Original subtitles

Hello, everyone. Today is April 8th, and this is our session number 14 of the

Wyckoff Trading Course.

We only have two sessions left.

Last class will be next week on April 15th.

This is the time where I kind of start reminiscing a little bit about the whole

group. We've been together for quite some time.

So I'm definitely, you know, used to a lot of your ways of how you communicate,

what you send, you know, how you behave in the classes.

So hopefully, guys, you know, after this course, you'll find the way

to, you know, stay in our community in any capacity, whether, you know, you're

just watching, you know, a free material from us that we post or maybe taking

some other classes. So I would be really happy to see you.

to see you around and to see you participate in the community.

There was a question about the Wyckoff Practicum course.

So I'm actually moving it to a different slot from

Mondays to Tuesdays.

I've realized I had, you know, some conflict, you know, going into summer.

So I could only, you know, have, you know,

Lesser Duration series, there are like specials on Mondays.

My apologies, guys, and for those of you who have registered, I sent out an

email today to all of you, and I just said that, you know, let me know if it

doesn't work for you, but it seems like everybody's okay with that.

So that's just that announcement. And on April

23rd, so that's...

two Tuesdays away from tomorrow.

We're going to have a free session for that class.

I'm going to invite all of you to attend that session. So just put this on your

calendar.

April 23rd, first practicum session, and it's complimentary for you guys.

And yeah, thank you for registering as well.

I'm looking forward to it.

We're only going to have nine sessions, so it's not going to be 15 sessions.

It's not going to be 12 sessions. It's only going to be nine sessions.

And that's why the price is so low.

And we're going to go through a lot of exercises there.

We're still going to go through some material that we just can't cover

all of it in this course. So it kind of spills into practicum.

Specifically, we'll talk about a lot of tactical decisions.

a lot of exercises on that, a lot of selection bias exercises where

I'm just giving you an assignment as a homework to determine the bias of

the formation and so on and so forth. So those type of things.

So for those of you who are interested in continuing your work of education,

practical mode is probably the best way to do that.

And obviously, you know, look out for other offerings that we have.

WMD, that's Wyckoff Market Discussion on Wednesdays. Bruce and I, we discussed

the last bar on the chart.

We go through the market analysis and all that stuff. So you kind of could see

the application of the method on the real current

market activities.

I also will be presenting this week on Thursday

at 9 a .m. Pacific at the Market Watches Live at StockCharts TV.

So for those of you who have any interest and you guys have time, come

out. It also will be posted on their YouTube by the evening, so you could

watch it on their YouTube.

Also, I want to say that some of you have sent me some questions for today's

session.

So I don't think that we have time for questions today.

So I want you to resend your questions for session number 15, and I will see to

what degree we're going to be able to go through those questions, because I

still would like to give you a little bit more material.

But if we do have time next class, this is definitely something that we will do.

or send me those questions again and for those of you who would like to send a

question please do so do not forget to include the chart to the question

because otherwise you know it's going to be a very very low priority um question

for me you know to answer all right i think that's it let's jump into

our material

Okay, so today we're going to finish the comparative and relative analysis. If

we have time, we will go through the homework.

Thank you for sending that.

Then we're going to talk about the top -bottom approach, filtering.

As I mentioned, we'll review the homework. The homework for next week is

going to be on comparative analysis.

And today I've put the slides.

from session number 15 into our deck.

And I hope that we could go maybe until maybe like not just 5 .30, but maybe

like 5 .45, 6 o 'clock Pacific.

So I want to go through as much material today as possible.

So we'll talk, if we have time, about the points of entry today, stop losses,

and exits.

And if not, then we'll do something else.

We'll move it to the next session.

All right, so now we've talked about comparative analysis, and we practiced

that, and we said that this is the analysis that Wyckoff himself conducted

100 years ago. He was comparing a stock or an

instrument to some kind of market proxy or maybe another instrument.

And his intent was to determine by the price action which instrument is

behaving better, which instrument is behaving stronger or weaker.

And that suggestion about the weakness and strength would give him some

deductions as to how institutions are perceiving the stock and how those stock

operators are perceiving the

the demand and supply in the stock, and what are they doing with the price? Are

they moving it up with the momentum or not?

So that was the idea.

Then later on, a relative strength analysis has been introduced, and

it's what is considered kind of like a more modern version of the same concept

of comparative analysis.

And there we see that the comparison is the same, it's just a little bit more

quantified and visualized in a different way.

Excuse me.

And it's very useful to us for scanning and filtering.

We could use relative strength ratio line.

on its own, for each instrument, against a market proxy, against the

sector proxy, against the industry group proxy, and so on and so forth.

There are quite a few comparisons that we could do there.

So the question becomes is, could we possibly systematize

the way of how we filter our universal stocks?

through relative strength analysis.

And obviously, yes, we can.

And I'm sure that a lot of you already know this material, so just kind of

enjoy, and maybe there's going to be something that you're going to pick up,

some small detail that's going to be extremely useful.

So this is the top -bottom analysis.

that I've combined together with the Wyckoff method filtering.

It's just basically a roadmap for us as to how we should approach the process.

I think I should have just put here the process.

And obviously, we should trust the process.

Okay, so the first thing that we want to do is we want to understand where the

market is.

So we want to understand the environment that the market is in.

long -term, intermediate, short -term environment.

Are we in the trend?

Are we in the consolidation?

Are we in the downtrend?

If we are in the consolidation, how do we see the structure?

And so on and so forth.

All right, so once we determine the market's conditions, then we want to go

the next level.

And that's why we're going from the top to the bottom. We're going from the

market to the sectors, to the groups, to the stocks.

and then to a specific stop.

So once we go to the sector level, we want to kind of understand

maybe a general idea as to what is

behaving better right now and what is behaving weaker right now.

Why do we need to do this?

We could just concentrate on the specific areas. For instance, if

been outperforming in the last three months or so, then the technology sector

is going to show that in the price performance.

We obviously want to look into not just the sector, but the groups within the

sector and find specific stocks that would give us...

some kind of chance to outperform the market.

So this is more of the general look when we look at the sectors.

And there we will be looking for two things.

We're looking for the current leadership, we want to define that, and

look for the rotation.

We'll talk more about both on the next couple of slides.

Then from the sectors level, we're going into

more detailed level of the industry groups.

Those groups are going to be within that sector, and they will be more specific

to what the company does.

So we could have, for instance, in the technology sector, we could have the

group that is software groups, semiconductor conducting stocks.

something like electrical components and so on and so forth. There are so many

groups that one sector could have.

And so we are becoming more specific to a specific thing.

For instance, right now, there is a lot of

kind of like... desire

to own security software stocks because security internet security

and software security is a big big deal in the world in general right now so you

could see that demand for this product in the price of those of that industry

group and in the price of the stocks within that industry group

and then once we define

our leadership group or the group that had their rotation into the leadership,

then we can go to that group and look at the stocks in this group.

And we're doing basically the same analysis as with sectors in the groups.

We want to see the leadership, what's leading, and we want to see how rotation

happens.

And then at that stock level, now that we understand that, We are in the

favorable market environment.

We are in the favorable sector.

We are in the favorable industry group.

And we're looking at the stocks that are also exhibiting some strength.

Then our watch list is going to be comprised of that

leadership universe.

So we're kind of looking at the either best of the best.

or we're looking at the stock that were not the best, but now suddenly they're

becoming much, much better.

And once we create that watch list for us, this is where we are

starting to apply our work of analysis.

Please note how many steps...

Before the Wyckoff analysis was applied, granted in the market environment, if

we have some kind of consolidation as a trading range, then we will look into

the Wyckoff analysis there just for that particular chart.

But look at how many steps we go through until we actually start analyzing

in Wyckoff way.

And that obviously...

happens in this process only because we set it up this way.

Someone might come to me and usually, you know, when students come and they

okay, well, I just want to do structural analysis.

And I say to them, yeah, of course, go ahead.

I've done this too before.

So for instance, it just depends on the universe of stocks that you have, right?

So if you have maybe...

100 stocks that you consistently look at because maybe you're a momentum swing

trader. And for the momentum swing trader, you probably have to have a

larger universe, maybe like 300, between 300 to 500, something like that.

But it could be 100 stocks in a specific sector, in specific industry groups.

and you just watch them, then there you could definitely go right away into the

structural analysis. But if you have the whole market as your universe of

stocks, you need to zoom in and narrow your universe of stocks, narrow your

leadership universe, and only then start conducting Wyckoff analysis.

For years and years, I've been...

I'm a subscriber of the Daily Graphs. That was a printed edition of the Market

Smith or IBD chart book.

And each week, I would go through about 4 ,000 stocks,

manual, literally, just four stocks on one page.

I go through them, all of them, and it would take me usually about three hours

to do that.

And there you definitely think about the structure. You think about the

comparative analysis and so on and so forth.

So it takes time.

And, you know, the more I work with you guys and the more I learn about who you

are, why you come to us, why you trade, what are the common mistakes, what are

the common process -oriented mistakes, the more I realize that.

We just don't have time to do all this work.

Imagine somebody, you know, having another job from nine to five, you know,

just to do all of this is just a little bit too much. So you want to create the

process that maybe like on Saturday will take you no more than an hour.

And this process probably would allow you to do exactly that.

Because as I'm going to show you, These first steps are not going to take too

much. I mean, of course, you could spend more time doing this, but

there is no need.

And then, of course, when we go into the Wyckoff analysis, this is where it

becomes very slow because we want to be very methodical about that.

So we want to make sure, obviously, that everything is by the Wyckoff trading

plan, so we have a specific sequence of what we look at.

Because we already determined the comparative and relative performance,

don't need to look at that.

And we could go right away into the price structure.

There we're going to, as you already know, look at the whack of phases and

events.

We want to determine the timing of where we are in the structure.

Then we will spend a lot of time on the volume and price analysis.

It's definitely going to give us a better understanding of the bias, a

understanding of the timing.

and possible understanding of the character of the next move.

Then we'll comprise some kind of tactical scenarios based on the

confirmations and failures.

So if we think that the bias is up, what should happen next?

And if it doesn't happen, then what should we do?

So those type of scenarios remind me of

some mental work on adjusting

your psyche to potentially any outcome that could come.

And that's why I really like those tactical scenarios.

a little bit more, a little bit better, so that we would understand this a

little bit better.

But basically, as we've talked about this, it's all based on the

of failures.

Confirmation, either confirmation of the bias that you have, confirmation of the

timing, confirmation even of the character of the move, or failure.

And then,

What it brings to us, you know, even a failure brings a favorable outcome in

terms of the analysis.

Because a failure uncovers something that we were not 100 % sure of.

Is it going to fail or is it going to not fail?

So there is always that question, right? And then once the failure happens, then

it's understandable that it's done.

So tactical scenarios are important.

And then obviously the execution plan, and that is how do I enter? At which

point? On which bar?

At what hour?

Is it at the open?

Is it at the close?

Is it throughout the day? Do I look at the intraday level or only daily or

weekly?

