Original subtitles

Hello, everyone. Today is March 11th, and this is our session number 10 of the

Wyckoff Trading Course.

And today we're going to continue with the exercise on volume and

price. This is what I call a systematic exercise. What do I mean by that?

It systematizes a lot of the knowledge that we already have, and it combines

actually not just the volume and price analysis, but also the price structural

analysis as well. So that's why I call this a systematic exercise.

Our next session next week, March 18th, and we're going to finish

this exercise in the next session.

And then session number 12, 13, 14, and 15 are going to be devoted to two

things. We're going to talk about relative and comparative strength

We'll talk about some of the filtering.

We'll talk about a Wyckoff trading plan.

We'll talk about some of the tactics.

And I'll introduce some of the concepts that are going to be a breach concepts

into

into the WICAV practicum.

That, by the way, is gonna start, WICAV practicum is gonna start on

the 22nd of April. Our last session

of this class.

So WTC is gonna end on April 15th.

This is session number 15.

And then from here, for those of you who's gonna take the practicum, we're

stay on Mondays for the practicum. I'm just changing a little bit the schedule.

So the practicum is gonna start on April

22nd.

A couple of things with the practicum. First of all, let's talk about the price

and let's talk about why the price is such.

So the price for you guys is going to be $598.

So usually it's $998 because we're going to have nine sessions there only.

And I would encourage you to take advantage of this opportunity because

it's 15 sessions. So for those of you who feel like, well, it's just a lot of

time.

This is definitely better, nine sessions, and we're going to do two and

hours each.

So kind of like the same as we're doing this class.

But what happened with practicum is there's so much knowledge in the way of

trading course that I can't give you even with 15 sessions.

Knowledge requires practice.

and we're just trying to practice with this exercise as much as possible, and

I'm still delivering you more and more knowledge.

So practicum was designed for the drill exercise, but I'm realizing that

having the lecture portion of the practicum and then the drill exercises

second part of the class works much better for students. So this is exactly

I've been doing this cycle, this current cycle.

for WTC students who have taken the class in fall.

So quite a lot of new things here. First of all, the price.

This is grade nine session instead of 15.

And then we're still staying on Mondays.

So your schedule for classes is not going to change.

If you have Mondays devoted to this course, then...

You're just going to proceed with the Mondays, and we're going to finish that

course, the practicum. The last session is going to be on June 17th.

And, by the way, you can register now. And I don't know why I didn't put this

an announcement, so maybe next time I'm going to start putting this.

So you can register now. Go to our website.

Find the Wyckoff Practicum course and sign up because

one of the things that I've noticed with students throughout all of these

cycles, and I got to calculate how many cycles I have actually done with this

course, but definitely 20 plus, maybe even more.

When students go away, they're kind of excited.

Now I'm going to... put this into the action and I'm just going to start

using this and by all means please do because it's going to show you

both it's going to show you the improvement that you've made over the

and then it will show you what else you need to know so I think that it's

extremely important you know to have some kind of exposure

to the market.

My only advice with that is expose yourself gradually, right? So this

apply gradually.

Seek confirmation that you know and that you could implement this.

All right, so that's that.

And what else? For those of you who...

I'm not signed up for Linda's Reschke much special. You can still do this.

Again, go to our website and sign up. You still can receive all of the

recordings and the slides. We just had a session on Thursday that went really

well, and we had really good feedback.

Now, Linda is not necessarily teaching us Wyckoff method, but she's teaching us

trading.

And the main thing with Linda and the whole special is just to listen to her,

kind of be in the presence of this greatness and try to extract as many

beliefs about trading and markets and how to behave in markets correctly.

So extract those ideas as much as possible.

All right, a couple of questions. Will nine sessions cover the same content

is usually part of the Wyckoff Practicum? Yeah, it is Practicum, and it

cover the same material, and not necessarily the same because I'm always

changing, always adding, always thinking about, you know, what is the best

exercise at this point, and so on and so forth.

So the Practicum is a very interesting being. You know, it just kind of

develops.

in the relationship to the group itself.

So we'll just have to see this, but it's definitely gonna be more of a feel of

the Wyckoff Triggin course, rather than the practicum as it was, let's say, a

year or two ago.

But we still will be doing exercise in each class. So each class, I'm gonna

have a chart for you where I'm asking you specific questions. Define the bias.

Define the selection.

Define the character.

And so on and so forth. That's the purpose of that class.

Will September's cycle of practicum course have 15 sessions and will it be

conducted on Tuesday from Roma?

Yeah, most likely that's how it's going to be, 15 sessions. And then this

is probably going to be the last cycle of practicum that we have.

Because starting with January of 2020, we're going to have Wyckoff Trading

Course Part 1, the one that you're taking right now, and Wyckoff Trading

Part 2, which was a practicum before, but it's going to be more cohesive and

it's going to be more comprehensive for all of the 30 sessions, two parts,

Part 1, Part 2. So I think this is where we're going with that.

Another quick announcement.

For those of you who are going to repeat this course during summer, so for those

of you who is going to sign up for WTC summer cycle,

and I would

highly recommend it if you feel that you like the course, but you need a

little bit more time. to get comfortable with ideas.

And you need maybe a second rerun just to repeat this knowledge and

cement it in your head.

And this is such a great idea and we have alumni of this course in this cycle

well.

So for the summer cycle, the alumni rate

is

And this is going to be only 12 sessions.

And usually during summer, that's what we do. I don't teach the full course.

It's kind of like an abbreviated version just because some people are much

busier and this is just our opportunity to give them that chance to participate.

So 12 sessions at two and a half hours.

The price for the alumni rate, so the regular rate is $7

.98.

And then the alumni rate is going to be $4 .98.

So really good discount, right?

Obviously, not as many sessions.

But on the top of this,

We have currently a promotion that is running until

March 20th.

If you register for the course and you email us after your registration

to WyckoffAssociates at gmail .com and you say that

in the title WTC promo,

then we're going to rebate you $100 back.

So effectively, your price could be $398 for a

repeat of this course.

So think about this. I kind of wanted to create a very appealing value.

It seems like it's such a low price, but I wanted that value to be available to

you, for those of you who have taken the class in this cycle.

and you feel like you want to repeat it, go for it.

You know, this is one of the ways to do this. If you feel more comfortable, go

for the practicum, because this is the next step.

And then, if you have any questions, obviously, just email me, ask me, and

be happy to answer.

Okay.

Let me just do this, otherwise I will forget.

Okay, now I can erase this.

All right, so today as I mentioned, you know, we're going to continue with the

group exercise.

Then we're going to continue with some of the OEM case studies. This is

going to come before the exercise.

The homework is going to be the same.

I kind of see a little bit of the deterioration of the

participation in the homework.

So I'm still receiving homeworks, but not as many as in the first months, not

many as in the first couple of sessions on this exercise.

So I want to encourage you to go back, re -watch those videos where we discuss

the exercise.

make notes, email those to me.

This is definitely gonna be very beneficial for your development, for

knowledge development.

Session number 11, next session, basically the same. We're gonna finish

exercise. This is gonna be the main purpose of that class.

If there is anything left on volume, case studies, I'll bring it up. If not,

then we're just gonna move on.

But we will definitely finish the exercise next time.

All right, let's go to some questions.

And the first question comes from Doug.

Doug is asking, is effort, if effort is the difference in force between the

volume signature of two different bars, then is the result the difference in

force between the price levels of two different bars?

Actually, yes. If you think about, let's deal with the effort first.

So we judge the effort by volume.

And we could say that on, let's say, one bar to the upside,

the volume was this.

And then on another bar,

in the same direction, the volume increased.

So this volume increase in comparison to bar number one, it suggests that there

is some kind of difference in the amount of effort that was put in

into that second bar.

So there is more effort to push the price up.

So there is a difference in how effort is being depicted right now.

The same for the result, because we could see that the result, let's say in

case, is going to be all about,

let's say, something quantifiable, something...

visual for us right because we're reading the chart so we're going to say

the up spread has increased secondly we could say

that maybe close to close the distance between closes

right so maybe the previous bar was somewhere here and that was a previous

so we see that maybe the close to close is increasing

then we might say that, let's say on bar number one,

there is some kind of supply tail that we see.

So we could say that the close to spread

has increased as well in bar number two, and it closes

so close to the high of that bar.

And that would be the difference in the result.

Obviously, the result is also going to be associated with the intention, and

this is something that, you know, not necessarily Wyckoff into.

You know, Wyckoff never talked about the intention of a specific bar.

But I took it from the significant bar technique that I've developed for

and I'm going to introduce this to you guys.

briefly in this course and then in more details during the practicum. During the

practicum, we're going to be discussing significant bar as an element, as

a tool for stop losses and how we would be moving the stop losses more

mechanically. Again, not necessarily a wake -up idea, but something that I've

realized in the methodology was, you know, in a way,

was heavily underdeveloped.

So I had to think about this and I introduced just basically the way how I,

know, trade swings or how I define swings.

And that became very popular with a lot of students.

Usually students opt out, you know, to do that instead of the Wyckoff method

stop losses, which are extremely discretionary.

So we'll talk about this.

And we'll talk about this in the practicum.

But intention is slightly different, but still under the result.

Let's see what other questions we have here. Is result indicated as an absolute

level, whether positive or negative, namely, result could increase, decrease

the downside or upside, or is it the delta, change in the value?

So definitely we're talking about specific things, Doug, right? So we know

those things that we want to define. And again, they are extremely quantifiable.

If we're going to look at the spread, we're going to compare it to the

subspread, and we will define the spread as the difference between the high and

the low.

There is a variation on the spread with the true range. We've covered that

before. Close to close, quantifiable.

Close to the spread, quantifiable.

So we are looking at the differences among these characteristics.

And obviously, yes, there is a change in value.

So for instance, if the spread has increased, so there is a change in

If the close to close has progressed more, there is a change in value.

If there is...

the close, like in this case that I'm showing here, bar number two, the close

much closer to the high of the bar, then it's quantifiable as well, and

therefore we could extract the value of change.

So yes, it's definitely a quantifiable change in value

type of parameter.

Having said this, you could say that the absolute level it's going to be related

to the intention itself.

Right, because we are going to be looking at some level of resistance or

support, it doesn't really matter.

And then we're going to be looking for the bar that's going to try to overcome

this point of resistance.

So intention behind this bar is going to commit above.

Therefore, from that perspective, you

could define the intention, whether it

was fulfilled or not, in absolute terms because you could define the level of

resistance. Let's say it's $100 here.

If the price does not commit on the absolute value above

$100, then what does it mean? This means that intention has failed.

If the price does commit above and closes above 100,

then in absolute terms, yeah, the result has changed as well.

So really good question. Quite a few distinctions right there.

And then we go a little bit into more details with sub -questions right here.

And let me just kind of like rephrase this a little bit.

Actually, let me read this. Is an increasing result to the downside

as an increase in the result or a decrease because of a smaller absolute

Is an increasing result to the downside?

I'm not sure about this question.

So let's just not go there, it's decreasing, okay.

The decreasing result to the upside communicated as a decrease or increase

because it's still high prices.

So Doug, I think that what you're talking about is in the context, let's

an up swing.

where maybe a result is decreasing.

So let's say spread is decreasing.

Maybe volume signature is decreasing.

If I understand the question correctly.

So how would that be interpreted?

So we still would be looking for what?

We would be looking for the previous bars.

right and we would be comparing the last bar with decreasing result uh with the

bars um on the same rally we just have to we just have to figure this out um

so in a way we could have a decreasing result

on a rally in a bullish environment

So hopefully, you know, I'm addressing this in the correct way.

