Original subtitles

Hello, everyone. Today is April 15th, and this is our last session of the

Wyckoff Trading Course. As you can see, I don't have a lot of announcements, no

comments. The only two announcements that I have is about upcoming events

or upcoming classes that I think that you should take.

So our first free session.

of the Wyckoff Trading Practicum course is going to be conducted on April 23rd.

It's Tuesday from 3 to 5 .30 p .m. Pacific. So time -wise, it's going to be

same two and a half hours.

The price for that is $5 .98.

For the Practicum alumni, the price is $3

.98.

So that's the pricing.

First session, as I mentioned, on Tuesday, April the 23rd.

Second announcement, and it goes to everyone, and I've already instructed my

team to put everybody on the receiving end of the

weekly links, weekly webinar links for the

WMD sessions, Wyckoff Market Discussion.

So for three sessions, I'm giving you a free access to this class.

You will probably not be able to get the recording,

so you'll have to attend live.

But maybe I'll figure something out, so I'll have to see.

But this is just an offer that is going to become kind of like a more or

less...

consistent offer from us at the end of each cycle.

So for the next three sessions, just come to WMD, check it out.

You could submit the charts that you want me and Bruce to go through and just

kind of get a sense for the class, what it's about.

And it's definitely a different vibe and a different class, a different content

and so on and so forth.

Okay, you don't have to do anything about that.

Just if you don't receive an email from us with the webinar links on a weekly

basis, usually those come on Tuesday, then definitely contact me.

And if you have any questions about the product income, also let me know.

Okay, today we're going to conclude with the homework review,

the homework that we did for the comparative analysis.

And then we're going to talk about the Wyckoff Trading Plant Performer. This is

the performer that I'm going to show you as a step, as a process step as to what

needs to be done when we are going through the selection, when we are

stocks and then, you know, what it should lead us. You know, what are the

there?

We're going to go through the case study for the Wyckoff Trading Plant

Performer. And then I'm going to give you homework.

You thought that this is the last class and we're done with homeworks. Well,

definitely not.

So the homework is going to be for those of you who's going to sign up for the

Wyckoff Practical course.

And even if you don't sign up, why don't you do it?

Wyckoff Visual Backtesting. So based on the Wyckoff Trading Plan Performa that

I'm going to give you today, guys, I want you to use it.

in your back testing.

And then before today and the April 30th, this is when

we're going to discuss your results, your homework results.

You're going to have, what, about two weeks.

So I think that's a sufficient amount of time, you know, for this type of

homework, which is going to be somewhat extensive.

So we want in the second session to look at the results. I want you to, and I'll

send you the messages, you know, for those of you who have registered as to

we're going to do, how the results should be presented. So it's going to be

little bit more like, you know, presentation style.

And then obviously the homework just then up for the practical.

Okay, great.

Now let's do a really quick review of the homework, and I want to save us some

time at the end of this session, if we can, to address any of the questions

maybe have not come to me via email, maybe something that is still on your

after everything that we're going to go through today, you know, some of the

questions that we received today. And if there is something that is left, then

definitely let's address this.

And we're going to start with the homework review. So I've given you four

individual stocks plus Q's as a market proxy.

And I've asked you to identify a stock leadership leader

that could potentially outperform all of the stocks.

So let's just go through that.

Okay, and here are all of the four stocks.

I'm not going to go through them individually. I'm just kind of going to

analyze. Well, actually, I should because it's going to show the market.

so let's just do this.

So what we see here before the trading range, even before that,

we're seeing a lot of the strength on the way up, and that defines

a prior leadership.

Prior leadership is all about CEO being in this stock and

CEO is not getting out.

We see that maybe there is some profit taking on the climactic action, but

into the, which is being shown here, a flash crash of 2010,

May 6.

So we don't see any selling going into that.

So no selling.

So just the bias.

Bias as a reaccumulation.

And then we just want to confirm this bias. And we definitely do.

We see how the stock is stronger, stronger.

Maybe less, well, depending on how we're gonna view this, we could do this. So

stronger, stronger, stronger, and then weaker.

And look at where the weakness comes.

Most likely, this is our phase C.

All right, we could probably identify it like that.

And then the minus sign of strength.

minor backing up action, and now we are outperforming again.

So strength on the reaction, not necessarily, well yeah,

strength again here, almost a double top, we're not reaching the top

here, so strength here.

So there is a prior leadership, there is a strength throughout the structure.

There is

definitely the structure that we like.

The way coffee and structure, we understand the timing of this structure.

So that all suggests to us that not only the stock will go up, most likely it

will outperform the market.

So that would have been a good choice.

Okay, so then the stock went up after this, 77%.

You know, I am just, because these slides have been created a long time

just was taking the percent on the move from one date to another, from the

low, I think, to the high at that time.

So it went up 77%. Whereas the market actually only went up, or at least Q's,

went up 32%. Now, so we could talk about, you know, the... beta, you know,

how this moves relative to how the market moves. That's definitely a very

important point.

But at the same time, you know, when you see what institutions are doing

by using comparative relative strength tools, and you see that

they're holding on to their supply and not presenting it to the market

throughout either an uptrend or consolidation.

that suggests that there's gonna be a continuation.

And most likely, this stock is gonna outperform the market.

And that's exactly what has happened.

Stock number two was very interesting and a lot of you guys kind of indicated

your solutions that this is the stock to pick.

And I would say that yes, definitely there is a lot of elements of strength

here. Not necessarily on the way up. We actually see that maybe on the way up,

the latest move is not that aggressive

as the move for the market. So we are seeing some weakness going into the top.

And then we're seeing some

weakness as we go to the downside. So weaker.

Weaker, weaker, weaker, stronger.

So this first element of strength is kind of very interesting. It happens in

what retrospectively we obviously would label as phase C.

So in phase C, we have some kind of strength that comes. And then look what

happens next.

Relative to the previous high, the price advances very rapidly.

So strength again.

The reaction is flat and much better than the

market's reaction.

So strength again. So we see three spots, three

significant highs and tops that are giving us some indication that

now are interested in this stock.

And also the way how...

momentum and the velocity has increased on the way up, and then the reaction is

so flat, suggests that most likely momentum is going to continue.

And I'm thinking that this is probably earnings.

So that could define that pre -earnings momentum, could define how the earnings

are going to be biased.

And also pre -earnings reaction also could do the same thing.

Everything is strong and flat, suggesting that we're going to have a

continuation. Now, the biggest question is, well, the stock is definitely

outperforming. Strength, strength.

So we have this quite an interesting

accumulation on the way up.

So, no worries, Cameron.

So, accumulation on the way up. We don't see it on the way down without the

volume signature, and I don't see anything very drastic on the way down.

more on the way up, so there is some kind of urgency to accumulate this

position. So, this looks like definitely an outperformer.

The only problem with this stock is that it has already advanced quite

significantly off the lows. From 175, we get to 300,

so that's about 60 % or so.

Whereas, let's say, stock number one that we looked at was not like that.

It's still in the trading range.

So stock number two was also a really good selection. Let's look at the

This was Priceline.

And we're seeing that, look how this move right here, this rally, 76

% instead of 13 % by the market.

So quite an outperformance, quite an urgency to get into this position as

as possible.

And after that price line, after this point, still went up 70%. So the first

stock, I believe it was CMG Chipotle, went up 77%. This stock went up 70%. And

believe me, I would take any of them.

There is really – would not be a big complaint for me if, let's say, I

pick a price line that goes up 70 % in the same period of time over Chipotle.

It's just – really not that important.

Okay, let's look at the third one. Well, the third stock is in the downtrend,

and we are seeing that maybe this whole move off was kind of like an area of

redistribution from the previous move down.

Obviously, there is a lot of underperformance here. I'm not going to

through this, but all of this here is weakness.

There is not a single point where the stock is outperforming the market,

maybe only on the flash crash itself just because it's just such an extreme

oversold condition.

So would we be interested in a stock like this in the market that is either

trading horizontally or we see some leadership that is already trying to

out? Well, most certainly not.

But it doesn't mean that the stock cannot travel.

Think about the oversold condition that the stock is in right now on

this chart.

So we kind of have an oversold condition here and then maybe another oversold

condition. If the market is going to go up, the market has such a gravity that

it's going to push.

The majority of the stock with it is going to take it with it.

So we could expect some kind of rally from here. If we define the timing of

market as the appropriate time to have some kind of momentum rally, where

momentum for the market is going to increase, what are we anticipating with

momentum increase?

We anticipate that a lot of institutions

gonna come to the market and they're gonna see some value and they're gonna

start buying.

That buying is gonna produce a buying wave that's gonna see a lot of

volume signature, excuse me, and price movement.

So that price movement might be much better than the previous rally.

So we might be also thinking the same way for this stock.

that the next rally is probably going to be better than the previous rally than

this one but it's still within the confines of the downtrend idea

it is still within maybe the confines of a trading range where we could

observe that this rally was maybe a change of character and this uh move to

downside was a climactic action and we are most likely where We are most likely

in phase B at this point. So the rally, aggressive rally, let's say into maybe

an upthrust situation is possible.

And you might be thinking here, okay, well, is there going to be a swing trade

of some sort? Yeah.

So from, let's say, 45 to about 60, that's about 30%.

So that's your potential high probability short -term swing trade.

But when you think about this candidate against the first two,

would you really go for this one?

I mean, even if it's going to go, let's say, to the highs here, obviously,

percentage -wise, it could be the same percent.

But I'm not sure if you're going to feel comfortable being so contrarian among

the selection stocks.

you know, where you have very, very high probability selection candidates.

Okay, let's see what this stock is.

Research in motion.

And even though, yes, there are no signs here, it still moved 60

% to $70. So to this line right here.

So you can imagine if you were in the swing trade, that would be, first of

a good swing trade. That's number one.

Secondly,

just the logic that we had for the trade into the up thrust high, that

would work out really nicely.

And that would be a really quick move.

So it's possible, but yet not preferable. Not something that

we would prefer to see. Okay,

last one.

Okay, so this one is kind of the most interesting one for different reasons.

Let's just go through this really quickly.

So we have an outperformance on the last rally to the upside.

Definitely the stock is outperforming the market, so strength.

Then on the flash crash, we don't have that kind of like a general

that we have in the market on that particular day.

So that's great.

That also is an element of strength.

They don't want to sell it on a flash crash.

If anything, they want to keep it so there's no volatility.

By this stock, we wouldn't even know that the flash crash has happened.

And then outperformance throughout

all of this

outperforming.

and then weakness, and then weakness.

So think about the whole story here.

We have a prior leadership on the way up.

So CEO does what?

Holds supply.

CEO does not present supply to the market.

And then we see that on the flash crash, no selling.

By the seal.

And then throughout this whole picture right here, there's no selling, really.

It's all strength, strength, strength.

Throughout, maybe there is some small pockets of weakness, and then we go into

the pocket of weakness.

So I wonder if you guys remember this.

We kind of started this when we were going through the...

comparative analysis.

Where for the stock that is exhibiting the prior leadership and strength

throughout this whole trading range could we find a short -term weakness at

which structural spot or maybe like which potential phase could we see that?

Do you guys remember?

Yeah, phase C.

That's correct.

So potentially we could say, okay, is this a potential phase C?

Well, let's go through some of the elements here.

So we could say that our first test is going to be in

phase A, somewhere here.