And so on and so forth. Stop losses as a part of the execution plan and

points of exit.

So all of those things are extremely important to

go through structurally, right? So again, we're going through the process,

this is the process. And by the time that we are done with this whole

we should come up with our daily execution watch list.

This is the watch list where you have, and I should show you this.

in the next class where you have, for instance, your symbols and then whatever

description you choose to have here.

So, for instance, you could have group that it belongs to, structure and

just describe the structure, some notes on volume and

price, then some tactics.

Then after that, you know, just go through this, right? So you're going to

your points of entry, stop loss, targets, and

that's it. And that's your daily execution watch list where it's in front

every day whenever you look at your stocks, let's say by the end of the day.

You just look at this list.

You don't look at anything else. There is really nothing else to do but just

look at this list. You already have all of the candidates there.

You don't have to find something else. You've done your work.

And let's say at the end of the session or at the beginning of the new session,

you just put in the order.

It's being executed, and that's it. And that's the whole process.

And then the next thing what you do with this process is that you keep adjusting

it. You keep kind of like adjusting it to the current environments and so on

and so forth.

This is something that we will talk more in the practicum.

So this is just more of the general idea.

And we'll talk more in the practicum as to what

are the...

Sub -steps, or what are the further steps?

And especially in a practical, we'll talk about post -analysis.

This is something that I want to develop a little bit more for you guys,

because it's one of the most valuable tools in trading, period.

The way to analyze the way how you conducted this trade, starting from

the analysis itself.

or starting from the process.

So I'll do some of the work on this probably in June for the June

special. I'm just thinking about June special.

And I was thinking of talking about the process

in general.

So we talk a lot about the wake -up analysis itself or just, you know,

everything else but the process how do we actually you know create everything

the weekly daily basis what do we do how do we execute and so on so forth you

know that requires you know some more attention okay

let's go further let's look at some of the examples okay so the first step as i

said we're going to look at the market always so we want to look at the market

from

three vantage points, long -term, intermediate, short -term.

So here are all of the three charts here for you.

Long -term, I would look at the weekly, and I would look at the beginning of

a secular or cyclical run, whether a bull run or a bear run.

And from that flow, I would try to establish for the long -term picture

kind of trend we are in.

And we could see clearly here that we're still in the uptrend.

There were periods where the price has touched the support level, which

indicated to us that there is a short -term oversold condition at those spots.

And the most recent shakeout type action is exactly that. It touches that long

-term support and then it recovers really quickly.

Now I'm using here obviously a logarithmic scale, and the reason why

using arithmetic is just because there is no space on this slide. So you guys

could practice this yourself and just see that the price is still in the

on both logarithmic and arithmetic scales.

So we've established, okay, long -term is an uptrend.

What about intermediate picture?

Okay. Well, we will look at the intermediate

Intermediate timeframe and we are probably thinking that

we are in the trading range Because the price basically consolidates

Around the mean we are in that unique

Historic

trading range that might last for some time.

We might have some acceleration to the upside and maybe a backing up action

right here. That could be a possibility, but we also could just consolidate here

for quite some time and the duration of this range might increase.

We still have not fully tested this area right here.

and that increase of the supply, increase of the distribution.

So at some point that might come.

So as we are analyzing this from the long -term and intermediate point of

what you do with your process is just you write it down.

You write down all of your thoughts about the market on different

timeframes.

And obviously, it's very helpful when you are in the trading range to apply

Wyckoff structural analysis, meaning that we would identify specific Wyckoff

events and be even more specific than what I am here right now.

Then you go to the daily and you look at the short -term structure.

And obviously, we are in the uptrend since the most recent low in late

And we are still uprising, so therefore high highs, high lows, uptrend.

So from this point of view, right away, the question here is, okay, if we are in

the uptrend, then what kind of stocks are we looking for? What kind of sectors

and groups are we looking for?

We're definitely looking for stocks that

are in line with the market.

outperforming the market.

So we're either looking for leadership in the sense of outperformance,

leadership in the sense of the rotation, or we're looking at the stocks that may

be at the same level as the market.

Philip is asking here, which list is comprised of different stocks from

different sectors or just one group?

Any sector, any group, you might go into different sectors and then end up in

different groups with different stocks.

You could do that.

You could also narrow your universe and just say, I'm only going to look at high

momentum stocks that are moving really fast. Maybe technology stocks are going

to be those type of stocks. Maybe some healthcare or maybe energy stocks

of how oil moves.

quickly up and down.

Another question, intermediate and short -term is both daily?

Yeah, I put daily here.

I think that once you get used to this, you know, on a short -term basis, not

only you want to look at the daily, you might also look at kind of like the

intraday picture of the most recent price action. But then again, it's not

necessary.

for someone who wants to go through the process quickly.

It's not gonna give a lot of the information for

any type of change of behavior that would happen on a daily, weekly basis.

We would be able to catch everything with the daily and weekly chart if any

meaningful type of reversal is about to happen.

Okay, so now that we know what the market is doing, step number two, let's

at this sector.

And here with this sector, we need to define that sector leadership and

rotation.

So here, I'm bringing the example from Wyckoff Analytics from our website.

Under the tools, there is a menu where you could go to a heat map.

So when you go on a heat map, your first...

heat map is going to be for the sectors and the whole all

of those boxes with the sectors and industry groups is built

in a way to show that top bottom analysis so we're starting with the

and what do we see for last week and this data if you don't

remember by the way the password if you don't remember, is Wyckoff123.

So these are the pages that are done

by students, are done for students, and this is only for educational purposes.

We don't even have the full universe of stocks there. I believe there are 4 ,800

here.

But you definitely can go ahead and use it on a weekly basis.

practice practice how do you define you know the how you narrow your universe of

stocks so and we see that on the on this week april 5th

the technology sector is number one and it's been like

this for quite some time So we are finding sector leadership, and we could

at the top three, top four sectors and kind of like see out

of the sectors, what are the leading groups in the sectors?

And it's very interesting how...

Technology is outperforming, healthcare.

So both of these sectors are high momentum sectors.

And then utilities.

And utilities are obviously a safety sector

and with good yield stocks. And

usually they would perform well during some...

market volatility, especially where the market volatility just starts, not

necessarily in the bear market overall.

So it makes a lot of sense that the three sectors are going to be the three

sectors. Well, what else are we looking at?

As we've talked about the heat map, we want to look at the rotation as well.

So we are seeing that there was a rotation here in the technology from

December from sector number seven, and we have how many here? I think

nine, two, three, four, five, six, seven, eight, nine, 10, 11.

Okay, 11.

So it was sevens out of 11, and then it became one.

So that defines the rotation.

And when we think about the rotation right away, think about what COO is

Why is rotation being shown to us like that?

Well, rotation means that the sector was not

very favorable in the eyes of institutional buyers.

And now it's extremely favorable.

And it happened during this month.

So what were they doing? They were buying this sector.

Or buying stocks in this sector.

And that's what produced an outperformance as the stocks that were

bought started to see their prices advancing.

And that's what is being shown in this rotation.

Well, look at this.

Healthcare was last to last at

the end of January.

and then suddenly it jumps to number two in one two three four five weeks so

that's a very interesting rotation as well and we would be looking at it you

know um in march or in february as the price starts to move and

Those rotational patterns are extremely important because think about the

leadership, let's say technology.

Within time, because it's been a leadership, it has

advanced in the uptrend already so much that a lot of

institutions would not be willing to buy more.

They would be looking for some bargains somewhere else.

something that is out of value, and they think that it might become valuable

in the future.

And you recently hear on TV that some institutional analysts would come out

they would say, yeah, this stock is not cheap at this price.

So they would be expecting the stock to drop, and then at the point of their

value, this is where they would initiate their buy program.

So you could see this all on the heat map.

Unfavorable stock or sector in this case.

Let's say somewhere here.

Then some small rally.

So momentum is increasing probably here as we're seeing, you know, in how the

sector has changed in the ratings.

And then reaction again.

And then after this reaction, a better rally with more momentum.

So in a way, we're kind of looking at how the price moves as we look at the

map. You know, we could even maybe suggest that this could have been a sign

strength in the structure.

So whenever you look at one element of the analysis, think about what other

elements, you know.

whether they are making sense here.

And then obviously you can go and just to compare and just think about what has

happened.

Okay.

Let's see what questions from Rama.

In generating this heat map, how many months of data do you usually include?

Well, there is a default here, I believe.

So you could use that as your...

point of measurement.

If you would increase the data range, you're just going to have more data

Unfortunately, we only look at this from the perspective of week -to -week

change.

We do not have, let's say, months -to -months change.

And actually, I would kind of prefer that as well, just to see a much longer

jump picture, or maybe even short jump picture.

But you could increase that. That's fine.

Again, it's not going to really change this picture here.

What is going to change is that you're going to have more data.

Okay, well, once you're done with the sector, what do you do next? You go to

next level, right? So you were on the sector level, and you said you've chosen

technology sector.

because you've chosen it either for the current leadership or maybe because

you've seen that rotation happen, and then it was stay in the leadership,

leadership rotation to leadership.

Okay.

And then when you choose this sector,

At least on our side, what happens next is that all of the groups

in the sector are being shown to you.

So you go from the market level

to the sector level and then to the groups level.

So you are zeroing in into the stocks that are

potentially the best of the best.

where institutions are currently present either in a sustainable

way that has been like this for a while, or maybe they just started aggressively

buying.

And we're seeing that through the rotation.

Okay, well, when looking at the groups, you're going to look at the groups in

the same way as you looked at the sectors.

You want to find the leadership, meaning that you want to see on...

On this week, this current week, what is outperforming? What are your top

groups in this sector? And we see that home entertainment software

is group number three out of, I believe, 156 groups total.

So you can imagine that if this is group number three, that's...

Shows a lot of leadership right there.

Look at the semiconductor equipment.

Definitely up there as well.

Hardware, system software, application software, and so on and so forth.

Semiconductors. So there are a lot of technology groups in the top 20 groups

general.

Look at this. That's why the technology sector is outperforming right now so

drastically.

One, two, three, four, five, six, seven, eight, nine. Nine groups out of

technology in the top 20 for all of the groups.

Obviously, just a big sign of outperformance. And then within this

general, you want to identify

that rotation, and we see that rotation, let's say, with the semiconductor

equipment from 126 in the ranking in groups.

We're quickly going to 21, so think about what has happened here.

Think about the market. So the market had a low around this time, and then it

rallied, and then the group has rallied as well, but it outperformed so much.

So this is a rotation.

to leadership, and maybe off the low, this could be

like phase C low, and to maybe a

minor sign of strength, rally,

or maybe a sign of strength, rally, and

then look at what happens next we still kind of like going up and down um this

is a rally right here then we have a reaction

then we have a

rally and again a small reaction and now we're at number five

jumped again like that so this is a very consistent um

way of how institutions are buying. We've seen this even through the heat

We used charts before, but now we're using the representation of the

same data in a different way.