I'm just trying to see if I'm understanding the question correctly.

So yeah, you could have in the bullish context a decreasing result. You could

have in the context of the downswing a decreasing result to the downside as

well.

Yeah, so that's possible.

Okay, really good questions.

Some interesting distinctions that we are discussing here.

All right, so thank you, Doug.

Let's go to the next question.

All right, next question comes from Adam.

And Adam is asking, was today an ease of movement bar in the markets?

So let's look at that.

By the way, before...

I feel like I have to clear my throat. Before I answer this, what do you guys

think? Is this an ease of movement day or not?

So write your answers really quick.

Yeah, Adam.

Doesn't matter what you used.

Let's just kind of like see what we've got here.

All right, so I'm trying to get the answers, and I'm not getting anything.

What's going on, guys?

Okay, let's get into the working mode. Let's go, let's go, let's go.

Let's just be quick.

You know, don't think about anything else, but the question is the last bar,

an ease of movement bar.

Okay, not sure. Does not look like one to me.

Yes.

No.

Yeah. Okay, so we're kind of divided 50 -50, right?

Okay, so first of all, we'll have more material on ease of movement.

So that's still coming.

We'll talk about this in the next session.

But let's quickly define what ease of movement is, right? So ease of movement

is going to have the characteristics of expanding result

and diminishing effort, or

on diminishing effort.

Obviously, in the buy direction,

in the direction of the bias.

And then under the result, what's important is that we are going to have

the intention

satisfying

satisfying the

commitment requirements.

So let me go through this again.

We're gonna see the increased result.

And predominantly the intention behind this result is gonna be

positive.

And it's gonna happen on the decreasing effort.

And usually the decreasing effort is gonna indicate that the

Opposing to the bias force, in this case, because the bias is what? The bias

up here, right?

So the opposing effort

is gonna

have the characteristics of weakness, right? So we could say that supply is

poor.

At this point of time, how do we conclude that supply is poor? Well, we

the chart. We look at the supply that's coming in. And on Wednesday's calls, you

know, I was talking about this area right here.

And we've talked about how the last ball looked climactic, how there is a very

subtle increase of the supply that suggested that's going to be some kind

reaction.

That's going to happen. Then we said that with this reaction, we need to

understand what is the character of this reaction that's going to develop.

And then we developed two scenarios.

One is kind of like a deep reaction.

And another one is shallow.

And we want to understand if the shallow reaction comes, that we would have an

opportunity to continue the trend.

we also would have an opportunity to consolidate.

And then if this is a deeper reaction, then we're definitely looking at more of

the testing type of, testing of the loads, of the December loads type of

All right, so it seems like so discretionary, this whole thing, the

logic. But then when you go through all of this, there are algorithms that are

basically leading us to specific conclusions.

And this is what I want you guys to get, you know, as the skill, as your

analytical skill from this course.

So let's look at the buying climax here.

So very subtle increase of the supply, suggesting that we're going to have a

reaction.

Reaction timing is being defined by a change of character bar that

suggests that we are in a consolidation. We are in some kind of reactionary

mode. And off we go to the downside. But now look at how the

price goes down.

We were anticipating that the price would have some kind of acceleration to

downside. And instead, we see that the volume decreases, meaning that,

and obviously decreases relative to what?

Relative with which we start here on the increase of the supply, all of the

other. Volume signatures to the downside are decreasing relative to that bar.

So therefore, we are most likely seeing a diminishing

effort to the downside.

So the downside effort is diminishing.

So therefore, we would be thinking that this is more of a bullish sign. If this

is more of a bullish sign, then our...

two scenarios on the shallow reaction are going to be probably working much

better at this point of time.

But coming back to the ease of movement, so we want to oppose an effort to be

poor. Would you say that supply is in control in the last, let's say,

two weeks, three weeks, you know, a month?

Even if I would take...

the last five, six, seven days.

It seems like it is because we have a reaction.

But it also could mean that on this reaction that we see,

we could say that supply is poor and demand is diminishing. And

that's why that produced a natural technical reaction.

And, oh, boy, did we have a discussion in the practicum about technical

and technical rally.

So that's a little bit more advanced, and we still have to go through this in

the practicum and kind of like put the last dot on

the conversation, but that was a really good conversation.

Why is this a technical reaction?

Well, because supply is poor, and only because demand.

has been exhausted with all of this momentum moves to the upside. Look at

many swings we had to the upside.

One, two, three, four.

Four big swings of momentum buying that we had to the upside.

So that suggests that we're going to have some kind of reaction just because

demand has been exhausted a little bit.

And if demand is exhausted and supply is poor,

It's going to produce some kind of reaction, but it's not going to be

with the distribution necessarily.

And therefore, it becomes more of a technical reaction within the

confines of the upswing.

So we are kind of good on the bias here.

All right, well, look at the last bar.

Let me just clean this up.

Let's look at the last bar, and let's go through the definition again of the use

of movement.

Do we have supply that is poor? Yes.

Diminution demand on the reaction?

Yes. We have that, or diminution react on the upside? Yes.

So now what we want to see is through the reaction that was a

technical reaction.

we want to see supply being exhausted.

At least temporarily, at least short term.

And with that exhaustion, now imagine that supply is exhausted

and demand is

tired too, right?

So both of the forces, buying and selling, are hesitant to go in into the

market and produce the next wave.

The buyers are hesitant because, well, they've been buying for two months now,

more than two months.

So whoever wanted to get into the position already in the position.

That advanced the price so much that there is no value even.

for some of the institutions to be in the market, to be active in the market

right now. There is more value for institutions right now to think about,

already in the position.

How do I hedge my positions against a possible

volatility that might come next?

Something maybe like of this variety sort, of this sort.

where we have more reactions that would create the trading range.

So therefore, the buyers are not

active.

And then the sellers are kind of the same way. Why?

Well, because they've been selling on the way down and they had profits.

And then once the price went up, what do you think they did?

They started selling again. Or they added to the position. Or they

new positions.

And what was the premise of that? All because they are thinking here, sellers.

Sentiment.

They are thinking that we are in the bear market. That's number one.

So their bias and therefore their behaviors are going to be determined by

bias. And secondly, they think that we are in a short -term overbought

condition.

Literally here, here, here, here.

And what they do is they sell, they sell, they sell, they sell.

To what end?

Obviously to a loss.

So they're going to produce loss.

Loss, loss, loss.

And this collection of losses, even though they're still extremely

sure that this is a bear market, leads them to the state

of exhaustion.

So sellers are exhausted at this point.

So therefore, when they are exhausted, especially emotionally, what do you

they're going to do?

They're going to withdraw from the market and they also become inactive.

And therefore, at this point of time, this is what we see in the volume

signature.

It's almost like there is not a lot of participation.

There is some, but not as much as we have had, let's say, in this area right

here.

So what does this remind you of?

Well, probably this environment right here,

something like this, where we're just kind of neutral, and we have some kind

reactions within the context of the swing, and those are fine. They're still

within the bigger context of a much larger move to the offside.

It still tells us a story that, yeah, we are exhausted in general.

Bars are inactive. They're already in the position.

And then sellers are just exhausted with all of the losses, so they are out of

this position.

And they don't want to come in on short at this point just because they don't

want to be wrong again.

So that's the whole story. sentiment picture that we have currently in the

market and it still favors the bullish scenario no matter how it's going to

unfold even if we're going to have a much deeper reaction let's say to 2600

fmp uh something like this then you know it's still going to be within the uh

framework of this bullish momentum rally that we have had just recently

i'm trying to finish on the ease of movement but there are so many thoughts

come to my mind as we discuss this so let's talk about these a moment again

um do we have an expanding result

to the upside well

let's go one by one let's say an up spread

It did increase relative to the spread that we've seen just recently, and the

spread. Yeah, if we would look into this area right here on the last rally,

actually, even if we look at some of the prior spreads as well, maybe this

one is a true range.

That's even larger.

So we could see that in the last months or so, This is the best bar.

So yes, I check.

Close to close.

Yes, check.

Definitely, we are at a much better close to the upside than

what we had here, and we don't even have a close to close to the upside here.

This is close.

from one down bar to another down bar, but we are overcoming all of those, and

this is a much better close.

What about close to spread?

Yes, as well.

And we could probably judge this by maybe like the previous bar that has a

bullish characteristic built in it.

The price has kept down on the open.

went down and then closed up like this so we definitely see the improvement

both on the close to close and close to spread and up spread and so on so forth

and then we said that the effort

to the upside for the ease of movement needs to decrease and we see that in the

volume signature so on the relatively light volume

compared to what we've seen before, we are actually moving nicely.

So now a tricky part comes, intention.

So with the intention here, we should think about this in kind of like two

terms, short -term intention and then long -term intention.

So short -term intention was to close favorably

over what we have had as a commitment in the most recent price action. What was

that commitment? It was commitment to the downside, right? So we had closes

down, close down, close down.

Are we committing above those closes?

Could the professionals, even with minimum effort, push the price in such a

that it's going to close above previous closes?

and we could definitely see that one two three three

bars or three closes rather this bar has overcome the latest three bars to the

downside and it did so in one day not in two not in three not in four in one day

so it took the price three days to go down and it took just you know, a day

a half to rally off this low.

So definitely we are satisfying a short -term intention.

Now what about the long -term intention?

Well, the long -term intention here is obviously to overcome a

resistance that has been created by the high of the sub -swing.

Have we done so?

No.

And that's the key here to this question. Is this an ease of movement

On a short -term basis, yes.

On a longer -term basis, we still have to see the commitment above this area.

So this bar has all of the characteristics for the ease of

an ease of movement on the short -term timeframe.

And yet,

having all of these characteristics, on a long -term basis, it does not show us

that ease of movement yet.

But it can if the next bar or within the series of bars, we're going to have

something like this.

And, you know, I've discussed in the WMD what could be the catalyst for this

type of move, what would be this type of commitment.

And I've shown you guys some analogs from the past.

So let's talk about the catalyst.

Catalyst most likely is going to be associated with China,

U .S. stocks.

Imagine everything comes together, everybody's excited, and what do you

the market's going to do?

most likely is just going to go to this level very quickly. So there's going to

be some kind of acceleration.

That's number one. So that's like the most bullish scenario that we could see.

So and this would conclude this run.

After this, we're definitely coming back in a big way because the institutions

are going to see this as an opportunity of liquidity value close to the long

-term uncertainty high, and they're going to start selling.

Okay, so we're talking about the catalyst, yes.

What else did I want to mention here? What's this?

Oh yes, so the analogs for this.

So look at the Dow Industrial in 1974,

75.

And 75 was such great analog for this rally.

And if something like this develops, or maybe even something of a small

trading range shape and then going up out of that, this is going to look more

like 75.

Tesla in 2014, 15,

16.

Look into that, had the same big structure trading range, and then a

shakeout in the middle, and then a quick rally to the upthrust

reaction, and then a prolonged consolidation, almost like a year.

And out of that consolidation, then the price started to go up.

quite a few still scenarios of how it's gonna unfold, but it's very encouraging

how the reaction is behaving, and that's why it's not just enough to

identify that the reaction is gonna happen.

What we should be concerned about is the way how it happens, because the way

how it happens will define the short -term bias and sometimes long -term bias

well.

All right, great. Let me see some comments here.