Our second test is going to be...

in phase b so probably some way here we have like intermediate test right here

on the way up this is more in the structure of the move to the upside so

test and then third test when we look at the point of fear

we probably would be confused here because we would be thinking that the

point of fear is obviously on the change of character itself

And then the second point of fear should be into phase

C, if we're identifying it as phase C. But the previous reaction also catches

our eye.

The spread is increasing there, suggesting more of the selling, and that

to the lower high, a failure to reach the previous high, and then leads to a

lower low.

So definitely this is... where the selling has started so we could either

of this as the beginning of the selling and this is just a continuation

um or we could be thinking that the second point of fear uh is

still on the latest reaction just because it has created the lower low so

about the weekends for them

to see their stock going below the support is gonna be very worrisome.

And they're gonna give up their position.

So that kind of presents that second point of fear.

But I must say that it's definitely not as clear.

And I would be thinking that this previous reaction could be phase C as

So if that would be the case, how would we trade this?

Let's see if we're thinking this way.

A, B, and C. How would we trade that? We probably would get into this position

on this bar right here.

This would be the bar that overcomes the point of local resistance

after the test at the support area.

So a test.

breakout above this resistance right here and we would be actually okay going

you know the first two days into this and then this type of failure in the

half of the trading range that's what would you know stop us

and most likely we would be thinking about exit not

necessarily where our stop loss would be. So our stop loss is going to be

somewhere here.

We're probably thinking of an exit after the failure somewhere in this

neighborhood.

If we're late to that, something in this neighborhood right here.

We don't necessarily want to participate in the potential sign of weakness.

So that trade could be closed like that.

Having said this,

there is something very interesting that is happening with the analysis between

these two reactions, number one and number two.

Look at how on the reaction number one, as I've mentioned, we

see the increase in the downward spread.

So that suggests that there is some selling behind it.

With that increase in selling, we would have an expectation

that this would

increase the downward result.

And it does kind of like suggest characteristically that there is some

selling. But does it really, really, really produces the result that we want?

Because if this is phase C in the distribution, then what should happen

We should have a major sign of weakness in phase D, and then an

LPSY that's going to come to the point of the resistance that acted before as

the support.

And we obviously don't see that. We don't see the commitment to the downside

that the major sign of weakness should produce.

We don't also see that rally, if anything, it's too aggressive, comes

the previous high.

So that doesn't look like an LPSY rally either.

So we don't see the increase in the downward result. And that suggests, if

anything, we see a decrease.

And that suggests a bullish bias.

That also suggests, in long term, that also suggests this failure right here.

It suggests that the short -term picture is bearish.

And this is where a lot of these students and traders kind of, you know,

confused about what's going on.

Because some of the elements are showing that we are in a bearish bias, at least

for now, with all of those failures.

and yet that the long -term structure supports a bullish bias.

So it's in those situations where you have to think in terms of how

characteristically the next reaction is going to unfold and what kind of result

that reaction is going to have. So let's look at that.

Again, I'm going to take reaction number one, reaction number two.

So thinking about reaction number two, we're thinking about, let's say, a

downspread.

And we're probably seeing that on the way down in the first reaction, we have

quite a few big, large downspreads.

On the way down in the second reaction, we see the

largest spread

at the beginning of the move and then closer to the

end and usually what it tells us whereas look at all of this

so

usually it tells us that there is some

selling

and then there is potentially some line

off the bottom.

So this would suggest that we could be in phase C.

Now the only thing that we would be looking for is some kind of

And that confirmation should come as, first, price should return into the

trading range.

It should be above, price should be above resistance

that acted before as a support, this line right here.

Third, if this is, phase c and the spring and

it looks like yeah maybe it is there's only one commitment to the downside one

progressive close to the downside so uh if this is phase c plus the spring

then we definitely need to see some kind of test which is viable

and plus we need to see some kind of local breakout. So something like this

where it tests, and then when it goes up, this breakout right here,

this local breakout as we've, you know, as I've shown this to you on the

previous charts, it's a buyable breakout. So we could buy on the

test. We could buy the breakout itself.

We could also buy any type of sign of strength bar.

on the way up, and then we would wait for the sign of strength

rally, and then we would wait for the backing up action.

So these are the conditions for a trade here, just based

on the analysis that we have, based on the analysis that this is a potential

leadership stock.

Kind of probably the same type of leadership stock as stock number one and

number two that we've looked at. Not stock number three, but the first two.

Now, the biggest question that I have for you guys about this stock is, what

you guys think?

Is this stock going to outperform all other stocks?

Or at least stock number one and stock number three?

We already know that stock number one and stock number two. We already know

stock number three

is not going to give us a

lot of room.

And so the only question that we have remaining is, We

know that this stock went 77%. This one plus 70%.

This one plus 60%. Again, we are looking more into the

structural analysis and comparative strength analysis. These are the

first two stocks that are definitely catching our attention.

But we said that stock number four is bullish.

Long term.

It's just very short term.

So do you think that stock number four could potentially outperform stock

one and stock number two?

Okay, and I see some answers coming in. So let's keep it rolling. Let's keep it

rolling. So what do you guys think?

Okay, so we have one no.

We have one yes.

Who else?

Give me more answers to work with.

Okay, another yes.

Okay, guys, pulling out the information out of you today for some reason should

be very fast and quick. You know, this is just a very simple question. Do you

think that the stock number four might potentially outperform stock number one

and stock number two? So for those of you who have answered yes.

Why do you think stock number four could potentially outperform Write

it down

Okay,

maybe a couple more answers Before

we go to the solution.

Philip is saying, bigger volatility hints CEO participation and the length

the trading range may hint bigger move.

Now, as you're saying, leadership stock in the reaccumulation.

Yeah, leadership stock in the reaccumulation. The first two stocks are

reaccumulation and also leadership.

Bigger volatility.

Hence the CO participation.

If anything, it's probably that CO was actually already in this position,

maybe got something on the way down, maybe got something on the way down, and

what do you think CO is doing here?

CO is going to be inactive at this point, and this inactivity, that's what

brings the price down.

So it's not that the COO is extremely active.

A point of liquidity for the COO probably wasn't a change of character

than somewhere else.

And again, remember where the COO is buying in the accumulation when the

goes down?

Selling climax, automatic rally.

These are the first initial.

spots where CO is extremely active, on the way down, on the way up.

That's what produces a change of behavior, and then that leads to the

character, to the structural change of character.

Think about where CO buys in the reaccumulation.

Change of character happens as a profit taken by some institutions.

That provides liquidity.

And that's where COO will be active.

So if COO was active here, maybe here, COO most likely is inactive

further down the road. And that's what brings the price to the support level

takes it down. And then the COO becomes active again if this is a true spring at

the bottom of phase C.

Okay, let's look at the result first and then we'll discuss.

So this was Lululemon, and indeed this was spring number two. After that,

until the same date, the price went up a staggering

182%. So think about

all of these four stocks.

And at that time of the market history, think about the leadership that these

four stocks potentially have had. Stock number three, Research in Motion.

This is the stock that has been a leader for years and years before iPhone came

out. And then it became a laggard and has been in the downtrend.

So the only move here that we could anticipate a swing move and we don't

necessarily want to participate in that so stock number three is just out of the

question we just don't want to do anything unless we are highly

know with with that position and you know we're looking um you know to trade

stock in general stock number one was a really good stock for us uh

chipotle and uh we are definitely would be in this position

And this is the momentum leadership stock at that time.

It's on IBD 50 list.

You know, you could hear about this stock at different classes, conferences,

so on and so forth.

Stock number two, Priceline, is also a momentum leader of that time.

So we definitely would be interested in this stock as well.

Stock number four, Lulu.

Is this the momentum leadership stock at that point of time? Yes, absolutely.

So a leader as well.

So think about how institutions are treating leadership.

They always want to be in the leadership stocks.

So what happens here with all of them?

Okay, so the first stock, we see that the Chipotle does not have a lot of

great points for institutions to get into this position.

Maybe there is some value after the earnings on the change of character, and

they get in there.

Maybe there is some value in the short -term oversold condition, some short

-term weakness, and they get in and face C.

Priceline.

is a different animal.

We might have some buying on the way down, like all of this

and some of the flash crash.

And then we definitely have some buying on the way up, all of that.

This is where the buying by institutions is happening.

Lululemon is also a leadership stock.

So where would they be buying this stock?

Well, obviously on the way down, so somewhere here, I think maybe somewhere

here, and then somewhere here as well.

This lowest point right here represents the short -term oversold

condition, short -term value, and short -term

liquidity.

So everything's short -term. But I want you to compare this

to where the first two stocks are.

And if you would be thinking about comparison of, let's say,

where we are relative to the previous low, right? So for instance,

if we're taking a significant market low, so let's say it's somewhere here.

this is the low and we would compare where the price is relative to that low

this is what we get for lulu then do

the same for price line okay so this is where we are for

price line okay do the same for chipotle and this is going to be insane one two

three four five one two three four five so i think this law right here

so this is the low and this is where we are okay

so here's the question and this is the question that i want you to kind of

cement in your head

if we

consider all three stocks cmg

Priceline and Lulu are

kind of like equal and equal,

quote unquote, equal leadership opportunity.

Then the question that we have here is which stock

has more value

at this point of time?

What do you guys think?

If these three stocks are all equal in their leadership momentum

characteristics, which stock has more value for institutions at this point of

time, thinking about that all three has a bias to the upside we know that

all three are gonna go up all three might potentially outperform the market

but which one out of those three has the most value to

the institutions what do you guys think write it down

Yeah, so stock number four, Lulu.

Just because it's so undervalued.

It's oversold.

It's undervalued.

And it has some liquidity right on the point of entry right there.

All of those points. But predominantly, it just, again, like think about maybe

like. three stocks that are starting at the same point of price and time. And

then stock number one does this, stock number two does this, and stock number

three does this.

If this next scenario is going to unfold as all of those three

are still going to go up just because the overall trend is up,

then they're going to go for the stock that is going to be undervalued.

In their minds, it has more potential if the price still is going to go up.

It could have more potential to go up because they will be

evaluating all three stocks against each other, all three leaderships against

each other, and they're going to say that the price line has extended already

off the lows so much.

and we got in into that position.

Chipotle just did not produce a lot of points of entry for us just because it's

such an outperformer. But Lulu had this short -term undervalued

spot, and we want to go there because we know that Lulu is definitely going to

still be a leadership, and it's going to catch up with other stocks.

So this percent that Lulu has made.

plus 182%, that's just catching up with Priceline and Chipotle, the

momentum leadership at that point of time.

So a very interesting kind of like point on the way how

laggards that are in the leadership groups or

uh you know for the stock that has leadership momentum characteristics

really quickly uh come back to that leadership and actually start

okay uh some questions

but has the lulu really a

strong strength indicators as stock number one from philip Well, Philip, we

went through this, right? So, strength on the way up, strength in the trading

range, weakness into phase B. So, yes, it does have strong

leadership characteristics as well as stock number

one and as well as price line on the way up. So, all three of them have elements

of strength.

doesn't it then mean that we should choose stocks with less intense strength

indicators? Because if it does, it obviously advances more, thus it becomes

interesting to the CEO.

Okay, let me rephrase the question just for all of us to understand it.

So the question is, if the stock has been advancing already so much, wouldn't

be more...

interested in a stock that has strength characteristics and then some short

-term weakness.

Yes, and that's the whole point of this discussion, Philip, that when you see

the leadership stock having short -term underperformance and you're still

concluding that the long -term bias is to the upside.

this short -term weakness might be just an opportunity for the stock to

rebound from.