And I'm trying to give you guys just a slightly different perspective as to

such a simplistic tool as heat map. Usually we kind of brush it off really

quickly, but if you...

think about what is happening, why the data is being shown this way. It kind of

becomes obvious of how institutions are being so persistent

in buying all of the technology stocks.

So we want to go in and zoom in into what stocks exactly, let's say in this

group, semiconductor equipment, what are the stocks that are going to be

attractive to us?

Okay, so let's look at that.

And here again, we were at the sector level. We chose technology because it

a leadership group.

Then out of all of the groups that we've had in the technology sector, we said,

well, let's look at the semiconductor equipment group.

We see in both that there was a really good rotation.

And then being ranked number five right now,

It tells us that there is a current leadership.

Okay, so looking at all of the stocks in this group.

And again, we're looking for the same thing.

We're looking for a top leadership.

So all of the stocks that are going to be, let's say, maybe in the top 10.

And actually, with a group as hot as this one, I would go down the road. I

look at it.

probably all of them in that group.

And then we're looking for the rotation as well.

So we know that rotation is important because it allows us to find the timing

for our points of entry.

What do I mean by that?

Well, think about the current trend.

The current trend of the lows in December has been established for three

already.

So therefore, a lot of the technology stocks, the ones that are being shown to

us on this heat map as leadership stocks, have been in the uptrend for

some time.

So if you just go to the top leadership, you're going to find the stocks that

are in the uptrends.

And you would be saying, well, I'm kind of late to the party.

So I need to find something that is emerging.

So top leadership is going to show you current uptrend outperformers.

The stocks where you see the rotation are going to show you emerging

leadership.

Again, something that maybe when you look at the heat map, you did not even

think about.

But this is a very important distinction.

I've been consulting institutions for quite some time, institutional traders

analysts or just, you know, money managers, mostly money managers.

And let's say, you know, when I started doing this in 2010

-11, off the lows of 2009,

a lot of them were having a lot of bearish outlooks for the market at that

time.

And their reasoning was that the market is overextended of the lows.

And if you look at the most recent historical data in 2008 and 2009,

obviously, yes, the market was overbought as it is right now.

But it didn't mean that...

First of all, the trend was done. That's number one. Secondly, that we wouldn't

have some kind of stepping stone consolidations like in 2010, 2011, 12,

15, 16, and so on and so forth.

But a lot of the systems that they were bringing

to me at that time, they were all based on their relative strength. And the way

how they would look at that, was from the perspective of the current uptrend

outperformers. They would look only at the top of the top, the best

of the best.

And obviously, being in the uptrend, what kind of opportunities that creates

you? Well, maybe a swing trade here and there.

That's understandable.

Maybe they will find the stock and then will follow it into the stepping stone

and buy it there, so that probably would be the best scenario.

But what a lot of them were not doing is that they were not looking at the

emerging leadership.

And emerging leadership is gonna look like this.

The market is going up, and the stock is consolidating or going

down, and then suddenly,

that leadership is going to show up in some quick move.

And on the heat map, it's going to look like this.

So for the stock, for stocks, the ranking here is from 1

to 100.

For groups, from 1 to 156.

For sectors, from 1 to 11.

So think about stocks, right? So kind of like a 100%.

you know what's better what's best what's worse um on the heat map

this type of jump might look like 95 to maybe like

9.

95 to 9.

here is that jump usually that type of jump is going to be associated with the

sign of strength

Or maybe some strong rally in phase B.

Or maybe something else. Maybe it's already in the uptrend and then it just

a reaction and then a good rally like this.

So think about the information that is being presented to you on

a heat map. Such a simple tool, yet there are a lot of ways to think about

Well, let's look at our examples here. So we're going to look at two stocks,

right? So we're at the level of the stocks. We see that both of them

have top leadership for the current week.

And then both of them had some kind of rotation.

We're probably assuming that the first stock is somewhat stronger.

And then the second stock just had really good, like two rallies.

And then it become...

you know, a top stock right here. So we want to definitely look at that.

And don't forget that this is the last step for us where we are contracting

our universe, narrowing our universe of stocks that we would want to analyze

based on Wyckoff characteristics.

So this whole process is just doing exactly that.

Okay.

So here are the charts of you know, these two stocks. And I'm going to show

how easily you could find these two stocks, you know, using, let's say,

Analytics tools, or we're going to go through stock charts, because this is

the majority of you are using, and I'm using that too, and it's a really good

software.

So we'll go through that.

Okay, so the first stock, AMC Research, and these are the daily charts.

I'm looking at this and I understand why the stock behaved this way on the heat

map. It basically showed a lot of momentum, but look at where it started

up.

Beginning of February, not at the end of December where the market has made that

low.

So that's why it's so important to catch the rotation of the thoughts happening.

For instance, here, here,

here.

If you could catch it there and you can do this, and the way how you do this is

just, again, use it to like a heat map.

By the way, let's just look at maybe like mid of February to the

end of February or maybe beginning of March.

Actually, not mid, even March.

Let's look at that rotation. Okay, so where is this?

Somewhere.

Yeah, mid of February to the end of February, right here.

So in one week, it was just one week.

But you see that jump from 32 to 5?

That's a big jump.

So what is it about?

Momentum has increased. When momentum is increasing right away, the question

that we have is that usually suggests some buying.

That type of momentum can only be buying.

done by institutions.

Why are they buying? They are interested.

So maybe there is some kind of accumulation that is going on.

We go to that stock right away.

And we're seeing that there is a really good momentum up off the bottom.

And that attracts our attention.

Why? Well, because we see a Wyckoff structure right away.

And this is where we are heading to go through our Wyckoff analysis.

We are thinking, okay, buying climax, automatic reaction, test, test.

We see another test here.

So test at the top, test at the bottom. We could probably label it as a

shakeout.

And then an automatic rally.

And then a secondary test, phase A.

Then after that, again, test and B, test and B, test and B, test and B. We have

another formation right here.

And it seems like, you know, and we're just going one by one here. So price

structure, we're thinking about phases and events.

Hold on a second, guys.

Okay. So we're thinking a sign of weakness, but probably minor.

There is not a really great commitment here. Look at the spread that commits to

the downside, right? So it's so different than what we've seen here,

texture.

And then again, the next reaction down has the same type of texture, same type

of characteristics.

No supply, so that's all good.

And we're thinking that potentially we could be in the phase C of the

larger phase C.

So A, B, C.

So if we found the stock on that heat map rotation somewhere here, we will

establish initial position.

We will then also look for establishing the position after that. So for

instance, we know that In the structural analysis, if this is C, then we're

going to have a sign of strength within the smaller structure, a backing up

action. And we could buy on the breakout of the backing up action somewhere

here. We're still before the resistance, the long -term resistance here. So this

could be our second buy right here.

And now we're looking at the structure.

And maybe we're a little bit doubtful as to what is actually happening.

Looks very bullish and so on and so forth, but this is how we would go

our analysis and this is how we would find stocks like this. And I've just

to you literally using today's data.

These are the slides that I wanted to create just for you today so that you

would see what kind of canvas.

you could find really quickly like this. And we're going to go through this, you

know, on stock charts in a moment.

Look at the second stock, Amtech Systems.

And look how it finds what. Why did we find this on the hit map?

Again, we're seeing that with this rally, this rally is

outperforming the market.

It's stronger than the market.

So this means that the ranking on the heat map is going to go up.

And that's what we see on the heat map, that rotation from being an

underperformer here in this consolidation to being

outperforming on this rally.

And then right away, we're starting to think, okay, so institutions are

interested or might be interested in this stock.

Do we have appropriate structure?

And we could say, okay, climactic action, automatic reaction, phase

A.

All of that is B.

Potential phase C.

Mid -range consolidation and then commitment above.

and attempt to commit again.

We've seen in both cases that supply is coming here.

So that's the biggest thing about these two stocks.

At this level, supply is coming in quite aggressively, so we need to see if the

price could hold on.

So therefore, when we analyzed it like this, so long -term,

we could say, okay, long -term bullish, at least we could give this bias.

but then short term bearish in both cases.

So what kind of now tactical scenarios are we gonna build?

Okay, if we assume that this is a sign of strength, then we need to define the

boundaries of the backing up action trading range.

So here is one, maybe here is gonna be another line right here.

Until the price actually commits to the downside below either of the levels of

the support, we're probably going to assume that the long -term bullish

is going to work.

And that the short -term bearish outlook is just for the testing of the supply

at the higher level.

And then we will define the confirmation in a specific

way, and then we will define the failure.

in a specific way.

How would the confirmation look like?

How would the failure look like?

Okay, so we said the failure is gonna be just a failure below levels of the

support commitment below.

It would suggest a continuation of the price to the downside here.

the confirmation to the upside is going to look either as a trading range or

some kind of element of the absorption and then continuation to the upside.

And we know that here with the confirmation, we would be able to add to

position to whatever we already, let's say, have in this position.

The same with these OMTAC systems.

We are in the sign of strength, so we...

potential sign of strength so we're assuming that for now the long -term

is going to be to the upside and the short -term trend has some bearish bias

behind it and until that bearish bias turns into the up

bias again we are not going to do anything and if it fails we're just

job and we just said okay failed

My scenarios are going to be all about the price potentially going to the level

of the support and even lower. So what is my trading decision there? Am I

closing the position or not?

Okay.

Let me see if there are any questions.

Okay.

Okay, from Philip. Are we doing all six steps of top -down process?

at the beginning of every day, or is it not necessary?

I think I was clear, but let me just kind of state this again.

So this type of the analysis where you go through,

where

you go through the market, the sectors, the stocks, and you create the watch

list, that's number one, and then you go,

through the Wyckoff analysis and you come up with the daily execution watch

list.

You do this on the weekly basis.

So this is weekly, weekly, and then this

is gonna become daily.

Because basically you're gonna again have that watch list with symbols and

you're gonna have those stocks there and It's going to tell you when your point

of entry is. Your point of entry at either at the close or at the specific

price and so on and so forth.

So analysis, you conduct once a week.

You don't want to spend so much time each day on such an analysis unless you

have time, unless this is your job, unless this is what you want to do.

A lot of us are busy with nine to five jobs.

So you do this on Saturday, Sunday, maybe Friday evening when the markets

closed. You prepare yourself for the whole week.

So when it starts on Monday, you already have your daily execution watch list

and you just watch those stocks on a daily basis at whatever point

of...

execution that you have you know you execute whether you do this in the

whether you do this at the close of the day doesn't really matter but you don't

come back to this process until you know your weekly point of analysis okay yeah

good questions and I think that this is something this is why I feel like that

maybe a special on the process would be really good okay let's

come back

Yeah, let's look now at how we would use the same approach using stock charts.

Okay.

So here's the top page for stock charts. This is usually where I start my work.

I like going into different things, so I'll show you today different ways.

And usually students kind of like, you know, going through a lot of those

features because I'm showing you exactly what I'm doing when I do this type of

analysis. So I right away go to charts and tools.

And here, this is the section that I usually spend a lot of time

in. I'm looking at the markets. I want to see what the markets are doing. It's

very easy just to go through those charts. That's number one.