Okay, so Eric is asking, in this reaccumulation, is public selling or

is CO taking partial profits? And Eric, you have to be a little bit more

specific. So when you talk about reaccumulation, I'm looking at this

right here.

So what are we talking about? Are we talking about the specific spot from the

low to the up? You mean from this low to this?

Right? Okay. Well, let's talk about this. So obviously here,

extreme oversold and extreme value.

and extreme liquidity so ceo is doing what ceo is buying

then on the way up

as we look at the momentum look at the where momentum picked right

here on this bar so all of this

It's going to be institutional trend followers.

What do they do? They are gradually getting into the position.

And they are getting into the position gradually just based on their

level of confidence and their systems. And the system just basically tells,

okay, expose yourself more, more.

And I see institutional systems are often based on this, on kind

of like this confirmation of the system's signals.

So asset allocation is based on how the system confirms specific environment.

And I'm actually thinking here, and for those of you who are institutional guys,

you know,

I think that it's a model that was based more on

the idea of the preservation of capital.

And I think that in the institutional world, we kind of all of us are so

concerned about losing the capital.

Because if you lose the capital, you lose your job.

That's what it basically...

If I have my personal account, and let's say that I lose the money, it

doesn't mean that I'm going to stop investing or trading in that account.

And I still have that job.

Because institutions are different.

They produce a bad performance, and then their

job is in jeopardy.

So that triggers specific behaviors by money managers.

So they wanna be tentative.

And they seek confirmation.

And what it does, Adam, by the way, yeah, I agree with you on that.

What it does is money managers at this spot are gonna be

tentative.

and they will seek confirmation.

And look at this and what this produces. If they seek the confirmation, they

underexpose.

And then because of that, they underperform.

And they underperform especially

And this is just a variation, especially on momentum rally,

like we just had.

So the reason why I'm talking about this is because this is a current problem, a

puzzle that I'm trying to solve for some of the institutional clients.

Because that's the question that is being posed to me.

How is it that we were correct on the bias of the low?

We started buying, and we're still underexposed, and we are barely, barely

matching the market.

Well, you can't really do a lot here with this rally.

It's almost like the solutions to this problem, and I wonder, guys, if you

have other solutions as well.

Solution to this problem is going to be all contextual, meaning

that in this environment where you're extremely oversold and there is so much

value in liquidity,

you should be exposing yourself.

The only other question here, if this is gonna develop into the bear market. So

like there are so many thoughts that I have on this, not necessarily wanna go

into this because we're already at four o 'clock almost, but this is a very

interesting puzzle and this is something that maybe I'll discuss more.

you know in the practicum so solutions contextual right so you're you're going

to be thinking about your weight in a specific sectors groups and so on so

secondly market oriented

exposure for your portfolio and

that could be in the

In the case, we could be thinking about specific ETFs that could

be related either to the market itself or to specific groups that we think are

going to outperform.

Then the third one is just the portfolio risk itself.

How do you manage your portfolio risk in this environment?

and underexposed, you're going to lose just on underperformance.

So for money managers, not just making money is not enough.

You're always being measured against the market, against your peers.

And this is where you could lose your job as well. So if you're

consistently, then you might have fewer capital coming your way.

So the portfolio risk question is a very interesting contextual point here for

us to think.

So maybe like ETFs.

And then also, I'm thinking and I kind of suggested that there

might be some smaller leveraged positions that you could

use here.

Smaller leverage.

leveraged positions.

So for instance, if your institutional risk there is at 1%, you could say that

I'm gonna expose a quarter of that percent to more risk than usual.

But in the environment like this, if it works out, it's going to, you know,

bring me, let's say, additional percent or percent plus.

So in a way, you're kind of creating that three to one, five to one

on reward and risk.

And you're improving your equity in that.

allows you to outperform.

This has to be timed more properly, this has to be selected more properly, but

if it works, then you're going to benefit from that.

And then the last one is you definitely want to understand how you're going to

do your hedge at the top of the

rally.

because you're going to have, your portfolio is going to have some

that, you know, maybe majority of the positions that are going to advance,

like 20 % that are not going to advance, 80 % that are going to advance. Out of

those 80%, you're going to have some of the positions that advanced, but not as

much.

You're going to have 20 % that advanced a lot.

So you definitely want to keep those.

And you want to understand how you hedge against an upcoming reaction for all

of your positions. So maybe the ones that did not advance as much and you see

some short -term deterioration in the price and volume signature, those you

could hedge more.

And the ones that are there, uh showing more bullishness you could just leave

alone and just seek the opportunity to add on the way down so quite a few ways

you know to tackle this problem and to think about this puzzle all right so

side notes today but hopefully all good guys and hopefully we are

um we are uh covering

some of the material that you could use in your own trading as well. And

everything, by the way, everything that I've said, if you have a portfolio of,

let's say, 100, 200, 300, 500, something like this, up to a million, and we

have students like that, this is your topic.

This is how to manage your portfolio, how to understand the portfolio risks at

the specific structural spot.

Again, maybe something a little bit more advanced for this class, but something

to think about, something to think about while you're taking the practical

because those things are going to come up and we'll discuss those.

One last thing.

What I like about this last bar, and obviously, again, short -term intention

satisfied, but long -term is not, right? So we still have to overcome this point

of the resistance that played out so many times before.

So until we have that bar, we're still thinking that the long -term intention

has not been fulfilled.

But look at the momentum, how the momentum comes to, and I'm always using

of change.

I'm not using any other momentum indicators. It's redundant.

Just use one, stick to one, and it would be enough.

So look at how it goes to the center line and then rebounds exactly off it.

So this could be just a short -term technical rally, and that's how the

would behave.

around that, so look at, let's say, something like this, something like

this, this, this.

So there's some kind of momentum, let's say, going into the latest rally, and

then on the reaction, we're seeing that once it touches the central line, it

recovers, so somewhere here, you know, you could continue your campaign or add

or establish a new position.

All right, great, good questions, good conversations.

Let's go to the volume case studies.

We're still studying how supply and demand interact with each other, how

and price interact with each other.

Excuse me.

And we've talked about different types of supply absorption.

We've talked about horizontal absorption.

or absorption through time, sometimes I call this. So this absorption is going

to be observed by ours through different phases.

And usually the predominant supply signature is going to be of the

supply going into phase C.

And then we could have different variations on this.

vertical absorption we said that could uh take you know different paths uh we

could see and we've studied the kind of like a vertical absorption on the way up

which is more aggressive where we had a reaction in the direction of the main

bias so main bias here is to the upside then

we have a reaction

And this reaction has elements of increasing supply.

So here we've talked about how on the way down, not only supply but demand is

going to increase and that's going to produce absorption on the way down.

And then we said that after that,

demand is going to increase even more.

And when demand is going to increase even more, the price is going to go up

the increased momentum and it's going to come to the point of the resistance.

Okay, so I want you to remember this because we're going to come back to this

thought. Price is going to go up.

with increased momentum to the resistance.

And then, after that, it's gonna have some kind of test.

Well, for, how would it look?

It would look something like this, where we have such a big move to the upside,

and then it comes to the level of the resistance, and then it's just gonna

right here.

So that's one of the elements of vertical absorption that we've studied.

So today, I want to talk about feather.

And feather was mentioned by, I believe by SMI,

not Wyckoff himself, but by SMI. And then, actually that was in the original

course. Yeah, I think that was in the 1930.

There was a reference to a feather there. And that reference was that the

price was kind of like hovering around resistance of the support with

diminishing both supply and demand signature.

And that produced the condition where on the next leg up, let's say,

momentum has increased.

And let me just kind of like jump into this, but before we do that, this yellow

highlighted area, think about what I've just said.

As demand increases and momentum increases, the price goes up on the

momentum to the resistance and then produces a test.

Does this remind you of anything?

What about the chart that we've just studied?

We definitely don't have a bullish bias before.

We have a trading range here, so non -trending environment.

Then we have an increased supply signature that produces this reaction.

And out of this reaction, we see that there is absorption on the way down, but

then there is absorption on the way up as well.

And the rally usually is going to come to the area of the resistance. So we are

right there. This is resistance number one, number two, number three.

So we are close to that zone. We are on the border of this zone.

And that's why I'm thinking, you know, what is going to happen here? Are we

going to have like a trading range right here and then we're going to go up or

are we just going to kind of like... spraying up like this.

And I think it's, again, it's all going to be related to China and how the talks

are going to unfold.

But it reminds me of that vertical absorption.

This is what has happened here.

There is an absorption on the way up and it's vertical because there is no

trading range here.

I mean, there is, but it's not that big. It's not the absorption that we have

through the trading range that we've had in April, May.

It's more.

on the way down and then on the way up.

And that's how the V bottoms are being created. There is so much value here on

the way down and there is still so much value on the way up.

And again, please note where the momentum signature has stopped.

Why did they stop buying here?

Well, if this was the previous value, then everything here is under value

and still under value.

even on the way up.

Until it hits this area right here, this is institutional undervalue.

So they are buying on the way down, they are buying on the way up, and then they

stop buying.

Once institutions stop buying, how are we going to see that on the price and

volume signature?

Well, the volume signature is going to be gradually declining.

The price is going to also deteriorate, right? So we're going to see a

deteriorating result to the upside, even though it's still a bias to the upside,

even though the price still goes up.

You know, coming back to Doug's question, you know, could we have a

result in the up rally? That's exactly what we have right here.

And once they stop buying and they're inactive, you know, we're going to see

this also in the momentum.

So momentum is showing this, volume is showing this, price is showing this.

We could interpret this as diminishing interest by institutions at this point

value, but still it goes up just because no one is selling.

They got in and they're not selling. Why? Well, because this is not their

typical behavior.

They are gonna be, they're gonna be,

thinking here more about they're already in the position and how to protect

their portfolio.

Okay.

I don't know, we're definitely on fire today with all of the side note topics.

Let's come back to the feather.

So here is the feather, right?

And this feather is in a free fall.

What does it mean?

Well, you guys remember, right? You know how the feather flies down, how it

falls. It's kind of very slow and gradual, and usually it's just going to

of like go from one side to another side and have those swinging type of

moves, and slowly and softly it will land

on the ground.

And if we would be thinking in terms of feather in the

market, this type of action, we probably would be saying that there is no

increased effort or pressure that is being applied to a feather. And

that's why it falls down on its own weight.

And it falls down smoothly and slowly.

And there is no increased result.

I mean, we're definitely going to hit the ground with the feather because it

still has more weight than the air, right? So the gravity is going

to pull down unless there is some kind of distortion with the wind and so on

so forth.

But if the conditions are such that there is no wind, the feather is not

to have increased effort.

to move down or to move to the side or to move up again.

It's also not going to have increased result.

It's just going to gradually kind of like go down, down, down.

There might be some slight increase in the result, you know, if we go into the

whole physics of this thing.

I'm not quite sure, but to me, just on the conceptual level, this is just a

fall movement without interruption.

And we could see in the market some places like this where, let's say, in

place right here, we see how the price had initial momentum.

And then after that, the price goes down, goes up, goes down, goes up, goes

down, goes up, goes down, goes up.

And this movement is...

reminding me of a feather. We are close to the breakdown. We are moving to the

downside. So result is there,

but not dramatic.

And then think about if we add more force.

to push the price down, what should happen? So in the feather

story here, we're gonna say that if we're gonna

put a small stone on the feather, somewhere like on the top right here,

so we are basically increasing the effort to push the feather down or to

push the price down.

What should happen with that?

Well, definitely momentum is going to increase.

With the momentum increase, we're going to have the velocity increase.

