that I've just shown you.

shows examples from life. This is how it
unfolded. And then as we go to the next

meaningful consolidation, this
consolidation is a reaccumulation

and it has a high, a low in phase C. So
it

looks like this.

This one right here, this is the flash
crash on May 6th in 2010.

Here is that example where you could,
Label a buying climax, selling climax,

a shakeout, and it looks like a
shakeout.

Automatic rally secondary test, phase A.

Test in B, test in B.

Phase C.

And relative to the previous low, the
flash crash low, this is a high low

so the same schematic.

The next reaccumulation has a
downsloping structure to it, so we see

C is a low low.

like right here, like in this schematic.

And it leads us to this frame, and it
shows us a sign of strength, and here is

sign of strength, and the back -and -up
action that's going to back up, you

know, to the same level of the support
that acted before the resistance.

So the linear thinking about the method

should always be about the process
itself.

We are in the trending environment.

Change of character happens.

We are in the non -trending environment.

In the non -trending environment, we're
going to go through our phase analysis

to define bias, timing, and character.

Once that is defined, we want our
tactics, a layer of tactics in phases

C, D, and early E to enter the position
and to scale into the position.

Then we're going to have an uptrend.

with potential areas of consolidation
where we could add to the position or

establish the position. Those are going
to be a reaccumulation area.

They are all going to start the same way
as other consolidations, with the last

climactic run, with the change of
character, with the failure to continue

previous move, and therefore with the
consolidation around the mean.

They could take different shapes and
forms, but the process is going to be

linear again.

You're going to go through your phase
analysis, you're going to identify all

weaknesses there, and then you're going
to apply your tactics.

And it's going to continue until you
actually come into the

distribution, and there the
characteristics are going to be

And that's going to repeat over and over
and over again. And this whole craft is

just about that.

It's about identification of the bias.

It's about identification of the opening
of the position at the most opportune

time where your trade becomes efficient
trade, where you don't wait for the

trade to happen. It happens right away.

And that gives you the most efficient
run for your money.

All right.

So that's a reaccumulation.

Now let's talk about the homework.

So this homework is going to be for next
week.

We are going to look at the Home Depot
chart.

And the assignment is very simple.

I want you to label all of the trading
ranges that I identify on the

slide.

And I want you to label those with
Wyckoff phases, that's number one.

Wyckoff events, that's number two.

And changes of character, that's number
three.

For the ease.

of conducting this exercise, I want you
to print out

this slide right here.

This slide is going to show you the
template with which you should label.

It's going to identify for you the
sequence of Wyckoff events, sequence of

phases, intentions behind the phases,
characteristics of all of the Wyckoff

events. in the consolidation.

And after that, I just want you to go to
all of the slides.

And by the way, I will make the slides
available to you. I will explain in a

second how you could get the slides. So
you'll have two types

of slides. You're going to have PDF
slides.

for lecture, and you're gonna have
PowerPoint slides for your

home assignment.

This is just the new innovation for the
course that I'm gonna try to cycle and

see whether it's gonna be more
successful.

Please note that I don't have the volume
signature here, so not all of the

charts are gonna have the volume
signature.

This is not necessary at this point of
time.

And I'm very serious about that. I don't
want your minds to be distracted by

additional information. It's just not
conducive to the understanding of the

price structural analysis at this time.
Just follow my lead and don't even think

about it.

So look at all of the trading ranges
that I identify with the support and the

resistance.

and just go through all of them and
label them.

And then in the next class, we'll talk
about all of this labeling, and we're

going to review all of these slides, and
I'm going to give you

my solution slides, and I'm going to
look through your homeworks, and

we're going to talk about specific
points where you guys...

more commonly making the mistakes.

That would be a great time for us as we
go through the review of the homework to

answer some of the questions that relate
to price structural analysis. So I see

today some of the questions come, which
is great, but a lot of the questions are

actually on the material that is still
ahead.

And obviously I don't want to jump ahead
without establishing very proper

basics.

And this exercise is all about the
basics.

Now let me talk about what's going to
happen today and tomorrow, and then

I'll go to your questions and comments.
If you have any questions, you can type

those in.

So I mentioned already a couple of times
a couple of things.

First of all, I will email you either
tonight.

or tomorrow morning. And I'm going to
email you with the access information

on the

webpage for this class

and for this particular cycle.

So please expect the email to come to
you. This information

is confidential.

I would like to ask you to keep it just
to yourself.

And then on this page, you're going to
have

usually two

things, a video and

slides.

So the video is a player.

That is built in.

So what you need to do when you watch it
is make sure that you expand it.

That you expand the view.

And you can watch it on the whole
screen.

Slides is just a link. And slides you
can download.

And what I'm going to do for you is,
again, I'm going to have a PDF slide on

lecture itself.

And then I'm going to have a PowerPoint
slide for your homework.

It's just going to be easier with the
homework if you have PowerPoint slides

because you could work with those right
away. You could just narrate them right

there and just send those back to me. So
you don't have to think about scanning

those or maybe converting them into a
different file format. It's all going to

be done for you.

So just use that.

Okay, so access, homework, what else?
Yes, send me with

your homework one paragraph.