Then I could quickly go through the sector. I could look at the industry

I could look at scooters. We'll look at scooters later on.

Now, stock charts, let's look at the market first.

So you have two type of views, the chart view and table view here.

You could just kind of scroll down.

And what's nice about this is that you right away have the markets, the major

markets, and then you have the sectors here, right? So industrial, the Dow.

And you could change here to NASDAQ, S &P, whatever you want to put in here.

you could go to the chart more, a much larger chart, and so on and so forth.

So you could do it like this.

I am kind of used to the old ways of what they had, like this.

So I could quickly just look at the chart like that.

And then if I need to go and look at the details, I'll click on the chart. And

again, it's so fast.

And on the weekly basis, when you conduct this analysis, you're not really

to...

We'll spend a lot of time on this because from week to week, not a lot of

are changing unless we're in extremely volatile markets.

So on the rally for the last three months, what were

you doing analyzing the market? Well, it was the same outcome, long -term

uptrend, intermediate -term trading range.

short -term uptrend, and you might see small reactions here within

the structure of the rally.

That's it. There's nothing else to say here, so you're gonna be extremely fast.

Then after that, you could go to the sector summary.

Again, I like it like this. You could use other ways of looking at this.

Now, one trick that I want to show you is that you want to look at the

of the market, the most kind of like recent intermediate structure, and to

understand what is happening here.

We had a move to the downside. We had a trading range.

We had a move to the downside, and then we have a rally.

So when you look at the...

of stocks, you want to see kind of like a very logical

duration for the period that you choose.

If I choose just one day, then it's gonna show me only the stocks that are

outperform on that day.

But if I'm gonna say that the rally has extended itself in the last three

months,

I probably wanna look at, if I wanna look at the leadership,

I probably wanna look at all of the three months, like

what are the top stocks right there?

If I wanna look at the rotation,

I probably would choose to look at the latest month because

I see how the market had reactions right here and some of the stocks, that were

weaker might have started to outperform during those reactions because

institutions saw some value, and therefore I want to catch it earlier on.

So let's say I'm going to do one month.

Okay, so where does this come handy? Okay, so let's say for

the ultimate performance, three months, we're seeing that stock charts

By arranging the three months performance, technology comes on the

that's in line with what we've seen also on the week -to -week basis from the

Wyckoff Analytics tool.

Okay, great. So what can you do next?

You could go right away into this sector from here, clicking on that, and then

you go into the group level.

Awesome. Three months. I know that the computer's hardware.

has outperformed.

And you could look at the percentage change here.

30%, 25, 23, 22, 18, and so on and so forth.

And then semiconductors are somewhere close.

Electronic equipment, somewhere close.

Everything. I mean, think about these percentages for the last three months,

meaning like for the whole year.

If you are in the technology, you're doing extremely well.

Okay, so then the next step, and this is why it is so easy, just click on the

computer hardware and you see all of the stocks that are in this

group. There are quite a few, so we could filter them further.

What do we do further with that?

Well, a couple of things that we could do here.

And you obviously see this ranking by the percentage change.

I usually look at the cap size, so the

U letter.

This refers to the cap size right here, large, small, or medium.

And I would just sort it like that.

I don't know all of the stocks that are... Before that, what it means that,

know, there is no scooter, there is no cab, but right away, here I see

large cabs.

Meat cabs.

And I would start with those, and I would start with large. Why large?

this is where institutions are.

They love large cabs.

Why?

Liquidity.

All of those times when I repeated that they need liquidity to get in

and to get out, I was not joking.

They have so much money that they cannot move a lot.

Think of it as maybe, you know,

like, A small turtle when they are born, right?

And a large turtle when they're already maybe like 200 years old.

So whenever, hopefully, understandable here, whenever I watch those programs on

TV about planet Earth or something like this, I love those.

And they show the small turtles.

being born and how they are trying to get to the water so fast and then you

watch you know a very old turtle uh that um you know maybe like a hundred years

old or something like this and they move so slow so think about institutions as

that big big huge turtle they have so much weight um for their mobility that

they can't really move that fast They need that liquidity. So therefore, they

try to stay in large caps or mid caps at the minimum.

They have requirements even for the price of the stock sometimes, that

not going to go and buy like a $1 stock or like a penny stock or anything of

this sort. It's just unacceptable.

They are large, large totals.

So looking at the large caps right away.

could bring you a lot of information of how strong the stocks are,

you know, and what institutions are doing in those sludge caps.

So I usually would do this. Okay, so I see some structure right away on the

chart.

Definitely worth to look at.

Apple, short -term uptrend.

Okay, so that would probably require either more consolidation or some

so probably not interested.

Seagate, okay, yeah, there is a test there, maybe a sign of strength, maybe a

backing up action, worth looking at.

Network appliance, yeah, worth looking at because there was a consolidation

right there, and so on and so forth. So quickly I could engage myself into

understanding of what's going on.

And it doesn't take a lot of time to do it like this.

And then the stocks that are going to become more interesting.

Okay, well, LG Display.

Very interesting how it's just going up here and how it's just reacting.

So here I would be in.

Roku is also interesting. I'm following that.

Where is that stock?

Okay, well, let's go to Western Digital first.

Okay, so right away, you could quickly find a stock like this and

then start applying your Wyckoff analysis once you got here, right?

So one of the things that what else I do is I would save this stock.

So for instance, I have different lists here.

that I save either for the class or for myself.

So you could save as, specify the list, and then this stock, this

is your watch list right there.

You could basically just quickly tune in

30 minutes before the end of the session, go through all of the stocks on

list. Using stock trust and don't have even you don't have to have even a list

you could create it somewhere here Okay, let me walk you

through a different path

Now sometimes

as I told you, you know, um sectors are going to be

kind of like too broad for our analysis.

So sometimes it's useful, and if you're comfortable, so for instance, I

rarely go to the sector level now. I usually go right away to the industry

summary.

And, you know, it just provides a much quicker way for us to get

where we want.

But obviously, fundamentally, you have to do it correctly. Market, sector,

group, stock.

So going to the industry summary, and again here, you could use different

And I kind of like how they did this in this latest version.

Look at the sector, and then look at all of the groups.

And you could change the groups within the sector. So if you know which sector

you're interested in,

And this is obviously intraday, which is also so cool.

But let's say we said we want to look at the rotation. And we said we want to

see maybe like one month of data.

That's what we want to see.

Right away, very attractive media agency.

Look at that.

Look at this chart.

I can go through all of them. Okay, well, broadcasting looks much stronger.

Fixed telecom is in the uptrend, so I don't know if I could find something

I don't know if I could find something in broadcasting.

Internet looks interesting because of the reaction, so there is some structure

here. We would have to look at the analysis of this and think whether it

uptrend or a backing -up action.

Publishing is also in some short -term structure, so also worth looking at.

Mobile telecommunication, very interesting pattern here as well, short

So we would be kind of like engaging ourselves in the quick analysis right

here, and then we could say, okay, well, show us all of the industry

members.

Right in this group. Let's just see if it's going to do it. Here we go.

This is media agency based on the month of data of

performance. And here again, there are quite a few stocks.

So I don't really need to go through all of them. I either could do this really

quickly by just like looking at the very short term picture like this.

Oh, look at this.

China net.

Very interesting chart.

This is a very interesting chart as well. Or I could do the same as I've

you, right? So do the cap size filtering, look

at the large, look at the mid -cap stocks, and then

go through other stocks if you're interested in a very quick way. So let's

at those. How would we find the candidates here?

Okay, also very interesting. A little bit volatile with all those moves, but I

would have a look.

So here I'm just thinking, okay, a lot of volatility right here, not following

the market in this case. So it has to show me that this volatility is going to

go down significantly and then to start to break out.

So it could be a confirmation here. But is it my favorite?

Maybe not.

Maybe I would look at something else.

No. This is interesting, some pattern right there. I see the structure.

So I could quickly look.

I usually, this is ADR probably.

So there are a lot of gaps. So my preference is not to engage myself into

Ooh, this is very interesting.

But the small cap. So it just depends on.

whether you would want to participate in a stock like this. But right away,

let's say that I do want to participate in a stock like this. What do I do next?

Okay, I want to understand the history, so therefore I'm going to look at, if

not all of it, but then the majority of it.

And I could see that there was an IPO in 2013, a downtrend that was broken.

Here's original consolidation, major sign of strength.

long -term resistance, and we just overcame on another sign of strength,

know, this consolidation. This is a very attractive stock to me. Why?

Well, because the trend has been established in the long -term

uptrend.

There are some near -term targets that would double the price

of the stock.

out of this consolidation at least at the minimum and potentially there are

targets up there because look at the causality of this whole thing the the

counts that we could have of the causality look at that this is a

stepping stone but you could extend it up to here as well so this would be your

largest count and it probably would would use um you know most

more cause here to go even above.

So now that I know that I'm interested in the stock, I want to look at the more

short term structure.

And here I'm going to apply our Wyckoff analysis as we do, as we've done through

this whole course.

So I'm seeing that the price was in the consolidation.

And then out of phase B, it just basically collapsed into the market

volatility, right? So that's the market takes it down. There could be some news.

I would check out on the news. So what was the reaction?

That is relevant to our analysis.

And then look at what the stock is doing while the market is still making the

lower low.

So the higher low, and this is the strength.

So this is a very good sign that there was no selling when the market was going

down.

That's great.

But it didn't really participate in the rally right away. It just started to

participate further down the road. So this is also news.

So we want to see, again, two news, two different reactions to earnings.

So we need to check this out.

Looking at where we are, we're thinking that we're probably in phase D at this

point. Sign of strength, as a major sign of strength, and look at how the price

holds there.

Went up, committed, went down, did not go down too much.

Went up, committed again, and again, and three

times it broke to the upside.

it shows an ability for the price to stay up.

And here we're just waiting to see maybe a little bit more meaningful reaction

before it starts going up again.

So our plan, our tactics is we have already seen some confirmation of the

holding above the levels of the resistance.

We want to see that reaction and then the confirmation and reversal.

So our plan is going to be to actually, you know, if we're going to initiate the

position, initiate position right there.

Another scenario is going to be something where we're going to fail,

like this.

So we want to describe it in our minds that this is a bearish scenario

and that price structural collapse needs to happen if

we're going to see that bearish scenario.

And then after that, We just have our execution plan, and it goes

into our watch list, and until it's executed, it still stays on our watch

or goes away if it fails.

And that's the whole process.

Does it make sense, guys?

Do you guys kind of see where I'm going with this? I want you to think about not

just the system, not just the analysis that we conduct.

But also the process.

How do we actually do it?

And now that I'm just going through this over and over again, I'm just thinking

definitely let's do the special on the process.

We're going to call this special trust the process.

Something like that.

I love basketball. So for those of you who love basketball, you guys know what

mean.

Okay.

Something else.

Let's look at this.

from maybe a slightly different perspective.

Okay.

What about scams? And I'm sure that somebody in this group

are, you know, somebody

in this group who actually does some scanning.