And with all of that, we're going to have the increase in the result. So how

would that look on the chart?

Well, it's going to look as if out of this feather

Tragen range, once the increased effort was introduced,

the price is going to just...

run down much faster.

And that effort is gonna be shown to us in the volume signature, or rather than

the change in the volume signature.

So volume change,

effort change.

As this happens, then we're gonna see price change.

Okay, so let's Look at this just on the charts, and let's talk about the

characteristics and definition.

So a feather is a part of the springboard heuristic that identifies a

significant lack of counter effort and counter result, resolves itself in the

momentum breakout.

Let's look at the bullish feather.

We have an established bias to the upside.

That long -term bias is to the upside.

And this is the Apple daily chart.

Then we have a counter reaction to that.

Counter move.

This counter move is going to be associated with the supply signature

could see here in the stop in action, in the sell in, and then still on the way

down, kind of like a general capitulation here.

So supply is going to increase.

Then after that, what's going to be interesting is that we're going to see

higher highs, higher lows for the bullish feather.

So here they are, higher high, higher low, relative to this.

Higher high, higher low, higher highs, higher lows.

But look at the nature.

with which these higher highs and higher lows are being formed.

We've seen a deterioration of the

effort that pushes

that price up.

I mean obviously this segment right here has some momentum, yes that's true, but

then after that, both supply and demand are somewhat

Definitely not negligent, but not that active.

And we are thinking that demand is

diminishing and that supply is poor.

And that's the whole situation. And even with that, we're still making higher

highs and higher lows.

So in a way, a feather...

is an ease of movement.

And because we're making higher highs and higher lows, feather becomes a

part of the vertical absorption family.

And then obviously, once we come to the level of the resistance,

This is where the behavior of those institutions is going to change.

And this is where they're going to say, well, even with that small effort to

the upside, diminishing effort to the upside, the price gives me an absolute

performance that I need. It goes up. It doesn't go down.

So I might buy more.

They might be buying more on...

some kind of catalyst.

Maybe they are waiting for this catalyst and that's what creates this type of

movement right here.

Anticipation, but it's more with the bullish bias built in into the price

action.

And then when this catalyst happens, they add more effort and that pushes the

price up with a lot of momentum.

So we're seeing a lot of momentum here.

And then after such momentum, there is usually a continuation to the upside.

Okay, then let's look at the bearish feather.

Kind of the same concept, right? So, and we could look into maybe like feather

as being this whole thing, right? So we're making lower lows, lower

highs in this area, or in a smaller area right here.

A major bias to the downside.

A counter move.

And I would prefer here to have more demand signature, but there it was.

There was an increase in the demand signature right here.

And then after that,

there is a move to the level of the support.

Please notice for bearish feathers, there's gonna be support.

For bullish feather, there's gonna be a resistance.

And we are kind of hovering around this area.

We're still making slightly lower highs and lower lows on a very short -term

basis. And once we are

Once the force is going to be introduced, and we're going to say that

those people who bought in, and they were buyers in the

bearish feather situation, they're going to give up at some point. They're going

to capitulate.

And this capitulation after the feather is going to produce increased volume

signature.

increased momentum, increased velocity to the downside.

And then obviously the price is going to react also a lot to the downside.

I'm going to have all of this increased result to the downside characteristics.

All right.

I'm thinking about what I've missed here, you know, any substantial pieces

I might have missed. So let's just think together.

What are the questions? What are the comments? Because this is not an easy

concept. It looks easy, but sometimes I feel like even I myself am not

identifying it correctly with a lot of consistency.

And the reason why is because sometimes the volume signature is going to

increase and it's not going to look like feather because there is like a lot of

increase in the volume signature.

So we usually talk about the feather as something being light as a feather.

And it still moves the price down. So that ease of movement type of thing.

Okay, so some comments patterns.

Okay, Adam, I'll have to look into that.

From Nilesh, how should we trade further to initiate the position?

Okay, very good question.

So let's develop, you know, maybe like different scenarios, right? So our

position here in Apple, and this was 2015 -16 trading range, so you're going

identify this high as a major sign of strength.

point number one as a backing up action going into point number five so this is

just a trading range of the backing up action here so how would we be thinking

about opening the position because of the first reaction and the increased

supply on the backing up action we might be thinking about uh establishing the

position at point number two on the reversal so somewhere here this could be

point of entry number one

then looking at the feather itself, and I think this is the value of that

question, how do we trade it?

If we understand that feather by itself is a test of supply

at the resistance level,

then we know that we could buy the test.

So we could find some spots to buy here.

One, two.

And then if we're thinking about what should happen next, if there's going to

a late capitulation of short traders in a bullish feather and they're just going

to capitulate, let's say, on the catalyst or on the breakout, all of the

that they're going to provide is going to become a market order to buy.

and therefore supply is going to absorb even more.

More. If that's the case, If there is more supply that has been observed, and

not only at the lower price levels, but at the higher price level, what do you

think is going to be a long -term bias to this?

Most likely it's going to continue, right?

Continuation.

And if the long -term bias is a continuation, then think about a point

Could we think about a point of entry right here in terms of...

add into the position.

And I think we can because let's say on this catalyst, on this momentum

catalyst, we are also going to have a test.

And that test usually comes within the next two days. By the way, it was really

interesting how we talked about this in this course, right?

Big momentum push on a lot of volume was the gap.

usually on catalyst earnings.

And then the next two days, we want to look at the test.

And Linda was talking about the same pattern. And she considers this one of

most reliable patterns. If your test is successful, if you don't have the bodies

or the tails of the testing days violating the low

of the gap day, and they don't go too much into the gap, most likely there's

going to be some kind of continuation.

And look how nicely, you know, you would have this straight from 125 to the

first change of character bar to 147, so that's 20 bucks, or

it's going to translate into what, about 18 % move, something like that,

around maybe 18, 20%. And then you're making this 20 %

in... one, two, three, three and a half months.

So you have to think in three and a half months, 20 % annualized, it's going to

be different.

So this is a good swing trade. And especially if you've been entering this

position before, you know, like at point number one, two, three, and four. So

you could potentially scale in into the position.

And look how nicely it's just on the edges of short -term

oversold conditions. What do I mean by that?

I believe this was below, yes.

So look at this.

All of our entries are clearly close to the

oversold.

except for the momentum breakout right here.

But the momentum breakout entry is going to suggest a strength of the

continuation. So therefore, we're still relatively in the not such a risky

place.

All right, so what else?

Joe is asking, for the bearish feather, where did the CO get out?

Well, CO got out in many spots, Joe.

we're talking about a late institutional capitulation here so and by the way ceo

could be getting out here as well and at this point the ceo still has a

profitable position that's number one and secondly we cannot call it ceo

because we would be thinking that ceo is going to distribute the stock at the

higher level so maybe somewhere here where ceo is distributing off

the top

Maybe here on the way up, on the way up, on the way down. So this is CO.

And then the rest is just institutional trend followers that are gonna

capitulate here.

So this is early institutional capitulation.

So this is smartest money.

this is smart money why is it smart well because they get

out at the last opportunity before the collapse uh and therefore they give

themselves an opportunity you know to still stay in the position if this is

going to be a reaccumulation and then the late capitulation is just going to

not as smart right not as

smart And I don't necessarily kind of like this definition, you know, smart or

not smart. It's just a little bit, I feel like some people could

look at this as a little bit, you know, domain value, you know, for certain

types of market participants. But I know that you guys understand what I'm

saying here.

So the smartness of the money depends on where they get in, where they get out.

But at the same time, there are so many different variations on how institutions

behave.

We don't even know completely what are the motives, intentions of some of the

institutions being in the position that is going down or shorting in the

position that is going up. What if they have some kind of spread trade, right?

So meaning that they have...

two highly correlated stocks.

One of them they bought and another one they sold.

And this could be here an example with Goldman Sachs where somebody might be

buying Goldman Sachs and don't mind the Goldman Sachs going down, but at the

same time selling another stock in the same group because it just outperforms

the relative basis.

Obviously in this case it should be vice versa.

This was actually a trade that I've conducted back then, what, in 2018 in

Goldman Sachs.

Let me just capture this.

So the trade was conducted here.

The entry was somewhere here. I don't remember exactly, but I remember that it

was before the break.

And I was consulting an institution at the time, so the trade was

done with that institution.

And it was a profitable trade, but it was executed incorrectly.

What do I mean by that? I mean, obviously selection was correct. The

entry was correct.

Check. Point of entry.

Check. We used the, I think it was actually a cash position, so

they were boring, and this was a good stock to

borrow because this stock usually has a lot of liquidity, so a good

institutional, easy, what's the term there,

easy collateral stock.

that could be used in this situation and the exit from this trade was somewhere

i don't recall exactly i think in this area here

or even earlier here

So we haven't even experienced a terminal climactic action.

And I was kind of a little bit disappointed how execution has been done

exit. I mean, obviously, for a small swing, that's fine.

But the bias was still to the downside, and we just experienced a major sign of

strength. So we had this first capitulation that meant that there is

likely is going to be a continuation.

could have stayed in this trading range and then continued to the downside.

I believe the stock went down after that.

So execution and specifically exit on the outside

was really poor.

So it's very interesting how you could have

the knowledge, but you might not have the skill.

You might develop the skill of visual recognition on the chart of what you

but it doesn't mean that you could execute correctly.

Even if you know how to execute correctly, you might be bound by the

opportunities that is being given to you.

I mean, obviously, the market in 2018 in comparison to 2017 are two different

animals.

So opportunities in the market play, availability of opportunities also play

big role.

And sometimes we don't learn how to recognize this opportunity.

But even if you can recognize the opportunity again, it doesn't mean that

mentally you might technically execute it correctly, but mentally you might not

execute it correctly.

And even then, when you...

can go through all of those steps and you are at the level of the advanced

understanding of not just trading but yourself,

you still can fail to leverage this

opportunity.

And with advanced students, you know, this is a common mistake.

Sometimes you see an opportunity, you recognize, you have the knowledge and

skill to act on that, and then it becomes a wasted opportunity because

it was not properly leveraged based on the contextual risk that was

present at that time.

So it's a process, and this course is just a first step in

this process.

And I'm still working myself on this. Believe me, guys. I'm extremely honest

with all of you always because I believe that if you're not honest with yourself

as a trader, you're most likely going to fail. So you have to expose yourself.

You have to be vulnerable.

You have to be uncomfortable constantly in order for you to adjust. Always make

that adjustment.

And then only that.

will bring you to the next level.

So that was kind of like my disappointed on the actions of that hedge fund at

that time.

Okay, so.

Okay, now I should say in Apple chart, the upward movement from February to

April also looks like a feather. If no, is it because it's forming after leaving

the trading range?

February, April.

I see this one right here. Well, we have to have some kind of reference to the,

obviously the resistance, and there is a long -term resistance here for Apple

that we've seen.

you know, off the 2015 high, I believe.

Yes.

So you could think that, yeah, the price kind of like does this. I would

probably go to the weekly chart just to confirm that.

I would say that this is just like an uptrend.

It's more established. There is no grinding into the resistance area.

It's more of a freer move to the upside.

So probably just based on that, maybe I would not exactly say this, but

if you see it like that, that's totally fine.

What are the consequences of that? Well, we need to see some kind of momentum

move. Well, here it is. It comes on the breakout, so that seems to be in

compliance. But again,

something where the bias is established and you have a big counter move first.

And then you have this vertical absorption.

Here, what is the long -term bias up?

Was there a counter move?