Identify how you heard about us.

How you heard about WTC.

And then what kind of...

Wyckoff method history you have.

You know, whether this is studies or
trading.

You can tell me what kind of results you
have as you're trading.

And all of this, by the way, right now,
I want to establish that all of the

communication with me would go to this
address.

SimpleKOT at Hotmail .com. The reason
why I want to use this address is

because... It's just faster for me to
see right away that you are emailing me.

Plus, the WyckoffAssociates .gmail .com
email is just for business purposes and

the whole team sees those emails and,
you know, it's just distracting for

So I just want to make sure that all of
the emails go to my private email. And,

you know, I could answer much faster.

I'm not guaranteeing that I'm going to
answer.

right away but i'm definitely going to
see it much faster okay questions

comments on the homework or on the
material that we've covered today so let

just see some of the comments questions
here

okay

question uh multiple questions from eric
here

In accumulation, schematic number one.
Okay, let's go there.

If the move up after secondary test in

phase B goes far above the previous high
in phase A, so with human up thrust,

which is overextended,

can we think that we are still in the
accumulation?

Okay, so this is a question kind of like
in the moment, right?

So, for instance, you know, if the price
goes up, are we still in the

accumulation? Well, by the definition,
you know, of the higher highs, higher

lows, here we already would be in the
uptrend if this to happen.

In some instances, the upthrust could be
overextended, but still will come back

into the trading range.

That's just the definition of phase B,
right? So phase B here

is going to suggest that the test at the
level of the resistance

could have either a failed upthrust
attempt

or is going to have an upthrust attempt.

I'm sorry, upthrust action.

So therefore, upthrust by itself
concludes with the return

below the support line, below the
resistance, right? So therefore, by

of the accumulation, the price will come
back.

In the case that you're describing,
Eric, you know, with the prices going

up, up from here, then we are in the
upfront, and I would be questioning

This type of structure is just phase C
of a much larger formation.

So you have to think about that.

Okay, next question.

Okay, so the main thing in the
reaccumulation is phase A that is

similar to phase A in the distribution.

But phase B is the only difference that
I could see with the sign of weakness

that goes below the automatic reaction
in the distribution.

Eric, again, I like all of the
questioning. I think that we're just

little bit ahead.

So I would just say, like, stay patient.

And it will come to us as we're
discussing in the next two sessions, you

all of those elements we go through the
homework.

But a very simple, quick answer to this
is that, you know, there are quite a

few things that we will be discussing as
to how to define the bias.

And yes, you're right. In the
redistribution, the first one -third of

I'm sorry, in the reaccumulation, the
first one -third of the range could

develop the same way as the
distribution.

It just starts with the same stop in
action, change of character, and the

secondary test.

So it's going to look the same.

It could look different price and volume
characteristics. That could be the

distinction. But again, the goal for
this course, for this particular four

months, is for you not to necessarily
give the bias in phase A.

I'm kind of teasing you a little bit
with that material.

Because I know that we discussed this in
the practical.

But for now, this is not the time to
discuss that.

For now, I just want you to remember
that reaccumulation distribution is

to start the same way.

So it's going to have the same labeling.

And then as we go through the trading
range, this is where we want to define

bias.

Would distribution show up or would
reaccumulation show up? And that's how

going to determine what to do next.

Can you address some differences in
phases B to discriminate phase B of the

reaccumulation and distribution?

Kind of the same thing, right? So this
is more advanced as a material.

We're still on basics. So we're going to
discuss those probably even more in

practicum. Like phase B is definitely
practical because this is one of the

hardest phases that we will be
discussing.

So with that, just, you know, everything
in the head.

You know, don't worry about this.

We will definitely, you know, get to all
of this material.

The main key right now is absorb all of
the basics and absorb them at the good

level. So that's the home assignment.

Okay, guys, well, that's it for today.

Okay, quick last question.

Is Wyckoff methodology suitable mostly
for liquid stocks?

No, we could definitely use some of the
examples of the liquid stocks as well.

Now, the methodology will be applied in
a slightly different way there, and we

can talk about this.

Nilesh, this could be a really good
question for session number 15, which is

going to be a Q &A session.

So once we understand all of the
concepts, a question like this will be

perfect.

All right, guys.

Thank you for all of the questions, even
though we really did not have a very

interactive session, but still really
good second session.

We've covered a lot of material, which
pleases me a lot because we've got a lot

to cover in the next couple of sessions,
even just on price structural analysis.

Please do your homework. If you have
more time, watch this recording again.

Create your notes. Send those to me.

But send me your homework to simplekot
.com and send those before the

class, not in the last hour. I beg you.

You know, if you're going to send me in
the last hour, most likely I'm going to

be busy just preparing for the class. I
will not even see it.

Send me all of your homework before 12
noon on Monday and preferably on Sunday

or, you know, at any time on Sunday. Or
if you could do this even before Sunday,

even better.

All right, guys, that's it for today.

Expect my email with the access
information, and I will be expecting

with the homework.

I will see you next week at the same 3 p
.m. Pacific.

Happy trading until then, and thank you
so much. Bye -bye.