What does it mean? It means that we determine specific parameters

of the technical analysis conditions that we want to find

on the chart.

And then we codify those parameters and we run it through a platform like

StockCharts.

And then we look at the results of what is coming back to us.

And we are saying, okay, we can use those results to determine

the same conditions that we saw on the heat map, but now they are just in a

slightly faster way for us being done, being delivered

to us.

Okay, well, let's look at some of the scanning tools that, let's say, I used

like, or I'm using even now.

this is just a visualization so this is not the tool that is available uh per se

but this i'm going to show you another version of this tool on stock charts so

there's really not a lot to this we are we could go

to the historical date so that's not important we could define the price we

could define the percent change during one month, three months, six months, 12

months, and we could define the market cap.

Very simple scan.

And in this scan, I'm just saying, okay, with the

market cap like this, 12 months return, I want to see

a percent change over 100%.

So give me all of the stocks that in the last year, in the last 12 months, have

returned over 100%. Question to all of you guys. Why do you think I'm

in something like this?

Wouldn't that be the stock that we would not be interested in because it has

overextended?

What do you guys think?

Why would I be looking at the stock?

that has advanced already 100 % in a year.

Okay, let your winners run and cut your losers short.

Relative strength, consistent leadership.

Okay, so probably the last one from Eric here is somewhat more correctly

defined. I think that all of you are on to this idea. It's just how you

communicate this.

Let's say that I don't have any positions, right? But I'm looking for

that are of interest to me.

Think about this talk that has advanced 100 % in a year. What does it mean? It

means that institutions are in it.

So they are holding the supply of the stock.

And they are not allowing it to come to the market.

They're just basically holding on to the supply.

And therefore, supply is so low.

And that's what moves the price up.

It also suggests that...

demand is there.

And that still there are more institutions that want the stock.

So with that, what do you think is the long -term prognosis?

If the CEO is holding the stock,

most likely it's still going to hold on to the stock because for the company

that had such a drastic move up, let's say 100 % in 12 months, they're doing

something correctly.

So the revenue comes steadily.

So institutions are thinking that this is going to be a sustainable revenue

trend, therefore a sustainable price acceleration trend as well.

Therefore, they probably will not introduce supply to the market for

some time.

There might be a continuation of the trend after a short -term trading range,

a short -term stopping action, which, by the way, started with what? It started

with some profit taken by some of the institutions there.

But then once this profit taking has taken place and have been tested and we

how this selling is starting to deteriorate, there are no

longer a lot of sellers for this stock, then the trend will most likely resume

because all of the supply from the profit sharing, I'm sorry, profit

volatility that we had in phases A and early B, it's gone by phase C.

And that's just a continuation of the longer term trend. Now, think about

We stopped here because some supply has been introduced.

Now this supply has been observed and assume that we are kind of like came to

the same equilibrium.

between supply and demand, where supply is in strong hands, demand is in weaker

hands, and now the price could just continue going up just because we came

that initial equilibrium that we've had right here. It's not equilibrium in the

sense that supply and demand are at the same level. It's just kind of like that

supply has increased.

And it needs to decrease before the price continues going up.

But because it was a leadership, then we assume that the leadership will

continue on the next move up.

And that's why we are looking for those type of stocks.

And 100 % in 12 months, that's just a function of the momentum, a function of

institutional presence, a function of institutional desire.

to be in the stock if they wouldn't want to be in the stock they would sell and

that would lead to either very rapid collapse of the price which happens

or it would happen over a period of uh distribution

or consolidation that will take some time we don't see it here so initially

in phase a we might be a little bit inclined to think that oh yeah, there is

some supply that's coming in, but look at where it stops.

It doesn't really stop at the level of the previous report.

So the gains that we had before, somebody was buying right here, they

might be in this position. So selling has not accelerated.

In this case, we're looking at sketches.

That was just one of the case studies that... I've discussed before, so that's

why the slide.

But you could find the same stock on stock charts.

They have user -defined scales.

And I actually like those.

I wish I would be a little bit more technically inclined in terms of the

technology. I think I would be more comfortable with this. But I think that

you spend a little bit of time on this, you can definitely...

You could definitely find it of a lot of value.

So here we are saying, okay, so I look historically at the

scan, so 229 trading days before, which is, by the way, such an immensely

helpful feature when you want to test your ideas through scan ideas.

Just figure out the day.

a number of trading days from the last day and you could run any scan

and see what kind of results are gonna come up on that day. And then you could

kind of like look where those results would take you.

So in this case, we're looking at sketches and we're still doing the same

We're saying that in the last 52 weeks, give us the price that doubled.

So the same 100 % return in one year. And we're saying that give us the

price that is more than $20.

And sketches came up the same way how it did on the other

scan. So look into that.

Look into how to create the scans, how to run them, how to store the results,

and so on and so forth.

A very useful tool.

on stock charts.

Okay, another way that I love to engage myself with stock charts and

find the candidates is through scooters.

And scooters is the proprietary technical ranking on stock charts.

It was created by John Murphy.

And for those of you who are not familiar with John's work, John Murphy,

considered one of the modern fathers of technical analysis.

You know, he is, you know, such a big name in technical analysis.

I've studied his books when I was preparing for the CMT designation,

with books like Martin Print Book.

I forgot other, you know, books that...

you know were relevant at that point of time but you know any uh books by john

murphy are still relevant you know his intermarket analysis is just superb so i

would definitely recommend you buying and reading those books so the idea here

was to assign some kind of ranking to all of the stocks through not

through just a relative strength but something more meaningful where you look

the long -term picture, you look at the medium -term picture and the short -term

picture, and you're trying to catch the stocks that maybe did something like

this, that had an uptrend, have some kind of consolidation, and then within

consolidation, you see some kind of short -term reaction, and then a

first initial momentum up.

So think about what they're trying to accomplish here.

They're basically saying, we want a leadership before, we

want a structure,

and then on the

reaction, we're probably looking at the potential phase C, and then the first

momentum bar up, is a sign of strength bar on the potential sign of strength

rally.

We also could find maybe this pattern somewhere here on the backing up action.

And of course this is ideal way, but

obviously the scan is going to pick up quite a lot of other spots because

sometimes we don't even think about

that the same technical condition could occur at different spots in the uptrend,

in the downtrend, in the consolidation.

And one of the ways how I look at this result is either through the candle

glance or through other ways on, you know, means on stock charts. Let's just

look at this.

Let's go here.

So one of the first quick ways to look at scooters is just to

do it under the technical ranking.

And you have scooters here. You could look at something else, obviously.

But scooters is just something that I look confused about. Okay, mid -cap.

look at mid -cap.

And you have...

Two ways of looking at squares here.

You could look at the top 10 and you could look at the top up.

And this comes into the discussion that we had about the leadership and the

rotation.

So top 10 is showing us the leadership.

Top up shows us rotation.

And again, We are thinking in terms of the ranking, right? So the top 10 are

going to have the scooters that are going to be in the high 90s.

And they're not necessarily going to have a lot of change.

The top up, I've just changed it, are not necessarily going to have the best

scooters. Actually, in fact, all of them do not have the best scooters.

But they're going to have the best.

percentage change in the ranking.

Or maybe this is just the ranking, the SCUDAS ranking change. I'm not quite

sure. I think this is a SCUDAS ranking change.

So you want to see that rotation.

So to me, kind of like the best thing is just to not even look at the top 10.

I mean, these are the things that are gonna look something like this already.

or we extend it this is by the way the stock such a good stock that we're

discussing in the wmd um you still could find something so it's still a

leadership but the question here are you going to open a position here probably

not why well because it's on the way why would we do this

right

Okay, so what we do then with the stock like this, we still want to recognize

the structure, and we want to say that we are waiting for some kind of

We know that this is a long -term uptrend.

It's been confirmed.

And now we are waiting for this reaction to happen.

What kind of reaction?

Well, probably of this magnitude.

So we need something like this, and then probably some consolidation that would

last maybe...

you know, at least a couple of months or so. And then it would be valuable for

us to consider, you know, some opening of the position.

So maybe in this area right here.

We could have different tactics as how we would do this.

So from that perspective, the top leadership maybe is not going to be that

interesting. Okay, Snap might be interested.

And again, even with that, look how quickly it went up.

You don't have any points of entry.

You had some points of entry between six and seven.

And right now, you just have to wait.

Even though it could go up, it doesn't really matter.

But the top up is going to give us a different look.

Okay, Polaris.

Look at where the momentum comes.

It comes out of the consolidation.

So we are much closer to the structure itself.

And that's why rotational patterns are much, much more interesting to

us than the leadership patterns. The leadership is going to be shown

here because it's been going on. A rotation is going to be emerging.

So beautiful chart right there.

Let's not look at this. Let's not look at this.

Let's look at this.

Again, where does this momentum, short -term momentum

comes? After the reaction, after, you know, pronounced consolidation,

and we're just emerging out of most recent short -term reaction.

And after this, you just do your Wyckoff analysis.

Okay, let's look at a couple more.

Not necessarily the greatest spot, but still you could figure

out a swing trade out of this.

Okay, this is something that I would just wait on.

Okay, look at this.

Even if the stock does not advance to the upside, we still have such a

structure that this type of stock should go on your watch list.

Again, how do we analyze this? Right away, I want to know the whole history.

Okay, so now I see we've been in a very long downtrend. So this means what? This

means that...

Once the stock is in the hands of the institutions, the long -term uptrend is

sustainable.

I definitely would want to know what has happened here in 2015 -16 for the

downtrend. So probably company -related, probably product -related, probably

management -related, probably industry -related.

And then I'm seeing how there was some buy -in by institutions.

That leads us now into upsloping structure and it seems like this

more like this saucer with the handle.

So we would be looking into this area right here as the latest trading range,

but we would be keeping in mind that the long -term causality of it is actually

quite large and maybe even larger at 30. And then the long -term target is, oh,

wow, at least that.

So that's a great candidate, whether for swing or for long term.

And what we can do here is just go through more strength in price action.

Okay, phase A, potential C, and then we're in the middle

of the potential phase D.

So we just need to concentrate on this trading range.

what would be the confirmation, obviously commitment above, and so on

forth.

So you could see how quickly we could do this. And this is just in the top 10.

And you can do this for large caps, mid caps, small caps, and so on and so

forth. You can do this for top down as well.

Look at Roku.

And here, even though I'm patiently waiting for the Roku,

to come to the downside right here to the support area and maybe spring again

because I'm seeing how there is some of the buying activity that is already

happening in the stock.

But short -term, it's bearish.

So therefore, the scooters are just showing us that loss of momentum and

-term deterioration.

And it's not like I'm going to short the stock. I don't think that it has any

value to me at this point.

If it's going to go into phase C, you know, I'll have to kind of probably

compare it to this area right here.

It seems like maybe there is more supply. So maybe it will go faster this

So maybe there is a trade there to the downside.

But I'm more interested in the long -term perspective.

So I might be actually inclined to stay out of it just to keep my, you know,

long -term bullish bias still there.