Not necessarily.

So from that perspective, maybe not.

Okay, Doug. Yeah, we'll talk about this maybe later on.

You know, I'll have to have more examples of this.

All right, great. Let's go to the next one.

Okay, well, 20 to 5.

Let's talk about urgent demand. That's another volume case study that we have.

So usually demand, and we've talked about the ice cream story.

So demand usually is not going to be extremely pronounced.

after the absorption of the supply.

Why? Well, because think about what happens with the absorption, let's say,

the selling climax.

So demand increases a lot here.

Supply increases as well.

So that stops the price from moving down. On the automatic rally, demand is

still increasing.

Supply is decreasing.

On the secondary test, supply is increasing relative to what we've seen

latest rally right here.

But decreases, so increases short term, decreases long term.

And then at the same time, demand is increasing short term.

So there are some buyers that are coming in and getting some value at the low.

But at the same time, demand is lower than it was on

selling climax and automatic rally.

Then we go into phase B, same happens again, demand is diminishing,

supply is diminishing, locally supply is increasing, demand is

increasing, that pushes the price up again, and then demand is decreasing

more, and that pushes the price into a spring.

At this spring, supply is increasing, demand is increasing even more. That's

absorption on the way down.

And then after that, in phase D, demand could either

be low and the price still will go up.

And that is a function of how supply has been gradually diminishing.

throughout all of these areas right here.

So sometimes supply has been absorbed, supply is absorbed at

this point so much that even dimension demand could push the price up.

But in some cases, that picture is going to be different.

In some cases, we're going to have a lot of inactivity throughout the whole

structure so apple here shows that uh for uh what about nine months or so

we with we see um in institutional inactivity

and there is a reason for that

there is a long -term reason for that and that long -term reason you will have

to look at the chart since 2001

and just to kind of see what that reason is on the long -term chart. But on a

short -term chart here, we're seeing how institutions are buying here,

institutions are buying here.

All of this is on the way down.

There is no buying whatsoever,

at least of the consistent institutional buying, until we probably come

to this area right here.

and we've seen that there is a stop in demand that comes in at this point, and

as the price tries to commit into the spring action, there is one close below

that support level.

We see how the volume signature has increased drastically, and that is a

point, so therefore demand has commenced in a significant way, and it's a stop

in demand, and it's absorption on the way down.

So that we've studied. We've studied the absorption throughout phases. We've

studied the absorption on the way down.

Now, we also studied a feather.

And a feather was a counter move

and then a grinding out action, price action,

with higher highs, higher lows.

And this would be seen more on the intraday.

And then both supply and demand are diminished.

And it comes to the area of the resistance.

And at this point, you know, we could be expecting if the effort is going to

come, it's going to produce such a huge momentum.

Why? Well, because supply has been absorbed so much.

And therefore, when demand comes in like this, on

the way up, When supply is in strong hands, there is nothing stopping

the price from moving in such a quick way.

And another thought here on the urgent institutional demand.

Think about the word in here, urgent.

What does it mean?

Why are they so urgently trying to get in into this position.

And please note, they're getting on the way in, on the way up.

They are not, at this point, they're not getting on the way down.

It's been done before, right? Here and then at the sprint situation.

Here they're just like, I don't care, I just want to be in this position.

I need to be in this position because I see so much value in this position going

forward.

It's going to be a leadership stock.

So that urgent institutional demand, usually in phase D, is

going to identify to us a timing of uptrend emergence.

And we know that behind it are going to be institutions and not weak hands.

And usually these type of stocks, if you go and you visually backtest a lot of

this type of breakouts in Phase D, and if you find a lot of institutional

signature in Phase D that pushes the price like this with a lot of momentum,

bringing it above the levels of the resistance, then you could

make a deduction here that it's not only going to be a leadership stock.

but that the trend is going to be sustainable for quite some time.

Because institutions don't buy for a couple of weeks, a couple of months. No,

they hold on to their positions based on the requirements that they have. And

one of them is to have long -term tax advantages, have low

turnover ratio within their portfolio.

and obviously with an intent to outperform the market, so they have to

leaders. They cannot pick just the stocks that are going to underperform.

So based on all of this, when you see this type of volume signature in Phase

you should be thinking about all of those things.

And therefore, this type of the position might be more of a long -term position

rather than a swing position.

All right, let's see if we have any comments, questions.

Eric, I'm sorry, I don't quite understand the question.

Okay, if nothing stops the demand.

Due to their accumulation, why backing up action appears instead of going up?

Oh, I see. Okay, so maybe I'm grasping this. Okay, so maybe the question is, if

there is so much momentum here, right, because of institutional buy,

then why, you know, it doesn't go up but

goes into the backing up action?

Well, I think it's a structural question here, right? Because think about how

supply is being observed.

So supply is being observed on the way down, on the way down, on the way down.

So supply needs to be observed at the specific levels.

And because there are so many market participants,

emotional memory of where they established the position, where they

win or the loss are going to be remembered.

And obviously at the points of the resistance, this is where that memory is

going to act out again.

Or we could state it in a different way. We could say that because of how

humans develop systems for the market, we could anticipate

that in the area of the short -term overbought condition, there's going to

some selling.

Selling is going to come from mean reversion trade

professionals.

The selling is going to come from short -term trend followers.

get in right here they're gonna get out somewhere here or on the way down at the

first sign of deterioration um and um

who else would be selling here at this point

um public would not be selling public would be excited getting in ceo is

in um institutional trend followers that are long -term institutional trend

followers are just gonna hold on and just wait to see how this position or

reaction is going to unfold.

So these are the predominant two groups at this point that might be selling.

So they're going to increase the level of supply at this level of the price.

And that increase of the supply and selling is going to produce what? It's

to produce a stop in action and a short -term reaction.

And therefore, this short -term reaction is going to develop a backing up

action.

Yeah, Eric, is that what we wanted to hear, right? So momentum, obviously, if

the buying is just continuous, continuous, continuous, then we would be

anticipating a continuation like this.

But not in a lot of cases we see that. I mean, this is more

something that would be a unique situation. And I would say that in

liquidity stocks.

That's a possibility where big institutions are not available

and smaller players could manipulate the stock more freer. And

I would say that the low liquidity stocks and the way how sometimes they

run up so much. In a lot of cases, this reminds me of the stock campaigns

that Wyckoff himself

was describing in the course and in his books and in his letters and magazine of

Wall Street.

And people like Jesse Livermore, J .P. Morgan, James

Keen, and other big traders at the time were conducting as

campaigns. They could take the stock, buy out.

the majority of the supply and mark up the price this way.

So on this action, we are learning this in the

modern world, and sometimes it's really hard to see on highly liquid stocks.

But it's extremely easy to see on illiquid stocks.

And therefore, illiquid stocks could be manipulated more.

Okay, great.

Okay, we should probably go from here.

Okay, so really quick now, Ash, and let's not have any more questions on

really want to jump into the exercise. If we got into the position between

February and March of 2003, with that being a phase C

assumption, should we book a loss on a spring and then initiate new?

your option after spring is confirmed.

So the question is around like here. So let's say that we're thinking that this

is phase C, which we might at that point.

This could be a point of entry.

This could be a point of entry.

So two, one.

So I'm kind of gonna do this in the way of

Well, actually, it doesn't really matter. So let's just quickly answer

question. So what do we do? Well, first of all, where is our stop loss? Our stop

loss is going to be somewhere here.

So we would be hit if we're just using the stop loss.

We probably would be thinking more of getting out of this position even

before we are being hit.

Where? Well, as the price develops some kind of structure and there is an

element of a time stop loss, within a certain period

of time, my position is still unprofitable and it doesn't work.

So this is two, two and a half months.

Would you be getting out of this position or not?

So you could have the exit just based on the time stop loss and time

characteristics. That's number one.

Secondly, we could get out and we could just have a loss.

And this loss would be only, let's say, half of

our position size.

Why? Well, because we only have... two entries and we usually

would scale in in four segments right so um even if it's a loss uh it's

only one half of the position size of course there is a third decision here if

we're recognizing that this day had a very unusual characteristic

of increasing downward spread on extreme volume signature.

And if we analyze this bar, and we're gonna say that this is a potential

then we might keep this position on, even with the bar that comes next, right

here, because supply is diminishing, result is diminishing as well, and then

have a high -low test.

So that could be a solution number three, but you have to be an extremely

comfortable with your analysis and with the bias that you're giving this stock.

So my preference is probably gonna be something like this.

If I got in, let's say right here and then here, at some point, I'm gonna say

my stop loss is gonna be somewhere here.

And partially I'm going to get out of this position. So close, let's say, one

fourth.

And then it still will be exposed, but not as much.

And then hopefully I will go through this. And then obviously, even if I take

loss, My points of entry, just based on what we just went through, are going to

be here, here, here, this bar, and then we go into

this bar, this bar, this bar, this

bar, and so on and so forth. So again, look at how we are accumulating this

position. By the way, we've done so many campaign exercises.

at the Wyckoff Practicum course.

And I'm showing you exactly the reasons of where we would be getting it, why we

would be getting in here, and so on and so forth.

So this would be the sequence of entries, possible entries.

And every time we enter, we want to enter on the point of no return. What

it mean?

This is where the price does not come back to this level.

Maybe it just came back somewhere here, but everything else.

It's just the price does not return.

And that's just an element of the risk control just based on how the structure

develops and where you enter itself.

All right, guys.

Let's go away from this.

And let's just see how much we're going to do. So I'm thinking that maybe we'll

stay until six today.

We'll see.

All right, a volunteer.

And you have, actually, first, which bar did we stop

at? I think that we've revealed this whole chart, right?

Is that what we did?

So you have to remind me. Have we discussed 52 to 58?

Okay, so I don't quite understand, guys. Have we discussed 52 and 58?

Yes? Okay, so we've discussed that.

Have we really?

I think with Adam, we have stopped somewhere here on 52.

All right.

Yeah, I think that we've discussed all of this, and then we've stopped.

So let me discuss this, but I know that I've revealed this right here.

So let me discuss 52 to 58, and then I want to have a volunteer so that

we would start the next segment.

So let's look really quickly at 50 and 51.

We said that after the secondary test, which was somewhat successful, look at

the levels of the supply here.

And look at where the price is rebounding relative to the height of the

They're kind of rebounding off the one half of that range, of that height of

that range.

So that suggested that we're going to have an upthrust.

And the upthrust is usually an element in phase B.

So there was a build -in trade right here that would get us above 42.

And then at the first signs of the deterioration, we're going to be looking

sell if this is a very short swing trade.

And we see those signs of deterioration in the diminution spread signature of

the 46, in the supply tail, in the increased effort that doesn't produce

the same result as 45.

So therefore, right here somewhere, we will be getting out. After that, 47.

develops a change of character this is a small trading range on the intraday

basis we just don't see it on the daily but this is the first bar since the low

of 44 that suggests that we are done this is a confirmation and we go into

reaction and look at the reaction that we have um the supply

increases and we were we were talking about first emergence of the supply how

Change is gradual.

And think about this statement. Why change is gradual in the markets?

it's very violent, right? And everything changes very quick. Like the market

that we had in December, January.

We were in such a bearish sentiment and then quickly that sentiment changes.

But even with that quickness, we still had a week or two.

where we could have guessed that the change is taking place and we could have

seen the signs of the demand coming in into the market.

Well, here this is the opposite.

A change comes gradually at point number 45 because we see that the volume

signature has increased.