And we should definitely look into that.

Okay, great.

We're done with this exercise.

So as your graduation homework, you could just go through this

by yourself and just kind of...

Okay, now I should say I'm getting into this talk early in phase C.

Test pays if you are right on the bias.

Yeah, and we've talked about the way how we would get in into the position.

When we're gonna have an example of the spring, you know, I'll talk about that a

little bit more.

Okay, let's talk about Wyckoff trading plan pro forma.

So why do I say performer?

Well, because this is something that you still need to work on your

own after the course.

And you need to figure out the way how you would like your

analysis to flow.

It could be a different flow than what I have here.

And I've shown to you the process, right? We've talked about

The process of selection, where we go and identify the leadership first. Well,

we go and do the market analysis first, define what the market is doing. That's

number one.

Secondly, we go and we define the leadership, whether in the sector or

group.

And then we go to the stocks level. And only after that.

we go into the price structural analysis.

Let me bring this example again.

A lot of students have asked me a question.

Should I do on my weekly, during my weekly selection process, should I do

price structural analysis first?

So my quick question to that as a reply goes like this.

What's the size of your universe that you look at?

Because if you look only, let's say, on a weekly basis at 50 stocks that you

follow religiously, then those 50 stocks are

not a big deal to go through on a weekly basis once a week. And then maybe even

just to look at them once a day.

But if you have, let's say, 500 stocks to go through, or maybe a couple of

thousands of stocks, Or maybe if you're a technical analyst and you go through,

let's say, 4 ,000 to 5 ,000, or in some cases the whole market of, let's say, 8

,000 instruments or so, then it becomes a little bit more difficult.

Also, think about that funnel that we have created, that selection funnel,

starts with the market.

then goes to the sectors, then goes to the groups, then goes to the stocks, and

then we go into the Wyckoff analysis.

Think about this as kind of like an easier route to get

to the stocks that are most interesting to you.

And obviously the way how you can create that scan that brings you to this

point. or a filter that brings you to this point, that's going to be really

crucial. And this is a subject of itself.

But again, if you have a large number of stocks to look at on a weekly basis,

price structural analysis is not going to be the first thing that you want to

look at.

The first thing you're still going to start with is a market filter.

What is the market doing at this point of time?

What is the long -term, intermediate, and short -term trends?

And I've shown you guys last time as to how we would define that.

We would look at the last secular low, which was in 2009.

And then from there, we would look at the market that we have.

So 2015, 2016.

18, 19.

Something like that. And we would say that, yes, long term, up, intermediate,

trading range.

Short term, up.

And that would be the definition of the market.

If we have a trading range, we would do a phase analysis. So we are probably

somewhere in phase D if we are bullish.

And we are...

we could be potentially in phase C, but I just don't even see this, so I'm not

even gonna talk about this. So we are talking about either phase D, or could

be potentially talking about maybe like phase B, and also does not make sense,

so yeah.

So the latest rally acts as a sign of strength.

It's either a minor sign of strength or a major sign of strength.

So both of those are going to be in Phase D.

Okay. What are the best trading opportunities right now based on the

context? This is a very important question.

Think about this.

Each market conditions are going to give us specific opportunities.

What was the opportunity off the bottom?

It was in the stocks that had a lot of momentum.

In the stocks...

that maybe had characteristics where the structure has been developed,

volatility has increased in October, December period, and the stock

was making higher low to the lower low of the market. So the stock was stronger

at this point of time.

So even though volatility has increased, but it produced higher low, so

indicates stronger stocks, and

Causality is already down.

Finished.

These are the stocks that we would be looking for at the bottom or in January,

even early February. These are the stocks.

What are the stocks that we would be looking for right now?

We are in this formation.

So what are the stocks?

What are the candidates that we would be looking for?

Well, we know that the next move is going to be to the downside.

It's just how it is.

It's either going to be a meaningful reaction into probably the upsloping

resistance, and it's going to develop as kind of like a trading range.

we might potentially have 2016 analog where we go up and then we kind

of rest at the top here.

And then we go higher from here. So that's a possibility as well. So think

if we do that in both scenarios, this definitely will be phase C.

And then we are definitely in phase D currently.

So this type of thinking, current market conditions, what kind of opportunities

we have here. So we might have an opportunity to the downside. This is

bear sentiment could short -term provide a lot of liquidity, quick moves.

So we would be looking for maybe even not necessarily shorting a specific

but maybe have some hedge against the market.

And that hedge might not be very substantial.

to cover some of the losses that we might have within the long -term

Having said this, any type of reaccumulation pattern right here would

that long -term campaign positions could be of interest to us,

and we would go and identify those.

Okay, so what's next?

We understand what the market is, what it's doing, where it is, you know, what

kind of opportunities we should be looking at.

So then after that, we would start our scanning for our performance or

underperformance.

And as we've done this in the previous class, and thank you for your emails. A

lot of you emailed and said that, you know, that was really helpful just to go

through the process and maybe even to see how you do it live.

on stock charts and so on and so forth. So it's great.

And we would do the same thing.

We would either look at the sectors or maybe we will not look at the sectors.

Maybe we'll look into the groups right away.

And from the group level, we'll identify those two things that we've talked

about last time, leadership and rotation.

Then once we have that and we go to the stock level, this is where the watch

list first starts to be formulated.

Okay, so maybe this watch list is going to have, you know, at the end of it,

maybe like 50 stocks, maybe 100 stocks.

Those are going to be of interest to you.

Okay, so, and by the way, this type of analysis right here should be very quick

because it could be automized, you know, visually you could be doing this,

you know, quite fast.

Market is going to take also a quick session for you to go through.

Why? Well, because the long -term picture does not change a lot.

The intermediate picture does not change a lot. And then the short -term

picture, you'll be able to analyze pretty quick.

So then once you have this 50 to 100 stocks, let's say, then you go into the

price structural analysis.

This is where you want to be slower and more deliberate in your analysis.

And obviously, you're looking for the timing.

Phase C, phase D. Bias is already going to be somewhat determined, but you would

need to double check on that.

But you're looking for that timing.

Identification of phase C.

Third test, second point of fear, specific volume signature.

Confirmation. The price returns into the trading range and then starts making

higher highs, higher lows.

Like of events associated with phase C. Last point of support, sprain or

shakeout.

And those are obviously bullet points.

Behind each statement here, behind each line, there is a system that

we've created.

How do we identify a second point of fear? Well, we have to find the first

and compare them. How do we identify test number three? We have to understand

phases. How do we identify volume signature?

We need to understand how

going into phase C, the volume signature must behave, you know, and more

preferable behavior of that and so on and so forth.

Phase D, a change of character that is structurally being created by the sign

strength rally and the backing up action.

Do we have that?

What's the confirmation? A resumption of the uptrend out of the backing up

action. Like of events, last point of support, sign of strength bar, sign of

strength rally.

Backing up action.

Okay, so we understand the structure right now. And our list, our watch list

might actually decrease.

So now we might be looking maybe at like 20 to maybe like 50 stocks.

The next step is going to be even more deliberate for us.

We have to get more detailed.

Because if the goal is to have maybe like five positions,

then we need to still

condense our universe to that number.

So we definitely want to look at the supply and demand, volume and price,

and the result.

And there, this is where, in this analysis, this is where we're going to

confirming the bias, we're going to be confirming the timing, and we are going

to be confirming the character with which the price is going to move.

So if you have 20 stocks and you just do that thorough analysis with 20 stocks,

that should take a long time.

So this deal should be potentially kind of like

average time that you're going to spend on this. And this is going to be a lot

of time.

that you will devote.

And it's the most important part of your analysis because it's so close to your

final selection.

And once you do this, then you're probably going to have maybe like five

10 stocks that are going to go to your daily

execution watch list.

And this is the list that we've talked about last time that you have on a daily

basis in front of you.

And each day, either before the session starts or maybe right after it starts,

and most definitely before the session ends where a lot of the trading

are being made either by institutions or by yourselves.

This is when we're going to look into this list and we're going to go through

this five to ten stocks really quickly, let's say on stock charts.

Put the symbol in and look what the price has done. Look what the volume has

done. You already have all of those scenarios outlined in your head. So in

reality, you don't need a solution at that point of time.

You need data to make a correct executional mistake.

I'm sorry, the correct executional step.

You're basically saying, okay, my watch list is saying, that if the price is

going to close favorably next day or during the week, and it's going to show

significant bar that breaks to the upside out of, let's say, a short -term

pattern, then I'm going to buy.

So you really don't get emotional when you know that one of the scenarios is

going to be like this, and if that happens, then you act.

If it doesn't happen, let's say that a stock on your watch list,

actually fails, well, then what you want to do is just, first of all, take that

stock off the list. That's number one.

Secondly, put it into the bucket of stocks that you want to follow

post -analyze them to see where the mistake was.

And that post -analysis has some kind of, well, it's

going to have a lot of value for you.

as you start adjusting your analysis and that's going to be extremely extremely

helpful okay so then once you have that watch list what you do next is you

start creating your uh tactics as to

different scenarios and i don't have scenarios here i should add those and

then secondly what are your um

Executional tactics.

Where do you get in into the position?

And obviously we want to get in on all of the like of buy points.

Sprint number three.

Test of sprint number two or a shakeout.

Or a test of the shakeout.

Lot of point of support.

Kind of strength bar.

Back and up action or a breakout out of the back and up action. So all of those

are going to be our potential points of entry, stop loss, original placement,

and then the movement, and then the exit.

Where would we want to exit this trade?

Okay, so that's the performer for the trading plan.

This is something that I want you to take.

and to think about and add something of your own. You could take this path,

but then let's say in phase C, you might say like, okay, I'm gonna add something

more to this.

I'm gonna add maybe that phase C is gonna have specific volume

I'm looking only for phase C that has diminishing supply signature and not

increasing supply signatures, something like this, and so on and so forth. You

might say, like, okay, I'm not going to look at the sectors. I'm only going to

look at the industry groups and stocks.

So make it your own.

You know, look at how you're trading currently, and then think about the ways

on how you could potentially adjust this performer, you know, to your trading.

Okay, well, let's go into a case study.

Okay, I think we're doing okay on time.

Okay, case study, Apple, Q's.

So we definitely would be thinking about the market here.

So we're discussing the second filter, but in reality, filter number one, the

market. So we would be thinking about long -term picture.

And this is 2011.

So think about the structure of the market where we were.

The 2009 low was the secular low. So the market went up. So we are in the long

-term uptrend.

Intermediate trend.

What is the intermediate trend at this point? Or at any point on this chart?

The trading range.

like the one that we have right now.

And the short term, it just depends on where we look, right? So right here, we

would be thinking about what is the last swing?

Well, the last swing was to the upside. Was it reversed?

Actually, on the last bar, yeah, we see that reversal. So we're expecting some

kind of maybe a higher low here with the bullish bias.

Okay, so we're done with the market.

Next thing that we do is we want to make sure that we are getting the stocks

that are going to outperform the market.

So looking at this trading range in Apple, we're seeing how

a spring with one commitment to the downside reverses and

produces the rally that is much, much stronger.

then the markets rally. The markets rally only comes to the previous high

stops, whereas the previous high for the stock has been taken out, and the

stock has advanced from that point quite considerably.

So a lot of strength on the way up.

Is there a strength on the way down, on the next reaction?

Well, the stock is making a higher low, and the market is making a lower low.