It might take some time for that to develop.

Okay, let's come back to our slides.

Okay, then I want you also to look at the relative rotation

graph.

This was created by Julius de Campanina.

He is a technical analyst from Europe.

StockCharts has him now as one of the contributors.

I believe he has a blog. I believe he also contributes video content as well.

you could find a lot of the information on the relative rotation graphs.

In my opinion, technical analysis has not produced a significant body of

knowledge in terms of kind of like a revolutionary body of knowledge within

last 20 years.

And within the last 20 years, the relative rotation graph probably was the

innovation, major innovation that we've seen in technical analysis.

And it's not even a concept per se. It's an old concept of comparative analysis

and relative analysis.

But it's being portrayed in a very brilliant way.

And Julius basically has created the visualization where we see the rotation

visually. We see that from week one,

and there are 10 weeks here, 10 data points, how

the ranking for, let's say, this stock turned.

certainly technology, was changing. From a lagging quadrant, the

ranking has changed and has been improving and brought it into the

quadrant.

Whereas for the stock, like Centene, CNC,

we saw the same movement, but it brought the stock from improving

quadrant to the leading.

And you can do this for the sectors.

You can do this for the groups. You can change the duration of the period under

the consideration. You can change the benchmark to which you're comparing

your stock or the group.

And you could also animate this whole thing. So there are so many things that

you can do with this.

I would advise you to go to stock charts, find this instrument, that's

one.

You know, I could show you actually really quick where you can find it.

Okay, right here.

And they are starting with all of the composite averages.

Let me show you the animation.

So here is the animation that shows that throughout the structure that we have

on the S &P since June, right here, how the

market was developing and how, or rather the market structure, how

it was being developed. And then through that structure,

how the relative strength picture changed for all of these indices.

Relative to what? Relative to S &P 500.

Right here.

Let's watch this again.

And let me just, I don't know if I could slow this down.

I usually don't look at this, but here are

our

you know, the sector ETFs in the same period of time.

Here's that change.

And you kind of could see again here, same idea, just different way to

visualize. Technology sector has been improving.

And whereas let's say financials, have been deteriorating.

So just another way of looking at the same data.

Okay, let's come back.

Let's look at something else. This is something that I've been using for

quite some time.

I like IBD. I don't necessarily like some of the ways of

what they teach.

I have some, maybe not the problem with the system itself, but the problem with

kind of congruency between the

system and who's using it.

Because for somebody who is nine to five, who works nine to

five, you can't really have a momentum system.

being very effective because people are distracted with life.

I think the best way is to use more of the long -term

structure from the system, and it could be useful. That is when, after

a specific number of weeks, the stock is outperforming by 20%, and you keep that

stock for the longer run. I would really use that.

But for short -term swing traders, And I consider myself predominantly a swing

trader and then an investor.

So, for instance, my retirement accounts, they are more investment

Those I don't touch. I just park the money there into a specific stock, and

I just wait for that to develop into a meaningful position.

But for my swing trading, Investors Business Daily IBD50 list.

is another way of how you could work with the universe of stocks.

And I like this quick analysis.

They basically filter for me what I want, including fundamental data

that I usually don't do as a filter.

And there are some technical filters here as well.

And they have their own relative strength ranking system.

Because it's the one that you can create really easily.

So what I would do is on Saturday, I usually would go to a cafe. I would take

either my phone, iPad, and a Saturday

IBD newspaper.

And I would just go through the whole list.

And some of the stocks are going to attract my attention, some of the stocks

not going to attract my attention.

So what would attract my attention right off this list?

And this is what, August 28th, 2017.

So I would be looking at YY for sure, just because we are coming out of the

formation and we are in the uptrend here, so there could be a swing trade up

right here.

I would be looking at Navadir. I would be interested in what's happening in

trading range.

I would look at OLED, really great leadership, and then a trading range.

NutriSystem is interesting, but I see that some supply is available here.

So this is under question. So maybe something of interest to look at, but

necessarily to participate right away.

Thinner.

Yeah, it looks like a sign of strength in the backing up actual. So I would

at that and so on and so forth. So right away, you could see that some of the

stocks I'm not even interested to look at. I mean, why would I be interested in

HTHT?

It's in the steady uptrend. So unless I'm in a very short -term type of swing

trade where I'm looking for this and then a continuation, then I would look

this stock.

But I'm looking for something a little bit more meaningful as a move, maybe

three to six months type of move.

So I would be looking into the stocks that have momentum behind them, and all

the IBD50 are momentum stocks.

But then they have some kind of pause, and then they get out, continuing

their long -term uptrend. So this is what I would be looking at.

Okay. And just to conclude this with IBD50,

IBD50, or another list that sometimes I would look at, the

growth list that they have from MarketSmith, 250 stocks about.

This is a way of narrowing your universe of stocks and just basically

saying, I don't have to look at...

I don't have to scan the whole market.

I could just concentrate on 50 stocks or on 100 stocks or on 100 to 50 stocks.

And this is my universe, and I have some rules as to how the stocks come in into

this universe and come out of that list.

But basically, from week to week, all I do is just to sit down and just go

through my list.

And as I go through my list, I see the changes.

And, you know, some stocks would go on my watch list and some stocks will not

on my watch list. But this is more or less consistent universe of stocks that

would be using.

And I think that IBD50 is actually for a swing trader, momentum trader, is

actually quite valuable.

All right, guys.

This is it.

on comparative relative analysis, scanning and filtering.

Again, something that I probably would explore more either in the special or in

the practicum.

We do have one more homework left to go through.

If we have time today, we will review tonight's homework. If not, then you

review on your own.

Meaning that I'm going to give you the solution slides and you just go and

review it by yourself.

But I want to talk now about the trade management, and we do have time, so

that's great. Awesome.

So let's talk about the trade management. We're going to talk about

of entry stop losses, management of stop losses, exit, and then we're going to

do this through the case study of the Green Mountain Company.

So let's talk about the points of entry first.

We're looking at JetBlue 2008 to

2014. The whole industry was going through consolidation.

JetBlue was not necessarily a leadership right away, so that leadership

developed later on.

of this drop right here that we would be thinking about the timing.

So we would know that other stocks in the group are already in the uptrend,

meaning that you would wanna look at some other stocks in the same group and

think about the timing of when this stock is gonna become of value

to institutions.

Basically, let's just think about it this way.

Some other leadership stocks in the same group are doing something like this.

Right? So they might be already in the uptrend

leader

of a group.

And phase C might have happened much, much earlier.

And now this could be just a phase B of a stepping stone trading range.

So what we're noticing here with JetBlue is that there is an area of volatility,

phase A.

There is an area where institutions are not wanting to give up their positions.

That's phase B.

And then a quick move down.

Only two days of selling. There is no more selling. Well, maybe here.

So two times itself does not create even a lower low, higher low.

Bias.

Bullish.

Bullish bias in the group that is already going up.

So we definitely would want to think about opening a position here.

Now, this is a long -term chart, so it took some time for it to develop, but

of the actual points of entry belonging to a specific phase are still

quite visible from kind of like a longer -term perspective,

but they're going to look the same on the intraday chart. They're going to

the same on the daily chart, and this is a weekly chart.

So we're just concentrating here on this slide.

It was an idea of looking at where we would be opening the position.

So points of entry in phase C, spring number three, that

spring is going to be associated with low volume signature and an attempt

to commit down.

Not the actual commitment.

Then the next point of entry is going to be a test.

I want to reiterate this, a test of a spring number two or a shakeout.

Why a test? Well, because spring number two requires a test to enter this

position. A shakeout most definitely requires a test.

Just because in both cases, spring number two and a shakeout would have

increased supply signature that will require that testing.

and the next point of entry, last point of support.

So all of the three entries are gonna be the entries that we could conduct in

phase C, where the actual entries are gonna happen.

So for spring number three, we want to open a position at the

close of the bar that is returning into the trading range.

Test of spring number two.

Reversal, so meaning that if this is the test, then the bar that reverses the

previous reaction, this is what we're going to call a reversal.

Okay, great.

Last point of support, also reversal.

Now we go into phase D.

What are the points of entry there?

Sign of strength bar.

On the sign of strength of rally.

Last point of support.

So this is going to be a rally.

This is going to be a reaction, last point of support. And then a backing up

action, a reaction.

So we have spring as a reaction.

Test is going to be a reaction.

Last point of support is going to be a reaction.

So the sign of strength bar is the only spot so far that we see

that's going to be in the direction of the bias.

Phase E.

Are there any points of entry there for us? Yes.

A breakout out of the backing up action.

Again, this is going to be in the direction of the bias.

And then...

Within the uptrend, we're going to find stepping stone trading ranges that are

going to have the same type of points of entry that we're discussing here.

We're going to find phase C.

We're going to determine whether phase C happened as the last point of support,

spring, or shakeout, and so on and so forth. And we're going to go through

whole thing again.

Let's look at the chart.

Here we are seeing a higher low in phase C, so therefore a lost point of

support.

On the shorter term picture, we are seeing in a shorter range an attempt to

commit to the downside in the sprint type action, and then it fails and the

price reverses.

Okay, so that would be the first time when we would consider this position.

Then out of the LPS,

on the reversal, another LPS was the reversal, another LPS was the reversal,

sign of strength, and the backing up action.

And out of this backing up action, because we have a trading range, then we

be thinking about phase C here and the entry on phase C.

So all of this is going to be the point of entry for us.

And then we're going to open on the breakout.

backing up action. So look at where effectively we're coming in into the

position.

We're not necessarily coming on the reaction itself. We're coming in on the

confirmation of the reversal out of that reaction.

So anytime it fails, let's say we've got in unit number one, got in, and then

the price goes down, we are out.

the price went down below this low we are out the price went down below

this low we are out and that's our risk but because we

chose this stock correctly what we are doing here is we are

accumulating the stock

on the way

up every time, either after the reaction or on the confirmation of a significant

momentum that is about to come.

And that's what, in a way, and for those of you who are professionals

here,

and we have some in this class, think about how you define the

risk, right?

institutions always are so concerned about the risk.

But risk could be defined in so many ways.

It's not just a metric of what's your risk proposition or what's your risk,

overall risk.

Think about risk in a systematic way in a sense of if

your entries are

at these spots, then what is your risk?

Does your risk go down or does your risk go up?

Then think about the risk in terms of the execution.

If you have the process to how you execute your trades and how you go about

whole process, then most likely your risk is less because you're going to

make fewer mistakes.

So what I'm saying is that the risk should be just defined by the

percentages of the risk per position.

I think you have to contemplate the risk from so many angles, even in terms of

the infrastructure of your company, relationships in that company, the

process, the system itself, the post -analysis and all this stuff.

There are so many elements.

where you could decrease the risk because the market is not the

only place that brings you a lot of risk.

You yourself and people around you, and again, I'm talking about, you know,

the professionals, but, you know, for those of you who are retail traders,

about this too.

You know, you yourself.

create risk for your trades. So therefore, you need to think about how

going to diminish this risk through your preparation, through your post

analysis, through your trade management, and so on and so forth. So creating the

systems and creating the processes that will help you to stay on track will

diminish your risk.