So what does it mean? It has some suggestion that supply has come here.

yet the result is still favorable, so that supply is small and does not

a lot of the result to the downside.

Then at 46, that supply has increased.

How do we know this? Well, the volume signature has increased by itself,

number one, so supply has increased.

And at the same time, the result to the upside has diminished.

So this means that on the more supply, we're producing

more of the stopping action and more reaction within the context of this

bullish upswing from 44 to 46.

So we see how from 45 to 46 supply increases.

Then at 48, we're seeing that the volume goes down.

And that suggests that

Demand by itself is deteriorating. And we see how even if

supply is going down as well, we see that the

close is lower than at 46, that the tail at 48

to the downside, the supply tail, is more than at 46.

So that gives us an understanding that on diminishing supply, we are producing

better result to the downside. So there is some kind of ease of movement built

in into that bar.

And obviously, looking at the intentions, intention behind 45 was to

overcome the high of 42. We did that. Intention of 46 was to overcome the high

of 45.

We did that.

and we committed at the close above.

Intention behind 48 was to overcome the resistance at 46

and commit above it, and yet we don't do that. Instead, we are closing below

the close of 46.

So that shows us the timing of when the price is ready to go down because the

effort and the result at this point are somewhat synced.

And in the practicum, I'm gonna show you and we're gonna have couple of

exercises on synchronicity between the effort and the result.

And that defines the beginning of the reaction.

As the reaction starts, we see that supply is present and then on the next

we see that supply is present but demand is coming in.

volume increases, and yet the result is better than the previous bar, what does

it mean? It means that demand is there.

Demand is present.

And we see that also from the tail, from close to close.

Look at this close relative to 49 close, and look at 49 and 50. They're almost

at the same level. So demand is definitely there.

And if demand is there, The first thing is just to stop the price from moving

further down. And this means that absorption was happening on the way

down.

And now we're going to go into some kind of testing.

And the testing supply is going to locally increase at the level of the

And we see those testing attempts.

Number one.

number two, number three, number four, number five, number six.

Quite a lot of tests here.

And the last two bars, I have in the price characteristic of

a feather.

And I'm sure that on the intraday you could see this. So we're coming into the

short -term resistance right here, and look how the...

Supply and demand signature are diminishing on the reaction.

There is some kind of grinding out action into the resistance.

So we know that after the feather, what are we going to have? We're going to

have some kind of momentum move, and that goes into 52.

Now, right away, I'm thinking here that 52 is probably going to be

analogous to 45 and 46 if I combine these two bars together.

So look at that. Does that look the same or almost the same?

Doesn't that have the same intention of overcoming the resistance at

46 and moving further up?

Yeah, so let's compare those.

So we're going to compare 52 and 45 and 46.

And here, obviously right away a question is going to be should we

volume signature cumulatively or should we compare

it just uh you know on absolute basis and we could do both uh in this

case i mean obviously we know that cumulatively there's going to be more

right here to push the price up less effort here but I would use probably

an absolute value.

That just tells me that the increase in the volume signature, which is one of

the highest increases since the selling climax itself, is most likely carrying a

lot of supply.

So there is some supply increase.

So I know that there's going to be a gradual change.

That's going to come. That's possibly going to come at some point. Where is

confirmation of this idea?

Well, the first confirmation is just in the bar number 52 itself.

Even though it looks bullish, and this is where amateurs are going to make a

mistake, and this is the whole game for institutions.

Amateurs are getting excited.

Weak hands are getting excited at 52.

It looks bullish by the conventional technical analysis. Look at the volume

signature. Does the volume confirms the price action?

Yes.

The volume goes up.

The price goes up. Volume confirms the price.

A little bit erroneous statement in this class because the volume needs to

confirm not necessarily just how bullish the bar is.

It needs also to confirm a commitment for this bar. What was the commitment,

the intention?

Was the commitment above 46, the high of 46? Do we do that?

No.

So we're seeing an increase in supply that stops the 52 bar from

committing above the resistance.

Bullish or bearish?

Probably bearish.

Just because supply emerges and it has the capacity to stop the

price from going further up.

So that's the first sign of supply.

emergence in this area.

Then the next confirmation is gonna be at 53.

So 53, look at the level of the supply.

The level of the supply is increasing and then we are producing

a relatively big supply bar to the low and

I would be thinking that this acts, if 52 acts as a bind climax, 53 acts as a

change of character and automatic reaction.

Kind of reminds me of 46 as a bind climax and then 47 as an automatic

reaction. So again, we are comparing

these bars of these two areas using the

analogs. And we are seeing that the 53 change of

character, a change of character at 53 is more bearish

than the change of character at

47.

Multiple conclusions can come up out of this.

We have not overcome the resistance at 46 .48.

We stopped.

Then we tried to overcome. We gapped up on 53 and then instantly went down.

And that change of character is so much more than at 47.

So what kind of deductions could we have here? Even at that point, we could say

that it's more bearish because there is more supply.

and there is more result to the downside.

So we know that if we had a reaction from 46 to 50, most likely

the next reaction that we're going to have is not just going to be to this

level. It's probably going to extend.

And where would it extend to? Well, what are our targets? So the low of 44, the

low of 40 and 41.

So this is our target zone.

And here with the target zone, we would be thinking that if this is an

overbought condition for this target, then this is going to be an oversold

condition.

And we would be thinking that this is a good trade for us. So we would be

looking for an opportunity to open the position here.

Now there is something wrong about... Bar number 53, if we're thinking

establishing the position right away.

What is wrong?

Well, we see that on a short -term basis, we have a tail that is a demand

So this demand tail suggests that short -term, we're going to have some kind of

attempt to rally at this point.

Plus, think about the momentum on 52.

We still have not deteriorated that momentum yet.

So that confirms that on a short -term basis, the rally might happen.

So we just need to see. And if the rally is going to develop, we're probably

looking at the trading range like we had at 46, 48.

So next bar, 54, is a very interesting bar because this is an analogous bar

to 52.

Look at the effort at 54 in comparison to 52.

It's the same.

Yet, what could we say about the result of 52 relative to the result

at, I'm sorry, 54 relative to the result at 52?

Well, we see that the upspread is definitely diminishing.

We see that the close to spread

is deteriorating as well. We are seeing a tail here on this bar where we didn't

have any tails at the top of the spread at 52.

So that suggests some kind of supply or deterioration of the demand.

And with the volume signature, most likely increase of the supply.

So we even thinking that there is more supply

at 54 than at 52,

just because of how result is being shown to us.

We also look at the close to close.

And we are seeing that definitely in the case of 52,

there is more progression from close to close.

So again, deterioration. And then the intention was obviously the same.

The same as the bar number 46.

The same as the bar number 45.

The same as the bar number 52.

The same as the bar number 53.

The intent is to commit above the level of the resistance.

And we still cannot do that. And now commitment line is slightly higher even.

But even if we use 46 as a commitment line, we're closing below it.

So therefore, no, intention was not fulfilled.

So all of this is extremely bearish, and the result of bar number 54 is

deteriorating after bar number 52.

So now we know that most likely we're going to have some kind of reaction.

There is still some momentum on bar number 54. We might assume that we are

the trading range at this point. We would be looking at the phase analysis

so on and so forth. And then bar 55 comes.

So if we said that 54 is more bearish than 52, then 55 is

much more bearish than any of these two bars.

Why? Well, because the effort is almost the same or just slightly below.

just slightly below or equals the previous efforts here.

And yet the result is so much smaller.

We don't have the same type of spread.

It's very condensed, diminished.

We are not closing above the high of the 54

bar.

And that suggests that the intention was not fulfilled, and that's bearish by

itself. So this 55 is a much more bearish bar than 52 and 53.

And therefore, again, change happens gradually.

And the reason why it happens gradually is because there is no way that the CEO

or professionals could unload their positions instantly.

If they do, they're going to...

influence the price in such a way that we're going to see more of this type of

movement out of this place.

Here at the top, they're trying to sell in such a way that would not move the

price significantly down before they get rid of the stock.

And then what comes next?

Next, 56 has a deteriorating supply signature.

And that's again...

gonna be something confusing to a lot of amateur traders. Why?

Well, because first of all, they're not gonna see supply at 52.

They're gonna miss increased supply at 54.

They're gonna miss supply at 55.

And then when the down bar happens and they see that okay, well, maybe

there is a decrease in supply, and it's still within the context of the uptrend.

We're close to this long -term support, so I should get in here, or I should

add. And obviously, they will be mistaken, because we know that all of

not, well, up bars, contain supply

signature.

in the volume signature.

So therefore, what is 56 then?

Because now that we're thinking what has happened, we're seeing supply,

supply, supply, supply, and then lower supply.

And yet what happens?

we are actually committing at the close of the 56 below the level of

the bar of 55, which was the last attempt to commit to the upside.

So we have not experienced this yet.

Look at this bar right here, 52.

Do we have a close below?

No.

Look at this bar, 53.

Do we have a close below? No.

54, no.

55, so I'm only going through the bars that had some supply signature in it.

Yes, for the first time we have that.

But it happens on the diminishing supply signature, and yet intention

has been satisfied and fulfilled, and therefore

this looks like a timing tool for us to consider

that this is when the move is gonna start.

And by itself, with this commitment to the downside on diminution supply

signature, this bar is an ease of movement bar.

And that's how we would view it. Could we open the position here? Yes,

absolutely. We would be thinking about opening the position here.

And then we would be thinking we're probably waiting for some kind of LPSY

backing up type of action.

maybe of a more manageable major sign of weakness, which comes at

57, especially on the intraday level.

You will have to look at this more as a trading range right here,

from 52 to 58.

So if 57 is a sign of weakness, then 58 is an LPSY, less point of

supply. so there are quite a few places here that we would open the position or

we can open the position first bar at 57 you know still somewhat vibrant but

still look at the levels of the supply it's still there so all of those bars

is just basically selling and uh the first bar is

uh

active, aggressive to the upside.

So we should be expecting some kind of retest.

So retest is coming like this.

And this would be our last point of supply. So we could open the position

somewhere here.

And then as we break out to the downside, this level is also could be

for opening the position. So three places that we could do this.

Obviously, we could also do this on bar number 55.

And the reason why we could do this is because within the longer term

structure and some of you who sent me the homeworks, you guys did a really

job because you were thinking that this is our trading right trade here. It's

just up sloping.

And then this is phase A, test in B, test in B, C.

And therefore, we could have a trade here.

Okay, I don't mind that.

and I don't mind that trade at all. This is a good trade.

I just want us to understand this.

How does it happen?

How do we compare on the analog basis what is happening in the

second area compared to the first area, on the SWIN18 compared to SWIN16?

All right, so if we're in this position, how would we...

handle it how would we manage it well let's assume that we are fully invested

already in this position 58 bar is really good for us because it still

shows that supply is increasing on the way down so we are feeling really well

um and you know there is a suggestion to add right here which we would

And then look at how the price moves to the downside, the characteristics.

Dimension supply signature, and as we come close to our target zone, we are

starting to experience some kind of buying as the oversold zone

acts more as a value zone right here.

So there is some buying.

around 59 .60, and then the price continues to the downside and comes

the oversold condition, below 40 and 41 on increased volume signature.

So right away here, we would be thinking, what are we doing here?

Are we experiencing a distribution, a continuation of the distribution that

we have had, or could we possibly

be thinking about the trading range and maybe more of the accumulation type of

action. So with that, guys, I want to see who would like to volunteer

to go through the next segment with me. So just say yes, and hopefully somebody

who has not done this before.