Definitely the stock.

is stronger and much stronger so we are attracted to this pattern why because

there is a sequence of buying on the way up and not selling on the way

down and we see that on this market volatility to the downside the stock is

being bought on the downside as well think about the market volatility what

had just recently in december january

And then think about the stocks that are outperforming right now.

They are usually the stocks that during that market volatility are going to

create some kind of short -term oversold condition.

But it's going to outperform the market in general.

It's going to tell you that outperformance is going to tell you

not heavily selling this stock and they still buying the stock when the

opportunity presents itself.

Now also think about something else. Think about the way how the CEO gets

this position.

And this volume signature is actually a Q's, so we can't use it for Apple, I

believe.

Actually, no, this is not true.

Looking at the volume signature, most definitely this is not the market's

signature.

This is Apple.

Yeah, definitely. This is the volume spike. I remember that volume spike.

Okay, so look at how supply comes in.

So supply increases, but yet we're holding on to the higher low.

So there is some buying on the way up. We see this from the volume signature.

see the buying on the way down as well.

So that kind of confirms that.

strength after strength and a sweet spot definition, where institutions

are extremely active in this area.

And then what do they do next?

They just become inactive. They bought in into this position, then what do they

do?

Oh, we're just going to go and rest.

We're just going to go and maybe buy something else.

We're just not interested in the stock at this point of time. So what does the

stock do? It's just there.

There's nothing going on. There's nothing happening.

And then suddenly weak hands might get it up.

Mean reversion trade works out at the top. The market still produces that

definition that...

short term mean reversion trade should work because we are in the trading range

look at how mean reversion trades work so nicely this is a big um

well even from here nice move nice move

nice move nice move nice move

and again nice move up to here nice move here

here and it's all

mean reversion trade until we get into the trend and they start trading mean

reversion as a trend, right? So they would be thinking going up and down. So

these are the spots in the trend where we gonna sell and where we gonna buy.

That's a whole mean reversion concept.

And they would be so successful during this time because it's during the

consolidation that mean reversion trade works so nicely.

it defines the oversold, overbought conditions almost ideally.

Just because the price consolidates between the support and the resistance.

And usually those type of trading environments create those opportunities.

But amateur traders do not trade it like that.

I mean, traders are usually more directional. They go to the excitement.

They go to that something in the news because we as people

are attracted to an information like this. Oh, somebody has made a lot of

in Bitcoin.

I should trade Bitcoin.

Then when that attention shifts and by the time you open an account and you

start trading, you kind of catch yourself.

um in the last move to the upside you are excited and then it just you know

turns on you so um in this case

we see how institutions have bought in on the way up how they were buying on

way down then they became inactive then they might potentially have bought on

the way down again and then again they become

inactive and nothing is happening after that.

COO is inactive.

But what it does, you know, all of this buying, there is an absorption on the

way up, there is an absorption on the way down, absorption on the way down, so

lot of the supply has been consumed by the COO.

And they found the spots where they found both value and liquidity.

Those are different ways of how they got there on the way up and on the way

down, but they got there.

And then after that, they're like, okay, we have enough of the position.

Because we're not going to provide this supply to the markets, the price should

not go down considerably. And if it does go below the support like with Lulu

that we see, like a spring, then they're going to be extremely active at this

spot because it creates that value again. They're going to buy in.

That's going to increase the momentum.

All of the systems are going to be triggered.

And then the next wave of buying is going to unfold.

And it repeats over and over and over again. The market is the collection

of visual representations of our behaviors.

And as everything in life...

We are small and they are big.

And by we, I mean retail traders, and by they, I mean institutions.

They behave in a specific way.

They have certain rules as to how they need to behave.

We have, you know, retail traders, when we come to the market, retail traders do

not have rules.

Retail traders do not have systems.

Nothing is built in.

So therefore, in general, retail traders' behavior

is somewhat predictable, correctable, but predictable.

That's why we are in this class, because we want to correct that behavior.

And then institutional behavior is also predictable, just because we know what

they need.

in terms of the value and the liquidity.

We know how to identify their steps, their presence on the chart.

And therefore, we just want to go with them alone for the ride.

That's the whole idea.

Okay.

Okay, so strength, strength, strength, strength again,

strength.

and then weakness.

Again, we are in a situation in this whole rally of strength.

We're in a situation where we have the leadership on the rally,

leadership throughout this first half of the trading range, two -thirds of the

trading range, and then weakness into potential what? Maybe potential phase C.

If this is phase C, then this would be the timing, and it seems like for the

market at that time, This is an attempt to spring, failed spring.

So potential phase C, sign of strength, backing up action.

A little bit too much supply here, so we need some kind of test,

which creates an apex, suggests a continuation to the upside.

So phase C, so we are in phase D. This is a good point for us to be in the

position to buy.

Okay, so once we are done with the relative comparative analysis,

We go to the next one, price structural analysis. Well, this is a different

structure, same stock, different structure.

Let's look at how the structure develops.

We've talked about this chart.

Horizontal structure here after a potential change of character would

that we would need to wait for the sign of strength in the backing up action in

order for us to open this position.

We probably would be too late.

So the downsloping structure works much better.

Here it is.

And then look what happens. A sign of strength actually commits to the upside

and has two progressive closes up. And then it comes to the support level

and that before is the resistance and balances up.

So a lot of points of entry right here.

I think it would be really hard for us to find the points of entry on the way

with an exception of the gap day itself because

it's a significant bar day.

Look at the true range of that day.

And if the day would look like this and at the end of the day, you're going to

say, am I a bar here or not?

So your answer should be yes.

You might wait for some tests within the next two days or so, and look at the

tests. They are not coming down, so you could buy on the tests as well.

Still a really good spot here to enter the position.

The second entry would be here, the third one here.

So that would be the sequence, and then obviously after this, we want to see

maybe another bar like this, so this would be point of entry number four.

okay oh why do i have filter number two here oh yeah this is not correct

this needs to be corrected and here

as well okay apologies for this something is not right

although we do look at yeah so we do look at

They're both price structural analysis and comparative analysis. So Apple, this

is, again, different time frame, 2001, 2003.

A lot of strength as the market still travels down.

So that tells us that this is potential leadership in the future.

We definitely want to consider this stock, and we need to understand the

structure.

And the structure is such that going into late 2002, 2003,

we're seeing how the price just

stays at the level of the support, doesn't go up, doesn't go down.

And it seems like all of the indications of strength that suggested that there

is a buying on the way down, there is a buying on the way up, buying on the way

down, buying on the way up.

buying on the way down.

With all of that, they are already in the position.

If CO is in the position, what happens here with the CO?

CO is inactive.

Why is CO inactive?

Because the CO has accumulated the position in the stock.

accumulation by the CEO has been shown to us, visualized for us on the

comparative basis.

We see that from the strength on each rally and on each reaction.

And then the CEO is just saying, I've got this position in my belt that, you

know, I don't need anything else. What I'm going to do, though, is I'm going to

go to the other stocks.

And I'm going to buy those stocks instead of Apple at this time. And

the market is starting to go up here because other stocks are being bought

they are starting to outperform on a relative comparative basis.

They are outperforming Apple.

And then only when there is some kind of urgency that starts to occur

or maybe a penetration of the support.

that creates that short -term panic and the ceo is attracted to the stock at

that point of time because of the liquidity only then we would go in into

position other than that we're just waiting we might have some trades like

here that are going to be losing trades a loss but that doesn't mean that

we shouldn't be waiting for the true timing right here And it's going to be

distinguishable.

Okay, let's see what else. Okay, something that I

maybe alluded to but have not talked about.

Do you guys know that you don't need a lot of the stuff that I taught you

throughout this 15 weeks?

That you literally can just trade the structure and have... just price

structural trading rules and be okay.

So what are those?

Well, usually when somebody studies Wyckoff method, you

usually study, let's say something that was created by the SMI

and you could, let me just go here and

show you. So on our website, you could, You could look it up.

This is the article under the Wyckoff Primer right here.

By the way, we have it in Spanish and in Chinese, so if you're interested in

those two languages, you could definitely read those.

This is the article that was written for the chart school at StockCharts.

They've commissioned us to create this article for them as part of the content.

a package that we were creating for them. So this is what we wrote.

All of the schematics, you know, we've developed ourselves here.

And then stock charts just took the leadership of that.

Yeah, so this is the schematic that I created for them.

Interesting that some of this is kind of bringing some of the discussions at

this point.

Although I don't see anything in the schematic.

Yeah, that should be okay.

All of them should be okay. Oh, yeah.

Sign of weakness in phase B. Yeah, but it's a minus sign of weakness.

I think.

Yeah, interesting.

Okay. All right. Well, let's look at this. So nine buying, nine selling

Buying tests. Let's go through the buying tests.

What do we need to see here? So this was an SMI's attempt to kind of put

everything together into some rule -based steps, trading plan, and, you

on and so forth.

So what do we need?

for the nine buying tests to materialize. The first test,

the downside price objective has been accomplished, and that information you

extract from the P &L. So for instance, if you had a downtrend, and then you

have what appears to be an accumulation, then you want to make sure that your

calculation of the causality, which is distributional causality,

comes as a target into the area where the new trading range is being formed.

So that's our test number one.

It just basically gives you an idea that the

target has been reached and that we are done with this

downtrend then you want to look for the evidence of that completion and uh

the evidence of the climactic run and phase a all right so we are looking for

preliminary support selling climax automatic rally secondary test

so that's number one number two uh

then we're looking for

Bullish activity, volume increases on rallies and volume decreasing

on the reactions.

So what this describes effectively is a change of behavior, not a change of

character.

Downward stride broken, so we want to see this break.

So number three is going to be somewhere in phase B.

And then the

break of the trend right here, number

four.

Number five and number six, higher highs, higher lows.

So this one could be in different positions. And this is where

I'm kind of realizing.

as I go through those and as I'm preparing sessions for students that I

use all of those. Some of them, they do make sense, but there are so many

variations on how it could happen. It cannot be universally true.

We could have higher highs, higher lows in phase B, but it doesn't mean that

this is the timing to get into the position.

So I'm usually... kind of like not using those.

But you could think of it as maybe like a sign of strength backing up action

where you have a higher high and higher low.

So that type of thinking could be beneficial.

Number seven, stock is stronger than the market.

Okay, well, we just went through the comparative relative analysis.

And then base forming, which is basically a causality.

We want to understand that there is sufficient causality.

And one of the thoughts about the causality that I have, guys, is why do

need the big causality?

What's the understanding on our part of the causality?

What do you guys think?

Why do you need, why bigger cause is better?

Can you answer this question? Can you write down your answers?

So, and I'm going to answer right away. So, the bigger the cause,

the larger the effect.

Okay, so that's going to be the most common answer to this question.

What else could we possibly be looking for in the bigger, larger formation?

Now, let's just say sufficient absorption of supply by strong hands.

And that's so true. Think about two examples of causality.

Two examples of cause.

This and this.

One is small, one is big.

So think about supply.

If supply is the same, so let's say supply zero and supply zero

here is the same level of supply, then think about how

quickly all of this supply needs to be observed by the CO in order

to push the price up.

Could it be done? Maybe it cannot be done. Maybe that absorption is just

to be partial.

Partial absorption.

Whereas in this case, there might be more complete

absorption of the supply.

by the CEO.

And if there is more absorption, more complete absorption of the supply, then

what should it bring us to?

Better trend?

Better sustainable trend?

And this is something, you know, those small nuances like this, right?

Where concept, that is so conventional concept.