And that's obviously what we always want to do. In this case, with the points of

entry, you kind of see how we're diminishing that risk.

We are saying that our risk is going to diminish just based on the bias itself.

That's number one.

Secondly, based on the timing.

Thirdly, we could say that the group

outperformance decreases the risk as

well.

Then we are saying that the points of entry

are constructed in such way that the majority of them are gonna have

two characteristics.

They're gonna come after counter move.

And secondly, they're gonna act as

confirmation.

of the long -term uptrend because the reversal by itself out of the short

oversold condition suggests that there's going to be an upswing and therefore

continuation to the upside.

So quite a lot of things here to think when we're thinking about the risk.

Okay, let's move on.

Let's talk about exit.

Where would we exit?

How would we exit?

And for the exits, one of the things that I'm so

kind of like on is efficiency.

Or sometimes I would talk about most optimal exits.

And a little bit on the belief here.

This is the belief, most optimal exit.

Okay, so right away, if you're thinking about this word, perfection, this is

what we are trying to achieve.

Okay, and in a lot of your heads, guys, especially those who live in the United

States, this word, has some kind of negative connotation.

And I kind of don't like when we talk about this word in

such a negative way.

I don't think it deserves that.

The idea here on the negative side is that whenever we try to achieve the

perfection, we strive so hard that when we...

cannot achieve this and we feel bad about ourselves you know it brings bad

results for the next trade well that's definitely not what we mean here what we

mean by perfection is perfecting the process and in this case we are trying

perfect our points of exit and we want to perfect it in such a way that

the exit would become efficient

Efficient in which way?

Efficient in terms of the price, efficient in terms of the duration of

trade.

And obviously we might also want to consider some kind of emotional

connotation here as to at one price

you might be

more exposed to risk and therefore behave in a specific way with

another exit at another structural spot, you might be okay.

It might be better.

So one of the first things that we need to think about the

exits in general is that we could

definitely use just

a stop -loss technique, any type of stop -loss technique, that should

mechanically keep us in this position until a change of behavior

and until we are done.

So, naturally, the exit by a stop -loss, and preferably in Phase A, is the most

efficient way, most efficient mechanical way.

But we also want to recognize that there are some Wyckoff ways.

of how we could be thinking about exit.

And from Wyckoff perspective, an identification of the last climactic

run with the characteristics of the volume increase, with the

a spread increase, and a stop in action.

That's what would give us the first indication that we are probably done

this whole move.

and we're seeing some signs of the CO distributing as the price still goes up.

But the CO is distributing on the way up into weak hands on the

weak hands excitement.

Okay, well, naturally, the second point, like a point of exit, would be

somewhere on the automatic reaction, and specifically a change of behavior, a

change of character.

would identify a possible exit situation.

Where would we find that?

Well, as I said, on the automatic reaction, on the change of character

and sometimes we will clearly see a change of character bar.

It's the bar that stands out in such a way that suggests that

it's a meaningful selling that has taken place.

And at least temporarily, the price is most likely will be spending a lot of

time in a consolidation.

And that bar usually is going to look as an increased spread to anything that

we've seen before on the reactions.

And I can't even find a bar like that.

So this is definitely a meaningful bar and a meaningful volume signature

suggesting that we're done.

And this is the time to close the position.

So that's the second most efficient point of exit for us.

Once we are beyond this point and the price goes down, there is no reason to

close this position.

Why? Well, because we know if this is an automatic reaction, then what should

happen next? We should have the rally that will be retested in the previous

high. This means that the price will go up.

We don't know where exactly.

It's going to go up. Is it going to overshoot? Is it going to undershoot?

We don't know.

But we're just going to use the rules to find some kind of reversal opportunity

on the secondary test.

And here we have it.

Increase of the spread after overcoming the resistance reversal on the

increasing volume signature.

So that suggests...

that Saturn came off the top, and we could

anticipate the next reaction, that we could close the position.

So again, the most efficient exit is going to be still on the climactic

The next most efficient exit is going to be on the automatic rally, on the

change of character bar, and then the next one is going to be a reversal out

the secondary test.

Everything else after that, you're basically

inefficient in the way how you exit.

Because you might be drawn to the up thrust, and then when up thrust fails,

exit could be on the sign of weakness bar, and then even worse, somewhere

So those are going to be extremely late points of exit for us.

But in some instances, when the trading range develops quickly, I think it's

acceptable. It's just not preferable. And it's definitely not efficient.

And think about the efficiency.

Think about the limited time that we have here, you know,

as investors, traders on this earth.

Use the money not in an efficient way. We are not gaining the money

at the high velocity.

And don't you want to gain the money at the high velocity? Don't you want to

have the trades that do that for you?

Meaning that you pick the stocks that move the fastest and the quickest.

And then you close out those positions and you move to another stock like this.

So imagine if you're staying in this position for like two years before you

and the price does not change.

This means that your money is parked and isn't efficient in that way.

So just think about that.

Another way for us to think about the point of exit is using tools

like trend lines.

A break of the trend would suggest a change of behavior, and therefore you

consider this as a point of exit.

Another one could be used as a trending tool, a moving

average, and look at how the break happens almost exactly at the same time

as the break of the trend line, as a sign of strength bar, I'm sorry, as a

change of character bar.

It's all logical. It all happens at that spot.

The break of the trend, the commitment below the moving average, and the

change of character bar, why does it happen then?

Well, because at this point, the duration of the trade for institutions

that they need to get out. There is no, you know...

absolute or relative performance. And we know in 2015, going into

summer, we had a lot of volatility, especially in August.

And the stock actually started to underperform even earlier. So there is

selling. The market is not performing well. The stock is underperforming.

Institutions are going to sell the laggard faster, and that's going to

this type of sign.

I'm sorry, the change of character bar.

We also see that selling in the relative strength

picture here.

Where we're seeing that the relative strength line is in the short -term

downtrend.

That's number one. Secondly, committed below the moving average.

Thirdly, broke the trend.

So you might consider a change in leadership as the

point of sale for your at least partial.

Okay, so those are exits.

Let's talk about stop losses.

So here is a hypothetical idealized.

points of entry and exit, and how we would be placing the stop losses and how

would be moving the stop losses.

And I'm going to show you guys the wike of logic about this, but I'm going to

tell you right away that even though I use the logic, I don't necessarily use

the same tool. I kind of created a different tool for myself to do exactly

Okay, so what's the logic here?

Well, in phase C, our first point of entry is going to be somewhere on the

of the spring.

There are multiple scenarios as to how and where we are coming in here. We've

discussed those.

Then the second point of entry is going to be a sign of strength bar on the way

up.

We could put different stop losses. Usually for the test, you're going to

the stop loss behind the spring.

for the sign of strength bar, just because it means a commitment to the

on the momentum, which suggests that the price will not come back.

We could put the stop loss right below that significant sign of strength

bar.

Then after the sign of strength, please note, I don't have a trade here on the

breakout. I don't have a trade here on the breakout.

We've discussed this before.

The reason why is because the volatility of the backing up action is going to be

purely dependable on how much supply is going to come at that point.

And we don't want to be caught up in that move to the downside.

Show us that move first, test it, and then we will add to the position.

we will add to the position on the reversal of the backing up action. And

we will add to the position on the breakout out of that backing up action.

in both cases, our stop loss is just going to be below the backing up action.

And now think in terms of trenches, right?

So let's say that I'm institutional money.

And let's say that I have 100 million under management.

I'm only allowing myself to open 1 % per

position.

Actually, let's just take 10 million so that the numbers would be more

comprehensible, right?

Okay, so 10 million.

So 1 % per position would mean what? That I could risk 100 ,000 per position.

That's my risk.

How do we define the risk?

Point of entry price.

And then the stop loss price.

That's our risk.

So let's say that our risk per this position was 10 bucks

just easier to calculate so what would it mean this would mean that the number

of shares that i can buy is going to be 100 000 divided by 10

so that's going to be how many shares

10 ,000?

Okay, so 10 ,000 shares.

But why would I open the position, my full -size position right away? What if

I'm wrong?

And if I'm wrong, I could be out so quickly with 1%. And from the

perspective, I mean, think about...

the performance that they have.

They don't have the performance of over like 100%, 200 % because it's just too

much money and slow movement.

So therefore, they need to get in slowly.

And I'm talking not even about the composite operator because this is a

different story. I'm talking about institutions that are going to

this area. Those are going to be our...

institutional trend followers they're going to identify the emergence of the

trend and they're going to be entering the position from the low on the way up

so the logic here is that you don't have to put everything

right away into this position you could have trenches

and you could say that um you're going to

enter

every time you have a point of entry and you're going to enter with 25 basis

points.

So meaning that your risk is going to go down, and if you run,

you're losing only a quarter of the percent rather than a percent.

And then you could recalibrate those guys for your own trading. For instance,

somebody... in the class might be saying, okay, well, I'm a retail trader,

risk parameters are much higher.

My risk could be like 3 % instead of 1 per position.

Well, you're going to calculate it the same way, and you could enter the

position the same way.

25 basis points of the test of the sprint, 25 basis points on the sign of

strength, only after the first entry was confirmed.

Then another 25 basis points on the reversal of the backing up action only

the sign of strength has happened.

And then the breakout only after the backing up action has happened too.

So you kind of see how we're controlling the risk here by

entering

at the specific places that the system defines as the most optimal places for

us to enter by waiting for the confirmation for the next entry before

increasing the size.

And then that still allows us to stay in the majority of the long -term trend

like this.

But even think about the intraday.

You're going to execute this strategy kind of the same way, but everything is

going to be much, much faster.

But basically, the concept is going to be the same.

So once we're in the trend, we're going to stay in the trend until the next

consolidation.

And then in the consolidation, we're going to do the same. We're going to

phase C.

We're going to enter off the law of phase C on the sign of strength bar, on

reversal of the backing up action, on the breakout of the backing up action,

then we're going to stay.

The swing trade entries should look the same.

And then the exit is going to be on the buying climax,

on the change of character bar, on the reversal of the secondary test,

and then your catastrophic exit.

This is where the sign of strength has failed.

and you are exiting on the short -term failure of that sign of strength, which

ultimately becomes an upthrust.

Okay, well, we understand the entries and the exits.

How about the stop -losses? I mentioned that the spring stop -loss, or

rather the test of the spring stop -loss, is going to be under the spring.

The sign of strength bar, stop loss, is going to be under that sign of strength.

The price should not come back to the low of that bar.

The backing up entries are going to be all,

you know, stop loss is going to be all below the lowest points on that backing

up action.

What happens afterwards?

How do we move the stop loss?

Well, we need to understand when we move stop -loss and then

where we are moving the stop -loss.

So when and where.

Okay, well, and this is where, you know, this is going to be purely Wycoffian.

So, and I was talking to Hink, you know, in extension about this.

we were discussing the way how the stop loss is not only placed originally,

but also how they moved.