And we'll go for maybe 20, 25 minutes after this.

I'm waiting, waiting, still waiting, still nobody is saying yes.

Now I'm curious about why nobody is saying yes.

What are your thoughts inside of your head? Why are you not stepping in?

This is an excellent opportunity to advance your knowledge.

Yes, it's uncomfortable.

I get this.

You don't want to do this. I get this.

But that's the only way.

All right, let's go to Doug.

Some motivational speech for you.

Hey, Doug.

Hey, how are you doing?

Good. I can't hear you really well. Could you be closer to the microphone,

please? Sure.

How's that?

Much better. Much better, Doug.

All right. So I stopped the analysis at around 61, and I said that there

are... probably a couple of scenarios where either looking at the distribution

of this is just a first move or like a second big move to the downside.

And the second scenario, maybe we're in the trading range and we need to define

the bias of this trade range.

Let me ask you a more general question.

How would you approach this puzzle? How would you approach this problem?

What are the first things?

answering those questions.

And basically the question is, are you bullish or are you bearish at this

How would you think about it? I want to understand the logic of

this thought so that we would either say, yes, this is good, or we would

this logic. So what are you thinking?

Point 61, although it is a bullish bar and it's finishing near the top

on its close, it's still, in terms of the recent activity,

it hasn't really accomplished very much yet.

There is some demand. I guess the other factor that I'd look at is there is a

fairly big... Doug?

I lost you.

Sorry, I hit the button.

Yeah, so on 61, the extenuating factor is there's a pretty big demand tail

coming in on 61.

But, again, its close is really not really

moving too far up than the two previous.

bearish bars.

It hasn't really accomplished a whole lot there.

Okay, so therefore the bias?

The bias to me is still bearish. Still bearish. Okay, so let me ask you another

question.

It's kind of like a continuation question.

For the bearish bias, what do we have to see from the price and the volume

signature as well?

to confirm this assumption.

So what would be kind of like the next, how would the price structure unfold

next if this is a bear scenario?

Well, there is, you know, that bar at 61 has one of the highest volume

signatures, which indicates there's still a fair amount of supply that is

present.

Okay. But I'm asking you, if you're thinking about the bearish bias,

how would the structure develop after this?

Would it go down right away? Would it consolidate?

What should happen here and why?

Okay, just looking at it, although that bar at 61, again,

has, as I said, some...

demand tail it's the the level of activity which makes me think as it goes

forward yes there will be a reaction but how strong that reaction will be uh it

doesn't look like it would be very strong so you mean up to 62 up to 62

that swing what is that swing 20 we're calling it Okay, so the reaction to the

upside, okay.

Right. Okay. So there is likely, because there has been some stopping action by

bar 61, but with the large volume signature, it makes it a little bit

questionable of how far that any reverse rally is going to rise.

Speculate. I'm trying to extract this information from you.

Speculate as to what's going to happen after 62.

I'm speculating that it is going to resume its downward trend.

Okay, great. And that's kind of like what I wanted to hear.

So therefore, if this is the case, if the price is going to continue to the

downside from 62 and just going to go down, then how would we label

61?

in the relationship to the 40, 42, 44, 55?

Could we label this whole thing?

You could label it, I guess, as a spring.

Hold on a second. Are we talking about the bullish scenario or a bearish

scenario?

Yeah, I guess, or a sign of weakness, I guess, would be probably more

appropriate in a distribution. Okay, let's review really quickly. So if we're

talking about a distribution, and in this case, the original distribution is

right here at the top.

Right. And this is going to be considered by us as a redistribution. So

redistribution is going to look like this.

Right. A salient climax, which is going to be intermediate salient climax, not

terminal, not final.

Secondary test, phase A.

Phase B, up thrust into phase C.

Major sign of weakness.

LPSY, and then a continuation to the downside. I want you to label this whole

range.

Okay, so.

The way I was sort of looking at it is 61 is your sign of weakness.

62 would be the LPSY. Okay.

I won't do everything.

You won't.

And we're going back through there, then up.

We're looking at 55, then would be the upthrust. Okay.

Phase?

That would be phase C.

Yeah. And then you have prior to that your secondary tests.

Do phase A first.

Oh, okay.

Yeah,

so that would be your sales climax coming up.

42 would be your automatic reaction.

And, yeah, and then I was going to say that you have your secondary test, which

would end your Phase A.

Okay. So see how simple that is, Doug? Right. So Phase C, define Phase C,

define Phase A.

Everything in between is B.

You don't have to think about what's in B here unless I'm asking you here, like

identify 46, 48.

So just a small shortcut for you.

Okay. So, yeah, it looks.

So here is a schematic, here is how it looks.

Now, let's talk about characteristics.

So I want to extract from you the information on the major sign of

in LPSY.

Okay, so major sign of weakness, obviously in phase D,

are gonna have what type of the characteristics?

It's going to have broken the support.

Okay, but in which way?

Because we could break support with the spring as well. And our conversation

here is going to be more about this.

Major sign of weakness or a spring, right? So

something like this.

In both cases, we will go below the support level. So I want to establish

level of commitment, price commitment, that major sign of weakness will have in

comparison to a spring.

Yeah, just looking at this chart, I mean, one of the characteristics on the

spring would be that it does, which is happening here, is it doesn't last very

long.

below the support, and there is a change of character. Okay, so you're kind of

jumping forward.

I understand your logic there, but I want us to stay on this thought for now

because that might, you know, I see that you understand this, but I want others

also to understand as well. So major sign of weakness is going to come down

which way in comparison to the spring? You said that commitment of the spring

going to be...

Let's just call it temporary.

Yeah, I guess perhaps what you're saying there is that you

have the commitment is to the downside.

To the close, would that be? Yes. By the commitment, we are looking at the

close. Right. And we usually would like to see that commitment, right? So let's

talk about the commitment.

That's okay if we're reviewing this, guys, because we need to. Okay, so

commitment. How would we measure the commitment?

This is a temporary commitment, and the price just commits

with one close.

This is going to have a progressive commitment to the

downside.

where we have multiple closes that are below the levels of short

term commitment between the bars here.

So three closes.

So this is more of the temporary commitment.

And this is, and then another one, a bar like this. So imagine a bar like this.

This is more of the attempt to commit.

So it tries to commit on the intraday level. We see this from the tail of the

bar, but it doesn't close below the support.

Next bar, more permanent, more kind of like significant commitment. At least

close below, but then it goes up.

More permanent commitment where we have multiple closes.

And not only that, the closes to the downside are showing some progression.

as they close lower and lower and lower.

So this is just on the commitment itself.

But let's come back to the major sign of weakness.

So you said that with this spring, we are going to have somewhat of a

commitment. Maybe one close.

Maybe this is an attempt to commit to the downside.

Now, what kind of commitment to the downside would we have with the major

of weakness?

Well, it's a longer duration.

Okay, so stays... It stays below the level of support for a

longer duration.

Support longer.

And this usually is going to mean that you might have multiple closes.

Right.

Which I guess in this case you have three, as it looks.

Well, we're only talking about the progression of the commitment. If we

up bars in between these three closes here on the commitment, we're still

to count one, two, and three. Why? Because those are the most important

us below the support.

Are we staying below the support? And are we progressing lower below the

support?

So let's say multiple closes, but the idea that you said that staying below

support longer is the correct one.

Because if we're going to have multiple closes below that would suggest that we

are staying below that price, that support level.

Okay, so what are the characteristics? Don't think about this right now. Don't

compare this. Don't think about this screen. Don't think about the major sign

weakness. Let me teach you.

what is the next characteristic that we would be looking at on the major sign of

weakness that would tell us that, yeah, this is a major sign of weakness and not

necessarily a sprint.

And I'm going to give you a hint here.

I want you to look at the characteristics of the move to the

61.

What would be the characteristic of a major sign of weakness as the price

down?

Would it be accelerating to the downside?

But I guess that applies also to a spring.

But there might be a slight distinction there.

Look at 37 to about 39, right? So this is a sign of weakness. You could use

as an analog here in your comparison. So what does this spread do?

Okay, so the spread is increasing.

Yes, increasing relative to what we've seen, let's say, 33 to 35.

Right, which is happening in this particular case also.

Okay, where exactly?

What are you comparing it to? So let's look first.

Hold on. Don't rush.

This is very valuable.

What spread are you looking at downward spread from 55 to 61?

If you would average all of the downward spreads in this area, what do you think

the size of the downward spread would be?

It looks like it would be around the size of the major sign of weakness bar.

Like this one right here?

Yeah. Yeah, probably will be something like this, right?

Right. Would you say?

Right, right. So this would be an average down bar.

Okay, so is that threatening?

Is that threatening?

Is that as threatening as the downward bars from 37 to 40?

No. Is it the same size as...

43, 49, and 53.

No.

Okay, so then what other characteristics do we need for the major sign of

weakness here to show us that indeed this is a major sign of weakness? We

it's in the spread, but also it should be in the volume signature, right?

So we see how the volume starts to increase here. And this is slightly

different. This is more, you know, comes with an ease of movement. And even if

we said ease of movement here at 56, look how different this is of movement

the distribution information here from 33 to 37.

It's definitely a larger.

A lot more volatility and a larger spread in those bars.

Yeah. If we would compare two swings, we would compare a swing from 37 to 40

with the swing from 55 to 61.

Which one is more bearish and which one is more bullish?

Or let me rephrase this. Which one is more bearish and which one is less

bearish?

well, definitely the 37 to 40, what is that, 41, is more

bearish. Yeah. So we want basically to see the volume increase on the major

of weakness. Why? Because we want to see selling, increase in selling.

Do we see a substantial increase in selling in this area?

So look at, let's say,

58 as the bar that does have some selling.

Which bar else here do you see a substantial selling?

I'm going to be extremely detailed here because I want you guys to get this,

and, Doc, I want you to see this as well.

56, does it have a lot of selling?

No, it doesn't. Okay.

First downward bar after 57, this one right here, does it have a lot of

No, it's small again.

Okay, so 58 we discussed. Yes, there is some selling.

Okay. And then next bar to that.

Yeah, same thing. It's relatively small.

What's the intention behind this bar?

The intention would be to go beyond bar 58, which it did.

It's to the downside.

Well, we see that there is an attempt to rally here.

So in reality, this volume signature is showing us an increase in the demand.

And the demand comes because of this bar right here. This is where they bought

in before.

So someone's thinking, I'm going to do the same. I'm going to buy at this

because this is an area of the support, and then the price is going to go up.

They're lucky for a moment there that the price goes up, and then

it's being sold into them again.

So we can't really say that this is a lot of selling. Some buying is behind

as well. Okay, what about the next three bars or the next four down bars?

Yeah, they are.

The volume is down. I was looking at it from that intermediate bar 2 after

58. There's an increase in volume happening up to 61.

Don't go away from me. Don't go away from me. Just stay with me. Stay with

Because there are so many details, if we're going to just side note, we're

to lose the logic here. So looking at this volume signature, is there a lot of

selling on the way down as we go down?

Probably not.

Yeah. Probably not. Then we go into the 59 to 60 area. There are attempts to

rally. So some demand starts to occur here.

So here is a function of the demand. And we're still failing. But are we failing

on the increased supply that's coming in?

Not at this point.

Demand is increasing and the volume signature locally increased.

But it's not as much as what...

selling we have had before.

So selling is going down.

So we kind of see through the progression of this reaction that the

actually going down. So now let's combine everything.

And again, just kind of stay with me.

We've said that we need to see what's going to happen with the commitment

the support.