Yeah, the bigger the cause, the bigger the upside, the bigger the effect.

You kind of have to think about these concepts from a different perspective.

In a lot of ways, we're taught to be thinking about the outcome itself,

right? The bigger the cause, the bigger the result.

But if we would look into more the underlying reasons of...

Why? Why would the trend be bigger?

In reality, it's all about the behavior by the CEO, by the institutional

type of the CEO.

If they have more time to observe the supply, it might take more time for the

price to fluctuate in the trading range.

But essentially, at the end of such accumulation in the institutions, the

will have a much larger holding.

And therefore, if they're going to hold on to this, that supply is not going to

be presented to the market for quite some time and is going to confirm the

sustainability of that trend.

And also, that's going to influence the character of the trend as well.

the way how reactions are going to develop, the way how stepping stone

ranges are going to develop, and so on and so forth.

So there are quite a few things that we need to think through more thoroughly

rather than rely on more conventional statements like, yeah, the larger the

cause, the bigger the effect. That's understandable.

Okay, number nine.

Estimated profit potential, again, you know, we're talking about the causality,

so we could estimate that.

So cause, number nine.

Base form, number eight.

Stock is stronger, somewhere here, strength, number seven.

And so on and so forth. So number five and number six.

Okay, so here is this whole plan, you know, that

they wanted, you know, their students to have, and by

them I mean SMI.

And obviously it has become a part of the methodology.

This is not my favorite part.

I do not teach that.

But, you know, I've extracted maybe kind of like the best practices here.

just based on the price structural analysis, the way how the price

unfolds. So look at this.

Test number one, three tests that you have to go through, structural tests,

you can trade without the volume signature whatsoever.

You can trade also without indication of the relative and comparative strength

if you don't care about the performance.

If you just care about the bias, that's what you can do.

Break of the trend.

Test number one.

Test number two.

Major sign of strength.

And this is something that you will have to be able to identify or to learn how

to do this.

It's the rally of the lows in phase C that travels through the whole trading

range, overcomes the resistance cluster that was created by the highs in phases

A and B, that commits progressively.

to the upside and allows the price to stay above the resistance cluster and

then pulls back, backs up exactly to that cluster and then

resumes the previous trend, which is to the upside.

That's the definition of the sign of strength.

Characteristics of the sign of strength.

Increasing spread, increasing volume signature.

Those are characteristics. Those are not definitional traits.

Okay, so let's come back here.

Test number two, a major sign of strength. So kind of easy in our case

we still have test number three. So it's not like we're going to come in on a

sign of strength rally and open the position.

A good example of this concept and how it could fail could be this rally right

here in October, November.

There is a close above the resistance, and then there is a failure back into

the trading range, and then a second failure, a breakout below the local

trading range that we see here.

So what we need to see from the major sign of strength and then subsequent

backing up action is an ability not only to commit to the upside, but to commit

in the specific way, to have the ability to stay above that, and see how

different this upthrust and this sign of strength are.

In the sign of strength, the price stays up.

a lot of time above the resistance.

In the upthrust, the price goes up, stays there a little bit for a couple of

days and then falls back.

It just can't stay there because sellers are attracted to this

price and they want to sell as fast as they can.

Here, there are fewer sellers and if there are some, there is some absorption

even at this high level.

What we need to see in the backing up action is their ability to pull back and

then resume the uptrend.

And that would be test number three.

And see how easy it is with just the price structural rules.

Break of the trend, we are done with the downtrend.

Then we're going through the trading range and we're kind of like not

until the point of the rally.

Until the point of the rally.

And then we're saying, well, obviously we need to have a proper backing up

action after that.

Failure, not failure.

And we need to wait for a reversed reaction, a reversal here in

the backing up action. That's when we are coming in.

And that's a high probability point of entry for us.

And you could just trade.

I mean, think about how valuable that is as one idea that you could trade over

and over and over and over again. And there are so many stocks that are always

going to be at the spot, either to the upside or to the downside.

You don't need phase C.

Phase C is something for maybe more advanced students

that are going to be

determined to initiate a proposition in phase C.

If you don't have time for this, look for the characteristics of the sign of

strength and the backing up action and trade that.

And believe me, your rate of return is going to be, not the rate of return,

win to loss ratio is going to be so favorable.

In a lot of cases, when you abide in phase C, you will be faced with a

where you will have to close a position just because it was

a short -term reaccumulation type of texture that

brought you a short -term bias to the upside.

You got into this position, and then it reversed, and it failed around the

resistance because supply still came in, and you have to close.

So if you're willing to go through this type of trade, which I do, and I could

show you some of those, I'm okay with this type of trading.

But in my case, I'm doing this each day.

So for those of you who don't have time, the best high probability spot is

always going to be after the backing up action.

And if you think about where the backing up action happens relative to the whole

trend you might be saying like oh my gosh the stock went up like 20 to 50

percent up into the backing up action do you know how valuable that is as a

sign that the stock can travel so much and now it's in the consolidation and

might continue its move to the upside you might be actually before the

distribution

You might be just experiencing the first 10 % of the move or maybe even 5 % of

the move.

And you still have so much ahead of you. But think about where you're coming in.

A high probability identification point of entry.

So think about that type of strategy.

Okay, what's next?

Quarter to five.

Okay, we've talked about the effort and the result.

So different characteristics, how absorption happens, how supply levels

behaving. So in this case, in 2008, 2009, Apple, we've seen a lot of

accumulation on the way down and in phase A.

Just a lot of buying. And then, so all of this.

Buy, buy, buy, buy on the way up, buy on the way down, buy on the test, buy on

the way up, buy on the way down.

And then some occasional buying like this one, this one, this one, then

this one right here.

And there is smaller buying. We see this from the consistency of the demand.

Let me just put everything on the chart.

Okay, this.

I think this, this, this.

So look at how the value zone is being constructed.

This is the value zone, institutional value zone.

And they are buying at all of those spots, but the most aggressive buying is

obviously in phase A and early phase B.

So supply is always crucial because it

gives us an understanding of what CO actually is doing.

If supply is still available, our question is, is CO absorbing that supply

CO is inactive?

If CO is inactive,

most likely we're going to have the continuation to the downside. If CO is

actively absorbing, then not only we might have accumulation bias coming out

this formation, we also might have some kind of leadership characteristics.

I mean, the way how the CO was buying this stock at this time, and think about

in 2009 what the stock represents at that time.

This is the hottest stock in the market.

it still has in the pipeline so many products that are going to come out

the next five years or so.

The cash, the revenue is just being accumulated at the very fast pace.

So obviously, there is a lot of value

on the way down, and there is a lot of liquidity.

And we see that.

both from the way how the downtrend has developed and also from the way how the

volume signature behaves.

So therefore, the most aggressive buying is going to be at that spot.

They don't mind going through the consolidation, and it's not our goal to

through the consolidation.

Our goal is to understand the motives behind the

composite operator behaviors.

and identify the timing when that motive is going to become more of the reality,

where the trend is going to start to emerge.

And that obviously happens in phases C and D in this element here.

Okay, well, that's the supply.

What about the demand?

Well, in a lot of cases, demand is going to show up as in demand either

on the way down

urgent demand on the way up.

And that urgency, again, defines the timing for us.

This is the stock that has a lot of interest by institutions,

and that interest is now.

It's not on the way down where it is, but the timing is not there.

It's not necessarily maybe like on no volume type

of rallies that we have. We don't see that institutional urgency.

But when you see something like this, where the price just goes up so quickly

and the volume signature is so high, and you might be thinking, yes,

supply is there. Absolutely, supply is there.

What happens afterwards?

What is the test? And the test is that we're still going up.

So that suggests a bias to the upside.

There are more buyers, and obviously there are still institutional buyers, on

the second bar that are still coming in and buying.

So there is no test after the first bar.

There are still some buyers even after the second big bar, and they're still

buying on the way up.

There are fewer of them, but still there are some bias. They are late bias, but

they're confirming the overall bias.

So that type of demand we definitely need to identify and to see that

as a timing tool and also as a potential leadership tool.

When we think about this urgent demand, we always say timing. But think about...

Why? What is the reason for this urgency and such a huge size to

be in this position?

Well, most likely they know something that we don't, and they're looking at

talk as a potential leadership for quite some time. So that's what's happening.

All right, guys.

Homework. Again, homework is going to be optional.

That's number one.

Secondly, you know, this is going to be for the practicum students.

But even those of you who are not going to take the practicum, I would really,

really highly recommend that you do this homework.

It's the final homework that I usually have, you know, in between two courses,

just because there is some window there before the next course starts. So we

want to use that.

But it's a very useful exercise. All of the students who have done this

exercise, they kind of felt the practicality

of all of the concepts that we've talked about.

And that's a very important feeling that you have to gain in order for you to

feel more confident with the methodology and how you apply it in your trading.

So what is the homework?

Okay, so the assignment is just to use Biogen.

or any other stock, I really don't care, to backtest the WACO trading plan.

So what you do is you go to the pro forma plan

and you start applying all of the filters and all of the

execution steps one by one with all of the trading ranges

that you can find in Biogen. And then...

As you identify a trade, then you put it into some kind of spreadsheet

where you have the number of trades, what was the pattern, trade date, what

the price, what was the original stop loss, how did the stop loss work out,

was the gain and the loss, and when did you exit this position.

The question usually comes here is, could we use a hypothetical portfolio?

Yeah, go ahead.

Use maybe like 100K, and you could just have another P &L here,

column, and just create that.

Or don't use that. Just identify the gains and losses in terms of the

points that you collect. That's the simplest way. I don't want to

the stats that you're collecting.

But definitely mention the market direction, analysis of the comparative

relative outperformance, your labeling, so you have to label each of the trading

range where you originate the trade, your points of interest, top loss, and

where you exited.

And I want you to have these stats, and also I want you to have charts.

Charts. with some kind of trades that you've originated and you're showing

trades on that chart.

Maybe you're showing some trades that have failed and maybe you're showing

losing trade.

That's also quite acceptable and needed for us to understand how you did this

work.

Philip is asking, so go candle by candle, analyze like that?

You could do that, but even at this point, and, you know, I've

asked you guys to kind of trust me with this education,

and we are at the last session, so we can talk about this, you know, more

freely.

Okay, so here is the whole history of Biogen.

So how can you do this?

You obviously would know the history of the stock, but it doesn't really matter.

What matters is through this work, I want you to create a convincing

strategy, a mental convincing strategy by going through all of the possible

trading ranges, whether they are on a daily, weekly, or monthly basis.

And then...

originating the trades and those you know in those trading ranges

looking for finding the way how

you know the trade would be originated and as

you do that put in some notes around

all of this

So let me just do the first one, and then I'll leave the rest to you.

So for instance, I'm looking at the first trading range right here in 94,

Obviously, I will have to do what? First, I will have to look at the

Secondly, I'll have to see, is there any comparative strength

at this point of time that I could identify?

And where would it occur?

So maybe it wouldn't occur here. Maybe it would occur on the sign of strength

instead. And we see how the momentum actually plays out so nicely here,

suggesting that institutions are finally buying.

So my points of entry might be after that and not necessarily before. It all

depends on where the comparative strength came.

And I'm not that familiar with that particular region of this thought.

price okay so after that we are in the backing up action how do we buy this we

buy it on the reversal we buy it on the breakout these are the two points of

entry for us and then we are just staying in

the trend until what until some kind of uh buying climax conditions probably

somewhere here on this volume spike and on this

clearly overbought condition that we see.