So this is what Hank told me. The Wyckoff had an idea

on the timing of when to move the stop loss that would define the commitment

of strong hands.

in the direction of the bias.

So every time there is a breakout, what is that commitment?

It's a breakout.

Every time there is a breakout, you can move the stop loss.

So it makes a lot of sense.

Because the commitment to the upside suggests the commitment by institutions

the direction of that bias, and therefore the price should not come back

previous support levels.

So we could move the stop loss somewhere there.

So Wyckoff would say, find the support levels.

But instead of finding just one support level, find two support levels.

And place the stop loss two levels away from that support level.

I'm going to repeat this.

After the price commits above the previous resistance, move the stop loss

price support two levels down.

So if we're committing to the upside right here, then we would be thinking

support number one, support number two, this is where the stop loss should be.

Why two stop loss?

two support levels away.

Well, in a lot of cases, we could have a weep, so and then the price would still

go up.

That usually happens in the stepping stone reaccumulation ranges with a

or a shakeout, or maybe a down slope in trading range.

So therefore, you want to give the price some room.

And the stop loss below the second of the support was considered by

Wyckoff to be a catastrophic stop loss.

Something where you're getting out the position completely.

Something went wrong in a very drastic way.

But if you're okay and the trend persists and just goes into the stepping

you're going to have something like...

commitment to the upside, even the fake commitment here was the upthrust.

This is your first support level. This is your second support level.

This is your stop loss.

You're allowing the price to consolidate and do what it does.

And then as you go through this uptrend, what you should be

able to do, and this is the whole idea.

behind the stop loss, trailing stop loss, is that you could move the stop

every time you have that commitment to that second level of support

and then mechanically exit it when the trend is done.

And in a way, mechanical way of exiting the position is much better because

Whenever you think about discretionary exits,

most likely, at some point, you will

make a mistake.

And that will cost you not just the money, but frustration that will lead to

something else.

And that's what we're trying to avoid.

So humans are not perfect. We're not perfect. We make mistakes.

how to eliminate the mistakes, put everything into the system, and then

the system to work itself through.

And trust the system. Trust the process. Get out when the system tells you to

get out.

You've done your research.

You've experienced this before, so just trust will become a big thing.

Let's look at... This is the case study of Green Mountain Coffee Company.

In 2008, 2009, as the market is in a bear

cyclical market, the stock, it does not go down.

There is a lot of strength everywhere.

This whole formation is just strength, strength, strength.

What does it mean?

It means that institutions do not want to get rid of this position.

They're seeing favorable conditions for the company in the future.

And look at the previous leadership and look at the leadership during the market

volatility. So definitely a yes, a huge resounding

yes on this election.

Okay, great. So now let's go to the daily chart. That was weekly.

And then on the daily chart, we're going to be thinking about Wyckoff points of

entry.

Spring and a test of the spring.

Where are we entering?

On the reversal bar right here.

On the open of the next bar as a continuation, still a reversal.

Above the high of the last commitment to the downside.

Then we're going to enter on the LPS.

Another LPS as a minor backing up action.

Backing up action.

And somewhere here.

Well, this was more of our entry, WTC. So Wyckoff was not talking about this

breakout.

But he was talking about all of the previous entries, test of the spring,

backing up action.

Those are the ones that he discussed.

we just added this one right here, the breakout, and this one right here,

line of strength bar.

Please note that these two bars are in the direction of the trade.

So you would have potentially these bars to consider

as entry points.

All of this in yellow.

One, two, three, four, five, six, seven. Seven points of entry.

So think about, again, maybe like some of the institutional guys here are

thinking like, okay, well, I'd rather open up the position right away at that

1%. Don't go into the trenches kind of like scaling in stuff.

Okay, well, think about this.

I'm going to walk you through this.

Okay, let's say that we are just only committing 25 basis points per

trench.

Okay, so 25, 50, 75,

1%. 125,

150, 175.

You're already...

or we're committed here on the very favorable position, but your risk is so

because your stop loss is already somewhere here.

So effectively what you're doing is that the first initial three positions are

slightly profitable.

This is basically breakeven and this is profitable.

So this is your profit. So even if you have, let's say, an unfavorable

move against you,

like this one right here, you

are probably going to be what? You're probably going to be still minus

50 to minus 75 basis points, which is still under

1%. That's number one.

And secondly, you had a situation where

By accumulating a sizable position this way, if it becomes

a super leadership stock, you're going to be overweighted in this stock.

And that's what's going to produce a much better result for your portfolio

much more favorable communication with your clients.

Something like this.

A stock like this. Look at this.

Here are all of our points of entry.

One, two, three, four, five, six.

There was one more somewhere. So one, two, there was one more here. So seven

points of entry here.

And then the stock does what? From $10, at least if you want to ride the swing

here, you're probably going to exit somewhere here even.

Because you still have a definition of the uptrend here, higher highs, higher

lows.

So you're effectively exiting at around like 28,

maybe 26.

And you're entering, your average price is going to be probably closer to

eight.

So you are making $20 or you're making what?

about times what times three and a half and that is

in around one year this is a really

good trade for the retail trader also an extremely great trade right

there and obviously you know for some reason i'm talking to

institutional people here, but the retail trader is still going to use the

thing. Whether this is a long -term strategy or a swing strategy, the swing

strategy would just cut this trend into smaller portions

and you would be taking those smaller portions, but you would be basically

the same thing.

Now imagine that why exit if there is so much leadership?

if there is no distributional quality.

So you might stay in this position and accumulate even more. Where?

Well, you look at the stepping stone and you're thinking, okay, well, this is

possible phase C, so here's one entry, here's another entry.

Then we got back into the trading range.

on the backing up action, and then again, after absorption here and here

even here on the way up, we could still buy.

So we could add to this position another one, two, three, four, five.

So by the end, we could be 3 % of risk, but at this price,

think about these positions. They are extremely profitable.

So think about the size that you could create in this campaign type of manner.

And then just to get out when, you know, it finally is going to start raining

here at maybe like 82.

So definitely worth considering as a strategy, you know, the way how you're

getting in.

and out of the position, how you're scaling in and scaling out, how you're

controlling the risk by scaling in, you're controlling the risk by scaling

and so on and so forth.

Okay, what other stop -loss techniques that are simplistic techniques that we

could use? I mentioned trend lines, right? So here it is, a break of the

Moving averages, a break of the moving average.

In this case, this is that change of character bar.

So those are all earlier points of exit for us.

Significant bar analysis. I've mentioned this many times, you know, this

terminology, significant bar.

This is something, again, that we're going to be talking in practical. We're

going to spend maybe two or three lectures just on that. And I'm going to

you my proprietary technique of

how I'm looking at the significant bars and how I would move the stop losses

here to make sure that as a swing trader, I'm picking up the best, the

momentum. So it's gonna go something like this.

Initial stop loss, and then I'm gonna move the stop loss like this.

So you kind of could see that the principle is the same.

Whenever you have commitment, you're moving your stop loss, and then

here on this bar, this would be the exit, the first exit.

And then obviously you could re -enter here, and then the next exit is going to

be somewhere here on this bar. So it's going to look the same way.

So something that I will show you guys.

you know to recognize those significant bars how to use the price and

time stop losses and also in practicum we're going to talk about a different

type of stop loss a volatility stop loss so something to look forward to

okay homework so here is your homework

for next week our next week is going to be our last session so this

is your chance to do the last homework if you're not going to sign up for the

practical for those of you who already signed up or planning to sign up for the

practical you guys are going to have a homework um and your homework is going

be for two weeks i'm going to give you like a more extended homework so for two

weeks you will be visually back testing a Wyckoff trading plan that I'm going to

give you. And then our first session of the practicum is going to be on the

23rd.

We're going to go through some material that is going to be appropriate for

everybody who's going to attend.

That's number one.

And then secondly, on the 30th,

two weeks into the practicum, we're going to...

look at your homework, the visual backtesting homework, and we're going to

about what else are we missing there?

How did we go through this process?

What kind of results do we have?

And this is going to act as a confirmation, visual confirmation,

visual backtesting confirmation for you guys to understand these concepts much

better.

And obviously, for those of you who are really serious about

The way how you analyze stocks using technical analysis, specifically Wyckoff

method, I think Practicum is a really good drill tool to

not only know, but to actually see it and be able

to see it consistently.

One of the things that happens during this course is

People get excited.

And I totally get this. I was the same way. Believe me, the first time that

introduced Wyckoff Method to me, I was like, oh my gosh, this is really,

you know, something that is so valuable.

And now I know, you know, how to do this.

Knowledge is not a skill.

And even if you have the skill, there are some other things that you need to

practice before you will be executing at a very high level.

So practicum is something where you develop the skill and you solidify

your knowledge.

Okay, so homework. I'm going to give you four individual stocks.

I'm going to also give you QQQ as a market proxy for your assignment.

is to identify the stock, a super leader that will outperform all other stocks

in this group.

Let's look at the stocks.

Here's the first stock.

And then we have Q's daily chart at the top.

And I'm going to tell you that the market is going to go up from here.

This is actually, I'm not going to say what, but for those of you who

you should know the history of the market just looking at the chart.

But the bias is up.

Would you be buying this stock, stock number one, and would this stock

outperform stock number two?

Or stock number three?

Or stock number four?

And here are all of the stocks, one, two, three, four, together.

So your task is to pick, obviously to understand all

of the stocks, do your comparative analysis, do your structural

analysis, and then pick one stock that you think is going to outperform all

of them.

Okay, that's homework.

And then an extra homework.

It's just going to be homework number nine, the previous homework that we did

for this class, and that's going to be a review for you. So we're going to stop

here in a second, but I just want to show you that, you know, I put

here my solution slides on the stocks that, you know,

needed to be picked, either one stock or two stocks.

I don't think that we had three stocks, so go through this, and maybe we'll have

a chance, you know, in the next class to quickly kind of like visit this,

revisit this, and to talk about this.

But for now, I want you just to do it yourself.

Review the logic here as to why we're picking up the stock.

And then we might come back to this.

Okay, guys, that's it for today.

I'm really happy that we went through all of the slides.

Just because we have only one session, kind of wanted to give you the points of

entry and exit stop losses in kind of like this very basic way.

This is something that we will...

Develop more in the practicum. So, as I mentioned, significant bar analysis

comes. We're going to spend two or three sessions just on the stop losses

themselves, discussing different ways on how to

work with stop losses.

So, if you want to continue your studies, obviously,

Wyckoff practicum. That's the way to go.

All right, guys, I think that's it for today.

Any questions, any comments?

Quite a lot of material today, a lot to observe, but I know you can do this.

We've been doing this for 14 sessions. You can do it one more time.

Okay, I guess that's it.

All right, guys, well, then, until next week, we're going to meet last time on

April 15th. Please send me your questions.

Don't forget about my presentation on Thursday at 9 a .m. if you have a chance

to go and watch that. If not, then just watch the recording.

Sign up for the practicum and then send me your questions for the last session.

Thank you, guys, and I'll see you all next week.

Bye -bye.