We see only one close below.

And then the price recovers.

And recovers relatively quick, right? Then we said that a major sign of

is going to have the characteristics where the volume is increasing and

therefore supply is increasing on the way down.

Plus, the down spread is showing some kind of

also element of the increase of the result.

to the downside.

Do we have?

Yeah, we don't have that.

We don't have that.

Okay. So if we don't have that, then it's probably not a sign of weakness, at

least for now.

At least we need to confirm this.

Then probably we're thinking that this could be a potential spring.

Okay. So now, again, we're not done.

So guys, don't think that we've defined this.

Doug, let's talk about the spring.

What kind of structure the spring would have around the support? So we are

committing to the downside, and then what should happen after the spring?

It should, as the name implies, it should spring. There should be a

Okay, so we have that, so that's the first confirmation. The price

commits below the support, has some kind of demand signature on both of the

bars, and the price comes back into the trading range. So we are confirming a

couple of things here. Number one,

short commitment, temporary commitment to the downside.

Number two, emergence of demand.

Number three, coming back into the trading range. Trading range. Number

what should happen after that comeback?

It should test.

Test.

So we are waiting for a test to happen. If test happens, this is going to be

another confirmation that this was a spring. What is the next one?

After that?

Yes.

then it should rise through the trading range to some sort of sign of strength.

This commitment below this local resistance that is being created between

below the spring and below the test, this high right here, I'm going to give

name to that because this is such an important localized high right here. If

have a local breakout of that, It's going to act as a confirmation,

final confirmation that this was a spring.

Let's kind of like stay in this space a little bit. Let's observe all of this.

Okay. So we are thinking that does not look like

a major sign of weakness.

We might still be mistaken.

If this is the spring, give us the test. Test number one is there, temporary

commitment. Test number two is there, demand is present, and there is

on the way down there.

The test number three, the price comes back above the support level and comes

back into the trading range. We still don't have test number four.

which is the test itself, and we don't have the test number five, which is the

local breakout above the resistance level, which probably will be somewhere

here.

So this is what we are looking at. If we have this, the breakout,

this is going to confirm the bias to the upside, at least a

short -term bias.

By the way, really quick question, Doug.

If this confirms, actually two questions.

If the breakout confirms that this was a spring, where is the target for that

trade? That's number one.

The target for the trade would be up at 50, well, in the area of 46, 48,

53. Okay, great. So this is our target number one.

If this is a spring, then what is the rally? How would we label the rally?

How would you label the rally?

Think about spring, phase C.

Oh, it'd be phase D, yes. Phase D.

Yeah. And this rally would be labeled as?

Major, well, major sign of strength or possible major sign of strength. Major

sign of strength.

Where in phase C on a spring, then the next thing

that's going to happen is phase D and a major sign of strength.

So our target is not necessarily just on the boundaries of the resistance here

of 46, 48, 53, 55.

Because what is the definition of the major sign of strength?

That it goes above the trading range, closes above.

The trading range.

Closest above the trading range boundaries.

It didn't make a commitment above resistance.

It makes a commitment above resistance.

Right, exactly.

So the major sign of strength in comparison to all of the upthrust that

before would travel through the trading range starting with, you know, at the

loss of phase C.

would commit above the resistance cluster that was created in

phases A and B, and then would come back into the area of that resistance. Now

that is going to act as a support.

So we have a target number two as well somewhere here. So two targets. So that

was the question number one.

Secondly, if that were to unfold, where would we open a position?

You'd be opening a position after that test.

After the test?

The first test.

Where else?

Okay, so number one.

Right, well, up at the backing up action that will hopefully occur.

You mean right here?

Yes. Okay, but before that, are there any other places?

I guess perhaps after it.

It passes the level of 62 you might enter?

Absolutely. This breakout acts as a confirmation, as we said, right? Right.

this confirmation equals just a point of entry for us. Why wouldn't we get busy

here with this trade at this point? Because if we're thinking that target

and target two are so far away, it's a really good swing trade.

Even if we are wrong and this is not a major sign of strength.

and it's going to become an up for us like we've experienced before.

It's still a really good trade because we have a lot of distance here.

This was a very quick trade. We probably might not even consider this. This

trade was quick and also we might not consider it because within the

contextual structure of where we are, phase B, we're not necessarily that

about this. But this was a good trade.

And then this could be a good trait.

So these are the two swing traits within the context of the structure.

And then when we are in this position, and if the major sign of

strength characteristics are going to unfold, like what we've done with the

major sign of weakness comparison to the sprain with dog, we're going to do the

same process when we're going to look at that rally. And we're going to say, are

there characteristics?

of a major sign of strength as the price moves up?

Are there other definitional characteristics of the major sign of

the price approaches the resistance?

Is there any supply that is starting to emerge in this place?

And if it does, what's the rate of absorption for that supply in this

level?

And then we'll go through the same process that we've done at 61 with the

sign of weakness at the spring.

So therefore, on the way up, we do have quite a few opportunities to establish

this position.

The test itself could be our first point of entry. The breakout above 62 could

be a second point of entry.

Any type of significant bars to the upside as a sign of strength bar

could be also.

another point of entry.

So we could potentially have maybe like two, three points of entry here. That's

number one. We definitely want to slow down as we're approaching the resistance

because we don't know if supply is going to come or not.

We'd rather wait, as Doug has said, for the backing up action or a confirmation

of that.

So that's going to be kind of like our strategy.

Okay. Yes, sir.

Between 61 and 62, what sort of threw me off is the declining volume signature,

and that's what made me think that it was

not a spring.

Yeah.

Okay, well, let's definitely address this, and then we have one more point I

want to show you guys, you know, where we are with that, and that's going to be

your homework.

We're definitely going to go much faster next time. Doc, don't think that this

is you. Everything that you and I have done is fantastic.

That's great. Thank you very much.

Yeah, because you brought up correct thoughts, and we, you know,

correct in a way of your thoughts produced correct questions.

And it was great how we went through all of this because

the logic was presented.

So we could be mistaken, guys.

And it's not a huge mistake to be

mistaken in our analysis. It's a huge mistake not to analyze it and then not

adjust ourselves in the logic.

And that's exactly what we've done here.

But let's come back to the question that Doug is asking.

The volume signature is diminishing.

So therefore, what is happening with the supply?

The supply is diminishing. What is happening with the demand?

The demand would either be the same or is diminishing somewhat. Actually, it

would have to be increasing a little bit, otherwise it wouldn't go up.

Okay, so this is where our analytical issue is lying.

So could we have this situation?

Could price go up on diminishing demand?

Yes, if supply is exhausted.

Yeah, if supply is poor or exhausted. Is supply poor

or exhausted or diminishing here?

Yeah, it's diminishing, right? It's poor.

Demand is diminishing too.

But yet, what is the price doing?

Price is going up. This is what we discussed last week, I guess. Yes, yes,

yes. Remember that chart with Home Depot?

Remember the ice cream story?

Yes, great story.

So ice cream story is all about diminishing supply, diminishing demand,

the price is going up.

So kind of the same here.

But there are two concepts here.

So the ice cream concept is all in how the price goes up and how the volume

the supply and the demand are going down.

But the one that precedes it, and we didn't go through this a lot, was bar

number 61 and bar before that. On these two bars, we see that the volume has

emerged. And it's only temporarily that the price went down. So the question

here is, how could the volume signature increase so much? How could supply

increase so much? And yet, only one temporary commitment to the downside,

then the next bar, it tries to come back.

So we know that with this increased volume signature, we're probably

about the increase of the demand. So therefore, we're thinking about

on the way down. That is happening.

Wow. Great example.

So then...

We are observing the supply on the way down, and then supply is exhausted, it's

diminishing, and demand is diminishing only because it has come here.

It's sufficient.

There is no more need for additional demand, at least at this point.

Unless supply emerges, demand might come back and emerge again, if the CEO is

thinking that this is a good value for me here, and this is a good selection.

And at 62, that doesn't happen, does it?

The supply doesn't increase tremendously.

No, there's nothing. So if we would be considering this as a test, we probably

would say it's a successful test.

The test is happening above the support.

The test is happening as a high or low.

We obviously need to reverse that.

We had a short -term high or high right here.

And supply is...

One of the lowest supply signatures on this chart.

And one of the lowest signatures since the selling climax.

So it looks like a good test at this point, at least for now.

So, Doug, that's the main point for you, just, you know, on a kind of like

personal level, right?

And personal, I mean, like for you on an individual level.

The price might advance.

when demand is diminishing, and that would be the function of exhausted

And we definitely want to combine that concept with the absorption on the way

down that we see from this volume signature right here. Then also add the

of the structural analysis, characteristics of the major sign of

comparison to a spring.

And that kind of brings me – I'm going to make a note. I'm going to make a

for maybe next cycle where major sign of weakness is compared to a spring, and

then upthrust is compared to a sign of strength.

And I think that could be a better explanation.

What else, Doug?

It's all contextual, isn't it?

It is, yeah.

Of course, yeah. The context is always going to be a layer for us. So we're

going to have the layer of interpretation of the bars, volume bars

bars. We're going to have the layer of the context in terms of labeling. We're

going to also have the context of swing analysis like we did from 55 to 61

compared to 37 to 41.

There's going to be also the layer of...

characteristics of the specific WCAG events.

So the comparison, right? So what, how it should look like. And that's why I'm

saying to you guys that all of the material that we've learned, you know,

the first months, you gotta review, you gotta go back there, you gotta pull out.

from your library of slides, you know, that slide on major sign of weakness and

a sprain. You know, what are the differences? You know, how do I

know, interpret it here and so on and so forth.

Okay, great.

Doug, one more thing here. Let's see what happens next.

Okay, so here we're going to start next time with this slide, but what I want

to, talk to you quickly here is

actually let me just pose this as a question for the homework. And obviously

homework, guys, is just to watch this segment again of the exercise, the

exercise segment.

Rewatch it and make notes. Send those to me.

But the question, the homework question is going to be this.

Bar number, I'm extremely interested in bar number 64 and 65.

Those are the breakout bars.

Are we entering the position on these bars or not?

So let's make this a homework.

And this is where we're going to stop today.

Would you be entering on these two bars, on the breakout bars? Because our

strategy was a sprint, a test,

and we are buying here on the breakout.

So the question is, would we be buyers on bar number 64 and bar number 65?

Doug, again, that was a really good job.

And I commend you for stepping in and being in that

maybe uncomfortable zone, but going through this and learning and staying

the logic of it and kind of like finishing this. So really good job.

Thanks a lot. That was great.

Okay.

All right, guys, this is it for today. Don't forget the homework.

Definitely we're going to continue in the next class.

I think we're going to have less of the theoretical material in the next class.

I want to finish this exercise.

If you can believe I have 30 more slides on this, 30 plus slides on this, so at

some point we're going to go really fast.

A question here from Nilesh. Could you please upload power slides for this

exercise?

So usually we provide you guys with, with what, with the PDF.

Is there a difference for you on eyelash between PDF and the power slide?

You know, I could definitely do that. You mean the homework power slide?

Okay, yeah, I could do that. I could do that.

I probably should do this in a slightly different way, but yeah, I could

definitely see how it's easier than the PDF.

I'm just thinking about all of these numbers because in the PDF it's

but I'll probably just copy -paste it and still paste it into the PowerPoint.

So yeah, thank you.

All right, guys, I'll see you next week. Good class, good job.

We're moving along, so let's just finish it next week. Thank you, guys, and bye

-bye.