So this could be our point of exit, at least the first one. So let's say that

have two positions, so exit number one.

Exit number two, we would be looking for some kind of change of character and

then a secondary test.

we're seeing here a smaller trading range and then the up thrust so we still

would be in this position until probably either this point or this point right

here so this is our exit this is our exit okay so exit number two and hit

three and then just create a table where you have you

know all of those dates for for entries or point of entry

Stop loss, exit, P &L, and so on and so forth. And just conduct

those trades like this.

Don't overcomplicate this.

Take this information, put it in. Take this information, put it in.

Calculate the P &L.

That's your job.

But you have to do this in a very qualitative way.

You have to label the trading range.

You have to think about the market. You have to think about the comparative

strength.

Then you have to think about tactics. Where do you go in? Where do you go out?

And then you need records.

And that's your homework.

The goal is not necessarily to know what's coming and to define

that bias.

If that would be the goal, I would give you the exercise where you don't know

what stock that is. You already know what stock that is.

What else can you do? Well, you can do what Philip has suggested, and you can

say, okay, well, for instance, in this trading range, I see a

lot of activity, and let's say

maybe somewhere here.

you know, start analyzing the trading range. What do we see here? Well, we're

seeing a climactic action that resolved in another run here.

Then we're seeing a change of character maybe, and so on and so forth. I don't

want to do this all for you. And then you could, as Philip suggested, go bar

bar. And stock charts can allow you to do this. Look at how I'm doing this

now, bar by bar.

And you can, define your points of entry.

This would be really good, right?

Like, what do you do here on this bar?

How do you react to that?

So this type of situations you can't foresee, even if you know that the price

going to go up.

I mean, what's your rationale? What's your logic here of staying in the

position? You have to think this through.

And that's why this exercise is so valuable when you go bar by bar.

But if you don't have time to do that, then just do it in the way how we did

this in the classroom.

Okay.

So that's that.

Questions, comments about the homework?

Five o 'clock. Okay, great.

So we have 30 minutes.

Looking at the market for each trade, Philip is asking,

Well, you kind of have to go through the trading plan, right? So each time you

initiate a trade, what do you do?

You compare your analysis to your trading plan, right? Because

you don't want to create the variance between your execution and your actual

rules. So therefore, market is part of deciding

what kind of trade is available.

and going in the direction with the market. So, yes, this is the first step

always.

All right. Well, today is the last session, and we don't have a lot of

questions.

Usually we would have so many questions, like the whole class would be devoted

to those questions. So I think maybe because we were addressing those

throughout all of the sessions, and it kind of allowed us not to accumulate a

lot of.

So I think that, you know, next 30 minutes we could actually do all of

Okay, three questions here. First one is from Abdulaziz.

Distribution, redistribution schematics. So I think in the last class we've

talked about this, but I don't have a redistribution schematics per se like

drawn, but I will draw this to you. And the biggest question is about labeling.

How do we?

label this. Okay, so let's start with the distributional labeling.

Buying climax, automatic reaction, secondary test, phase A,

defines the trading range, phase B,

optros of the distribution in C, with the test, which

is LPSY, last point of supply, sign of weakness, which is a major sign of

weakness.

LPS wire rally.

Move to the downside. So now here we are going into the redistribution. How

would we label that?

Selling climax.

And this is going to be in the redistribution.

Intermediate selling climax. So it's not terminal.

Automatic rally.

Secondary test.

Phase A.

Definition of the range.

Phase B, upthrust of the distribution or LPSY,

major sign of weakness, LPSY.

Continuation to the downside.

Now let's look at the accumulation.

Because this is accumulation, this is going to be terminal cell in climax.

automatic rally, secondary test, definition of phase A,

and

definition of the non -trending environment.

in their accumulation.

All of the definitions and so on and so forth.

So what's the difference here for the redistribution?

We are going to have the intermediate selling climax instead of the terminal

selling climax.

But then the rest is going to be somewhat the same.

The start of the trading range is going to be labeled the same way as an

accumulation. We're going to have a change of character in the automatic

secondary test of the test, local test of the climactic action.

We're going to go through phase B. We're still going to have up thrust there.

We're still going to have secondary tests at the level of the support. We're

still going to have minor.

sign of weaknesses at the level of the support as well.

And then up thrust or LPSY, major sign of weakness, something that is

common for the distribution as well.

And then off we go to the downside.

So that's the only thing that, you know, we could potentially have

as our labeling. Now, having said this, there might be some other variations as

to how redistribution could happen we could have something like this where the

price maybe like uh slopes to the upside like this

and then goes down and then continues to the

downside so those type of uh structural differences are definitely gonna

exist, but the label in itself is still going to remain the same, right? Phase

C, phase B, phase D.

So that's the key, is that conceptually, we're still going to be doing the same

thing, but there's going to be quite a

few variations on the theme.

Okay, let's go to the next question.

Okay, this one comes from Philip.

As a beginner trader, how do I start? If I want to use 1 % risk rule,

then from the prices of the stock, it looks like I would have to put around 10

,000 in my account.

Is this the only way or should?

Or how should I approach this problem? So the key in this question, Philip, is

this. How should I approach this problem?

So one of the things that I really, really want you to think about,

as you're a beginner, is to create some

kind of practice.

that leads to consistent result.

Consistent results.

And Philip, I'm not joking here at all. This is actually, you and I would

get into the private session. This is exactly what I would tell you.

If you're a beginner, don't put the money into the

into trading right away.

The first step is still going to be to practice to the point where you have

consistent results.

What are the consistent results?

Well, for instance, you do some simulation.

And then let's say maybe your goal on the simulator go through at least, let's

say, 100 trades.

And if

your results are showing that, let's say, more than 50 %

results are winners,

then proceed to the next step.

If not, practice more.

And until you get to that level where on the simulator,

You can identify the bias correctly.

You can identify the timing of the trade. You can enter the trade correctly

then execute the trade correctly.

And 50 % of the time you're making money, then definitely go to the next

So Philip is asking, simulation means something as our current homework or a

practice account. You could use both either. There are quite a few

that you could purchase as a software.

I actually use a couple. You could just even use the stock charts, the one like

I've showed you, candle by candle, as you said, right? So that's so useful.

Sometimes what I do is, let's say, my wife would watch some kind of show,

and then I would be just kind of using my iPad and

leisurely. As I watch the show, but leisurely just concentrate on the chart

well and go bar by bar.

I'm just kind of going through the thinking process of how do I analyze,

I enter, how do I react to those gap days, and so on and so forth.

So any type of simulators that you could use, those are useful.

Even if you know the history of the stock, you don't know bar by bar what's

going to happen.

Second step.

Once you're done with the first one, second step is going to be put a limited

amount into your account.

And then use the smallest size

for your initial

trading. So for instance, if your ultimate goal,

is to use, let's say, 3 % risk per position,

then I want you to divide this

into, let's say, different portions, so maybe like a quarter,

or maybe even less so, maybe like

20 % of this 3 % risk per position.

So what would it be? For instance, 0 .6%, maybe to

be better, like 0 .5 % of equity. So this is your 0 .5 %

of equity per position that you want to use.

And then just work with this and show again to yourself that in

a three to six months period you can produce consistent

results if you

do this then go to step number three and then trade full full size

now there is a step number zero

to that and so

Step number zero, knowledge,

skill.

And obviously I'm putting the semantics here for our products, but you could use

any other products.

If you could go through this as a process, I think it's going to be very

valuable. Knowledge, skill, execution.

Execution are gonna be all of those steps. So step number one, two, three.

And then mental execution.

So mental execution, I would not worry for now. This is something that is gonna

be required after the technical portion of your trading is unconscious.

And when you are not thinking about your analysis too much and it just happens

naturally, a lot of the bad behaviors that you have in

trading and in life in general are going to become more visible because they

will become the single point of frustration, distraction, losses,

poor execution, and so on and so forth. And you will be...

kind of screaming inside saying that I got to deal with this because my

is good.

I went through all of the drill skills.

I've shown myself that I could produce consistently and then the mental portion

of the execution is the only thing that takes me down.

So then come to me and I'll give you a different scenario, a different plan as

to how to work with your mental.

So it's a process, right? I don't want you to jump right away into this and

experience some losses.

Build up your confidence gradually.

Don't allow yourself to jump into the water and then have it

kind of negative emotional experience and then decide to like quit uh quit

wyckoff uh quit thinking about your financial independence and so on so

okay next question is somewhat uh i think no something different i

have been swing trading stocks and i realized that the more i trade the more

mistakes i make okay so right away we we see some

mental landscape from Jung here.

Therefore, I'm thinking of swing trade for a longer period of time to reduce my

frequency of trades.

By the way, both kind of like do not have anything to do with each other,

two statements. You can still make mistakes in your swing trading based on

analysis and not on the frequency of trades.

I could see the logic here because usually when you go to a longer time

you are dealing with fewer trades that you have to conduct.

If you're dealing with fewer trades, therefore you're going to reduce the

of mistakes that you make.

But having said this, I still would concentrate a little bit of the more I

trade, the more mistakes I make.

So what are those mistakes?

This is the more interesting question to me, not in terms of the timeframe.

What are the typical mistakes that you do in your swing trading currently?

And the reason why I want to know this is because you go to a longer timeframe,

you might be making the same mistake.

And the mistake, the example of this could be, theoretically, for instance,

make your analysis, you define the bias, and then...

Maybe the bias was defined incorrectly.

You get into the position, the stock moves against you, you don't close the

position, and then you lose money.

That's kind of like a very amateuristic mistake that you could make still,

right? So defining the scope of

mistakes. is extremely important at this point of time. We need to understand

what mistakes you're making.

I would like to know if there is a systematic way, methodology of screening

a winning stock that has been chosen by the CEO so that I could get in early in

phase C and D and follow the trails of the CEO. Also, since it is a swing trade

for weeks and months, how do I handle the trade when the winning stock is in

out of sector rotation?

In short, how do I detect a stock early from thousands of stocks in the universe

that is under the campaign of the COO and swing trade this stock with the WTC

class knowledge and is able to handle it when the stock is in and out of

rotation. Okay, so we are 15 after.

I think we still have time.

Okay, I'm going to show you an example.

okay so let me just show you this

look at this stock what do you guys see let me just put the price here

of the fmp

the size okay here we

are exiling semi -conducting stock um as we go

through a downtrend short -term downtrend in the market

and then we start to recover right so we're thinking sign of weakness

or a shakeout

This is the bar that changes that perspective, right? So we know at

this bar that we overcame a shakeout, there was a test, and now

we have a breakout, which is the local breakout right here.

So let's say that this is the day when we're going to look at stocks.

Okay.

Let me just decrease.

the size here and just increase the yes great okay

so what is this date january 4th so on january 4th we're gonna

go through our market and then look january 4th was friday january 7th is

so you have the weekend here to make that decision about what you're gonna do

you're thinking this way

Sign of weakness or a shakeout?

Well, maybe I don't know at this point. Maybe I don't have that strong

conviction level.

So what do you do?

Well, still, you recognize that this is an oversold condition. And even in the

rally that we might have, let's say a bear rally, that might come to this

point, then do this, something like this.

During this time, there will be some stocks that will outperform.

So you want to find them. How do you find them? Well, you're looking for the

strength. That's number one. You look for the causality.

And then you want to look at the supply and demand.

and you want to look at the structure, obviously.

Okay, so Xylem is some of the, one of the stocks that was, at this spot,

definitely outperforming the market, right? So look at how it's

From this low, we have the stock that is maybe slightly

outperforming. Definitely outperforming on the way down.

Look at how the market creates a lower low. The stock is creating a higher low,

so that's a strength. So that's already a sweet spot.

Then again, outperforms during the time when the market is just consolidating.

And then look at the reaction, another higher low, another point of strength,

another sweet spot.

So what do institutions do? They accumulate on the way up. They don't

sell on the way down.

They want to buy on the way down.

So therefore, on this day, January 4th, this is the

stock that is going to go into our watch list based on what? Based on the

structure, which I've discussed this.

Causality. Is there enough causality here for a swing trade?

Yeah, absolutely.

I mean, like, look at this one -year cause.

So this is definitely something that would go on up for quite some time.

Okay, so it's great.

Supply and demand.

Well, we see how supply is diminishing into the reactions. I'm not going to go

through this whole analysis, so you can do this by yourself. Check.

Structure. Well, we're thinking that probably phase, and look at the

apex formation. So phase C is probably somewhere here, minus sign of strength,

major sign of strength.

LPSY, LPS, I'm sorry.

and then a backing up action.

And we are in phase D here. If we're in phase D, what's going to come next? E.

Structure is there.

So we are making a bet here that the market

might have both scenarios, both bearish and bullish scenario.

and we want to pick up the stock that is showing that relative comparative

outperformance, and we want to make sure that the stock has causality, that it

has the appropriate structure and the timing is now, and that it has that

-demand signature that is favorable for not just the buyers, not just the

timing, but also the way how the stock is going to perform after that.

And we have all of those.

And that's your swing strategy.

So how do you find those stocks?

Well, we went through this in the last class, right?

So I've shown to you guys how, like on stock charts, I might use, for instance,

you know, scooters. I might use, you know, especially top up, right? So,

look at this stock. Look at this stock.

Let me just find maybe just one.

That I like.

Okay, so let's look at this one.

Look at this stock.

What is this? Entertainment, Viacom. Okay.

Look at the attempts to stop right away. Look at the structure.

This is the latest structure.

And it seems like whenever the price went down, it recovered really quickly.

Went down, recovered really quickly. What is it?

Those are elements of buying, right, even here. Went down, recovered really

quickly. So the value zone somewhere here, and I'm just doing the analysis,

right? There's a momentum buying here, momentum buying here, so that's all

great. We just overcame the center line here. That's also great.

There's not a lot of supply here. That's also awesome.

A lot of it was here. Now there is nothing.

And then we are having higher highs, higher lows, most likely in phase D

already. You could extend C like this.

And then it's all about tactics. Where is the point of entry?

And this is more maybe of the campaign stock because it might go up and going

consolidate for some time like it did here.

That could be a possibility.

So Xilinx was a much better candidate because it was already in the

reaccumulation zone and you can define a lot of the...

swing characteristics like this.

One of the things that I want to ask you to do for those of you in your career,

I'm just kind of like asking, we have quite a lot of on -demand products.

And one of them is actually a swing trading using the Wyckoff method, which

conducted multiple times. Usually in December, I either do a swing workshop

or... Intraday workshop.

This year workshop is going to be slightly different.

Last year I've combined both intraday and swing.

This one is going to be somewhat different.

And you could just purchase this. This is like seven and a half hours of

material.

And we go through all of those things in more detailed way.

All right.

Let's go to the next question.

Okay, this one is from Doug, and this is just based on the homework that we had.

The question here on slide number five, stock number two.

Last slide, market bar is up. How do you determine if the trading range is

sloping or horizontal? Using the horizontal range, it seems to indicate.

We are in phase D while using the upsloping trading range. Price has

within the range and indicates on the right side a possible phase C is

Differentiating the two scenarios determine if the stock is in the sweet

enter a trade.

Okay, so let's just address the question of this.

How do we determine if the trading range is upsloping or horizontal?

Okay, so I was thinking a lot about this question.

And the reason why is because usually it's kind of hard sometimes to define

that slope.

In some instances, I see that students would just be looking at uptrend and

they would label it like this, like selling climax, automatic rally,

test, upthrust, secondary test, and then some kind of upthrust here.

No, no, no.

This is not how we're going to do this. First of all, there should be some kind

of understanding of the slope, right, that's going to happen. So, for

if you're going to have like 45 -degree slope, then most likely it's an

uptrend. It's not a consolidation.

But if you have a lesser than, you know, 45 -degree slope, then this could

produce a question. Do we have an upsloping structure?

The second and more important...

of how we should be looking at the upsloping or downsloping trading ranges

that every time we have a higher high, and by the way, I should have put here

another high here.

So this was the actual buying climax.

So if we have a higher high, and then the price comes back into the trading

range significantly, meaning that it retraces you know, a significant

portion of the previous reaction.

It retraces a significant portion of the previous reaction.

It retraces a significant portion of the previous reaction.

Then we are still in the trading range because the action here

is, for the price, is to come back to almost the level of the support that

was defined before.

and therefore we're still in the trading range.

How to define up slope, slope

and trading range, okay.

So that kind of is becoming the key for me in the way how I explain this

concept, and Doug, hopefully, you know, that's helpful.

And for now, this is the only thing that I can tell you. So those two things.

You have to look at the, well, actually three.

So first, degree of the slope.

Secondly, there should be, you know, a similar texture

as to the price and the volume

characteristics right so when we look at all of this moves up reactions moves up

reaction they kind of look the same right so it's not necessarily a

type of price action it's the same we could see in the market here one price

texture where the price goes up where the up spread is increasing and then a

completely different price and volume structure and texture you know when it

goes into the trading range so we want to capture that similarity in the

And then the third one, obviously, is that, you know, how does the price comes

back, the actual structure?

So those are the three things that I can think about at this point of time,

Doug. I don't think that at this time I can, you know, bring you something else

on this.

Okay.

Okay.

And a question, I think three questions from Lee. Okay, and then there are a

couple of questions here that you guys have, so I'll try to address all of

those. Okay, 530.

Okay, so what do we have here?

Question number one, on March 11th, time stop loss

was mentioned. The time stop loss for Apple is about two to two and a half

months.

Okay, I'm not sure what it means.

Okay, so maybe this, time stop loss.

Okay, what I meant by that, okay, let me just finish the question. However,

there are stocks in the trading range which are as long as few years, like

Selgen. If we had entered the position early in the trading range green line in

phase B of Selgen, so let's say here.

Shall we exit those positions within three months? Is there any guideline or

rule of thumb for the time stop loss?

Two different ways of how we look at the stop losses.

So one of the things that we discuss in the practical class, and

this is going to be a big portion, we're probably going to spend like three

sessions just on stop losses.

And we're gonna talk about the price stop loss, we're gonna talk about the

stop loss, and we're gonna talk about volatility stop loss.

And those are three different stop losses.

And we're gonna work with all of them. And the time stop loss is just basically

gonna define for us not the time when we get out if the position does not go our

way. but it's going to define more of the kind of like the levels of where

the stop loss is going to be based on.

So for instance, the price stop loss could be at one support level, and then

time stop loss is going to be at the lower price level.

So if the price just violates the price stop loss and then recovers, we do not

close this position.

but if the price, let's say, commits below the time stop loss, we would call

this a catastrophic stop loss, like Wyckoff did, and we would get out of the

position. This will become more clear during the practicum, but I think what,

Lee, you're referring here is more of the stop loss rule, where in a lot of

cases, for instance, if you got in into the position right here, and then the

price does not go your way, you close out this position.

And you use time as a factor, as the timing to get out of this position

it's not working out.

So that's just a technique. That's not necessarily the stop loss, time stop

by itself.

But this is just a technique where a time used as the,

you know, point at which you're saying, okay, I'm closing that position.

And this is a good example.

of how we might be just using that.

But it's a bad example here with Celgene, because if we would be thinking

the structure, we would be thinking that this is probably a secondary test in B.

And therefore, we would know that the price is still gonna consolidate for

time.

Okay, well Lee, hopefully that's understandable.

Okay, second question. In Celgene graph, assuming we had antitheposition in

phase C of the green line, of the trading range.

Shall we exit our position at the close of bar number one based

on your teaching and previous classes? We shall exit at bar number one if we

consider the black line trading range.

It might be an up thrust or down and the down bar number one is kind of

significant bar and reopen position at point number two and point number three.

Other points of entry chances between P and 1 are ignored. In this case, will

there be any reasons not to exit the position at bar number 1 as it's already

E for green line?

Okay, yeah, definitely there would be some reason not to close out this

position, right? So what do we think here?

We're thinking that this is a secondary test in phase B, and then we're going to

have a retest of the high.

in phase B again.

And then after that, and in this case, this is an attempt to go up, it does not

up thrust, it's up thrust only in the local trading range. And then after

we should go and find phase C.

So phase C here is more horizontal phase C. It's just a variation on phase C.

So if we open the position right here, then we should experience a major sign

strength in the backing up action.

If we are long -term investors, opening the position

in phase B does not end with the characteristics of the major sign

of strength.

We do not have to close that position.

We're only going to close this position on bar number one if we are swing

traders.

So this is the swing trade.

Close your position.

If we are in the long -term trade,

then we hold this position.

And then we add more, we add more to the long -term position. And then we, as

you describe it here, Lee, we open new positions for a swing position.

And that's how we should approach this.

Because for a swing trader, the key is going to be to capture the major swing.

The swing between phase C and the major sign of strength is going to be exactly

that. It's that rally.

The next swing trade is going to be after the backing up action into the

swing.

So therefore, your exit on bar number one for a swing trade is perfectly fine.

You have all of the characteristics to exit it.

especially above the resistance, and you can re -enter that swing again.

If you're a long -term trader, then there is no reason to exit. You can

out a little bit. You can decrease your size, your risk, but not necessarily.

Okay, ooh, two more questions. Okay, well, let's see if we could cover this

really quick.

Question number three, why don't we open a position at the close of bar number

three?

Okay, right here.

Oh, right here, this is the bar.

Okay.

Even if it did commit above bar number one, number two, we would be able to get

into the position as the bar of the bar number three did go up slightly higher

and so on and so forth. Okay, yes, I would agree here.

So I probably have not noticed this bar just because of how the chart is.

but yes, you're right. There is a reversal right here. That would be your

and this would be your stop loss. You still would be in this position, and you

would be able to add to the position right here.

Yeah, so a good catch. I just did not see it.

Number four, if I remember correctly, you did mention before there is a tool

that we could, can allow us to know more accurate information about the supply

and demand instead of deducing what the volume bar.

which is quite misleading sometimes.

Is there such a tool? Could you please introduce the tool to us?

I probably would, and I don't remember exactly in which context we mentioned

this, but I probably was talking about the up and down volume.

So, and this is something that I'll have to show you in the practical. In the

practical, we'll talk about horizontal volume.

And by the way, I'm arranging for a special, maybe in June, July, for us to

through on horizontal

volume signature or on market profile.

But I do talk about that in the practicum, so I'll show you an example

Okay, so I think that's it. There are a couple more questions that

I'll address and then we'll stop.

One comes from Sarah Way.

You mentioned that in the price gap up or down,

is actually buying or selling stocks overnight. Would the volume generated

during the overnights be reflected?

The quick answer to that, Sarah, is no.

Would it affect our volume analysis if the overnight volume is not recorded?

Yes and no, because we still would be aware that there was a volume

signature that overnight that drove us to this gap

and i'll show you on the example and that's what we have to be aware about

there was some buying institutional buying overnight and then we will be

a judgment of the daily spread in the volume signature for that daily spread

that's where our what our analysis predominantly will be based on

Okay, let me just then find it on a

chart for you.

Okay, so here is this gap, actually multiple gaps here, great.

Okay, so overnight gap. So here it is. What do you think is happening in this

overnight gap?

So institutions are selling, right? Maybe there are some news. There's some

that came out.

What do you think is happening in this gap? Yeah, so they're selling, and

how the price moves.

Now, we don't know that volume signature in the gap.

We can extract it, by the way. You can go and find the

softwares, like, for instance,

TradingView actually, I use TradingView so I could look at the aftermarket

data on TradingView.

So you could look at how the price moved, you could look at the volume

now. Is this gonna be a really good identification of

the buyers?

Well, your bias is going to be based on the momentum in this case. It always is

on earnings or on the events like this.

So it's definitely going to be in the direction of what has happened prior,

institutions have done overnight, and then how everything develops in the

morning.

Could we just use the volume signature that we have?

Yes, absolutely.

Think about what happens on these two days where there is a gap.

We are developing a climactic run to the downside on the climactic

volume.

What kind of action does this suggest?

Stopping action, selling climax.

And we have all of the characteristics of the climactic action.

This acts more as a secondary test here.

So here is our support line.

different support lines and resistance lines that we could create.

Look at the second example.

Kind of the same thing.

Climactic action. In this case, we're probably thinking that we are, okay,

so initial phase A, B, and we're thinking, could we

be in phase C here?

or maybe it's a much larger formation, and what we have is more of the

weekly. On the weekly, maybe it will look differently. So look at the weekly,

and you might say, okay, well, what if this is the area of the selling climax?

This is the area of the automatic rally.

Then what we have here is kind of like a

secondary test in phase B type of action.

So we might be inclined here to do what kind of trading? And this is, again,

something that we do in practicum a lot.

We think about all of these scenarios, right?

Because through thinking, we develop logic that becomes a habit for

us in the way how we think and how we approach the market. So we're thinking

here, it's either secondary testing B or it could be C.

In both cases, we're going to have some kind of rally, and this bar kind of

shows that there is some demand.

So we could have maybe like a swing trade up to this point, and maybe

this is a high -low, who knows, maybe there's going to be some kind of

So on the daily, coming back to the daily chart, okay, so our entry pro,

going to be either here or at the close here, or maybe on the reaction.

And we're thinking that this is a...

like a very risky trade uh not a lot of potential so again not necessarily

would be my favorite trade out of this place but possible so how would we do

it okay so let's say that this is our point of entry this is our stop loss our

target is slightly above 50 so maybe like 52 somewhere on this bar

where the selling has started

So that's the goal.

And we don't even have a really good, you know, let's say if

our risk is smaller. So what is this? 40 and 32, so maybe like three bucks.

Three bucks of a risk for what?

40 to 50 for $10 of profit.

Okay, acceptable, right? So we have 10 to three.

which is basically three to one about.

Okay, well, let's go and do it bar by bar. Okay, so how are we feeling? Yeah,

that's good, but the spread is diminishing, and it goes into the

here, and the volume signature is still high, so some supply. So let's see how

it's going to be absorbed.

Oh, okay, I don't know what happened here.

Okay, so we don't see that absorption, so I would be extremely concerned here.

as the price overcame. So there is no like reason for us to do trades like

You already kind of could see where it's going with all of that.

Okay, let's continue.

And this is that part of the simulator that I was talking about.

Who was asking that question?

I think either Phillip or Nilesh was asking this question.

Could we like use the simulator?

And you see how the price fails.

So if we had this as a potential smaller sign of strength, then we definitely

don't want that failure to go and then fail again in a more meaningful way. So

we would be completely out, and this would be just a break -even trade for us

right here.

And definitely we would need to establish some more definitive rules as

we get out of this.

Okay.

And as we got out, the price actually comes back.

Okay, well, I think that we need a little bit more time to think about

this trade would develop.

I'm just a little bit in a rush right now.

But that would be the logic in terms of the scenarios as to what do we expect to

happen. And obviously, one of the things here is just the spread is diminishing,

supply is diminishing as well. So I need to be a little bit more attentive to

those details.

Okay, second question.

Stock charts by default and back.

By default, add back.

they distributed dividends to the price. To remove the dividends from the price,

we need to add underscore to the symbol. Is it necessary for us to remove the

dividends from the stock price?

Now, I definitely like it without the dividend. So as

you could see, I don't have any underscores.

So this would be a different picture here.

or should be a different picture, although it looks the same, right? So

underscore and then the symbol. So try it with some other stocks and you will

see the difference.

But basically, you know, you could see that here, for instance, unadjusted

and then adjusted. Well, I guess I'm

looking at the adjusted, right?

So I always look only at the symbol. I know that with the underscore, obviously

you get a different picture, but still, my preference is just to use the regular

symbols.

Okay, I think that's it.

Will we discuss...

figure charts in practicum.

I read Wyckoff books and it seems like important part of the method or is it

obsolete? No, it's not obsolete.

It's probably considered obsolete by many technical analysts or they just

cannot find the quantitative evidence with the point and figure that it works

consistently. That's what it is.

Now, the reason why it might not work consistently for them is because

they just use it incorrectly.

I'm just curious where.

Oh, okay. Here's that failure.

Yes. Okay, it didn't even go to 50.

Do we discuss that in the

practicum? No, there is no reason to because you could go to our on -demand

products and we have part number one with Bruce on the PNF, almost eight

Part number two, most recently constructed last year,

I believe.

So you have about 15 to 16 hours of material on the PNF.

Also, if you go to our YouTube channel, you will find there a

lot of, well, not a lot, but you will find

on the PNF.

Last presentation that Hank gave at Best of Wyckoff and his last presentation

period.

After this presentation, it was on Saturday. Next Saturday, he passed away.

And then two 30 -minute intros to the PNF by

Bruce.

So you could definitely start with this, and then you could...

you know, switch to the products that we have. And those are great products. So

I would just, there is no reason to go through the PNF. I mean, obviously I

mentioned it here and there, but you could just buy it there.

All right, guys, let's stop here.

Let's kind of conclude our whole course. So last session, last

five minutes, last...

comments, and so on and so forth. First of all, I enjoyed this group a lot.

Each group is so unique, and it's obviously being comprised of the people

are in this group and how they are and how passionate they are about all this

stuff, and what kind of questions they're going to answer.

And I'm always curious, what kind of group am I going to get for the next

So I really enjoyed it.

being with you and developing the material together with you. As you could

I'm developing material as I teach this.

And somebody sent me this wonderful quote that I'm going to read to you.

It kind of states a different thing that I want to say, but I'm going to

translate this in a different way.

Teachers,

change lives, but students change teachers.

And this is so true.

Because every time I have some kind of connection with one of you or

with a group of you, I feel that the questions, the

anxieties, the happiness that you bring to me in your emails and our

conversations, they change me.

They change the way how I teach. They change the way how I look at the

Because any type of question that I don't know the answer to, and there are

definitely a lot of those questions, like even today, to some of the

said, I have to look into this.

So they develop me. They change me. So I am in the state of appreciation

to what you've done through this course for me.

I know it might come a little bit as kind of like an unusual thing, but thank

you, guys. I appreciate it.

I appreciate that you pushed me to develop myself better as a trader, as an

analyst, as a teacher.

Having said this, I hope that whatever you received in this course is valuable.

And you've indicated to me many times how valuable the material is, how you

the market better right now.

I'm extremely happy for you.

If you're still in that space of where you are happy about the course, this is

good time to write a testimonial and send it to me.

And we don't show the names of the students for your testimonials, only

initials, so don't worry about that.

And we usually just collect the testimonials, and then we're working on

website right now, so once it's going to come up, we're going to post those

there. So if you have...

anything to say about the course or the way how I teach, please do so. I would

be happy to receive that.

Also, I want to receive some kind of feedback that you think is going to be

constructive feedback on how to improve the course.

I'm all ears. I want to hear that, and I have a lot of ideas how to do this

myself, but I want that feedback from students.

Don't shy away from shooting me an email and just say, Ramon, listen, what about

this idea?

Have you thought about that? And so on and so forth. Or maybe like, I want to

suggest this as kind of like a potential improvement to the course.

All of those are extremely valuable and I'm extremely open to receiving those

type of emails as well.

The most important thing for you right now, guys, is going to be what do you do

next?

You spent 15 sessions, 15 weeks working on this material.

If you're going to stop, most likely you're going to have a big drop in

knowledge because it's going to just go away from you.

And then you're going to try to kind of catch up.

So the most inexpensive way to continue your education of Wyckoff methodology is

just go to our YouTube channel, watch the recordings there.

Go to the course again.

And do it again by yourself.

Just go through the course by yourself.

Identify each week as one lesson.

And then do the homeworks again and think about the homeworks and so on and

forth. And then find a way how to build your skill.

If you don't have time for this and you want a more structured environment, then

come back to us.

Because if you are going to be in a structured environment, let's say in the

practicum or WMD classes, and by the way, again,

you know, I'm giving you options to attend free sessions here, four free

sessions. You know, do at least that. Orient yourself as to what's the next

step. But one thing, do me a favor.

One thing, do not stop.

learning this stuff because it's too complex there are too many things and

have to stay honest and there are so many wonderful stories

that our students have that have taken this course before that have taken the

practicum that they have taken other classes and after a year year and a half

they've incorporated this and installed this as a habit the way how they think

about the markets And the story goes like this, and this is all true. I'm

kind of paraphrasing. A student emails me, and he says, thank you for this

course.

After having a couple of trades based on the way how now I understand the market

after the course, we were able to remodel the kitchen.

And now the email goes like this.

Thank you for the course. I was able to...

pay for my son's college education with the trades that I made during the

course. Another email, thank you for the course.

I made so much money on this particular trade. My husband has

established a grant at the university of

his alma mater.

Those type of emails.

give us a sense of what kind of value we bring

to people.

And obviously it goes just beyond of like the money, you know, the way of how

people think, you know, the emotions that come to that are extremely

And also what's important, and I'm developing a lot and a lot of this, is

community.

You know, it's so hard to trade on your own. It's so hard to be disciplined.

It's so hard to create the system and follow the system on your own.

You know, not every person can do that.

I have problems with this. So my life is all systems. You know, I built systems

for everything.

Even like, you know, for my...

physical exercises or anything like this. I need accountability.

So if you're a person like that, if you need more knowledge, if you need more

skill, come back to us.

We have something that goes beyond just the material of the lack

of training course.

And other than that, just stay in touch.

Shoot me an email here and there. Obviously, as you know, sometimes I

reply right away.

Sometimes I might send you to some classes.

to answer specific questions. It's all about filtering, you know, through the

inquiries that I have.

But let me know how your progress is going.

Let me know what are the plans, you know, for your trading.

I'm curious about this. Maybe something that I could suggest and so on and so

forth. So just stay in touch.

All right, guys. That's it for the... For this class, that's it for this whole

course. Again, I really appreciate all of you.

I appreciate you being here. I appreciate you signing up. I appreciate

the comments, questions, and everything that you've done for this course.

You've done something that is going to improve the course for the next cycles,

and new people are going to be grateful to you that you've done that.

So I appreciate that. Thank you guys so much.

and I'll see you in the practicum, or just shoot me an email. Thank you, guys,

and bye -bye.