All language subtitles for Session 4

Hello everyone, today is October 1st,
and this is session number four of the

Wyckoff Training Practicum course.

The remaining sessions on the, well, not
on the 6th, on the 8th, yeah, I'm

sorry, on the 8th, 15th, 22nd, and 29th.

In the announcements, October special,
looking forward to that.

It kind of will make a lot of sense, you
know, when it all comes together in

December.

December special is going to be kind of
like the

evolution of the material that I've been
going through in the last about 10

years or so.

So I'm going to present to you guys the
finalized system based on

Wyckoff methodology and price cycle and
all of that stuff. And it's going to

encompass a lot of the different
players.

So December special is going to be,
we're going to build up to that.

And you kind of could sense maybe that,
you know, I'm already working on a lot

of material that goes, you know, to that
particular, to those particular

sessions.

November special is also going to be
interesting with the discussion about

momentum and volume. John and I in
October special will be discussing

and hopefully we'll have some volume
characteristics there as well.

And October special, I think, also, it's
going to be probably two steps,

October and then February or March.

And February or March is going to be
more advanced, but you will have to go

through the first one in order to go to
the second one. So I'm looking forward

to all of those.

Today, what are we discussing?

Okay, I didn't correct this, so we're
not going to stay on significant bar

today. We're going to discuss kind of
like two things that are somewhat

as a topic. So we were discussing
significant bar analysis and the stop

associated, how we're moving the stop
loss based on the significant bar. Today

we're going to talk about volatility and
what that plays as a role in how we

manage our position.

From that discussion, we'll jump into
the discussions of the trend because

volatility occurs in specific places in
the trend, in the price cycle. So we

want to recognize where they occur.

And then we'll have kind of like this
exercise on trend identification.

And we'll see where potentially it's
going to take us. As usual, buyer's

We'll discuss that.

Oh, boy, that was.

a very interesting one uh we'll uh talk
about our anatomy of the trade which is

also extremely interesting i'm actually
really grateful that we've picked up

that particular stock at that particular
structural point because it's all about

you know how you manage the trade right
now and then as always there are some q

a's so we'll go through those stop the
recording watch the whole disclaimer

Everything that we've talked about and
discussed in these classes is only for

educational purposes.

Okay, well, let's go to our bias game.

I thought that was very interesting.

I actually would like maybe to have a
discussion at this point because I think

this is something that we need to stop
and discuss a lot.

This is very tricky.

So going through your homeworks, which,
by the way, thank you guys for sending

those.

I always go through your bias slides,
and I try to understand

the logic which you apply to charts.

And I try to think about why you were
thinking that this was, let's say,

accumulation over distribution.

What are those common logical steps that
you guys see

on the charts?

And I think that predominantly,

And please agree with me or disagree
with me on this.

Predominantly, this is the thought that
a lot of you have had.

Looking, and let me just take another
color.

Looking at this movement of volume in
general and then supply in particular.

So this is the observation that we are
making.

And that leads us to an erroneous
answer.

Because we're thinking here, well,
volume is going down, so supply is

diminishing. And that's true.

But we never fully engage with the
opposite side of the effort,

which is demand.

And you might argue here, okay, well,
what is happening to the demand here?

we see that as well wouldn't we kind of
like see that demand is also diminishing

okay well great so we have a picture

where both supply and demand are
diminishing and that diminishes you know

the overall volume signature so then how
would we resolve

this dilemma. How would we be dealing
with this, guys? I mean, like, what else

would we be looking at in this situation
where maybe volume is not that telling?

And I mean overall volume. Do you guys
have any thoughts, comments? And let me

just unmute you guys. Just say unmute
and let's just kind of discuss this

because I want to hear your thoughts.

As I said, this was probably the most
interesting bias game so far, you know,

since the beginning of this semester.

Thoughts? Comments?

Remarks? Questions?

Okay, well I see that Eric is going in
the right direction, so let me just see

any other answers before I'll release
his answer.

Anything else? What do you guys think?
How would we look at this picture when

see this dimension volume signature on
both supply and demand?

What else would we be looking for in
identification of the bias?

Okay, Simon is saying structure.

Definitely, I mean, like we definitely
will be looking at the structure, but

what specifically within the structure
Rick is saying, price spread, could be

somewhat confusing.

especially when you think about the
supply going down and demand going down,

Rick, right?

So what would that remind you of?

Probably this indecision point where
there is a contracting characteristics

the structure.

And we kind of see that also from this
structure a little bit, a little bit of

the triangular.

Okay.

All right. Anyone else?

What else?

Okay.

Rami is saying.

Interesting thought, Remy, but in what
regard would you be thinking about the

momentum here?

So if the effort diminishes, we would be
thinking that momentum would be

diminishing as well.

And if we would look, let's say, at this
rally here and compare it to the

previous rallies in the uptrend, we
would most definitely say that momentum

diminished, right? Okay, so if you're
thinking about the momentum as a

of

how the price moves, then I think you're
on the right track there.

So I'm going to say I'm looking at the
rallies and reactions and comparing

with others, analogs and congestion with
the volume signature.

Look for texture and where CO is active.

All right. Well, let me come back to
Eric.

Eric had this comment.

What about results?

versus efforts, or ease of movement up
versus down.

And I think that's what it comes down
to. I think this is the dilemma that we

are facing as kind of like you go
through the initial beginner's

level type of layers of analysis, and
then you come to something like this.

How do you make a judgment here? And I
think that's the next layer where we're

just basically saying, A common sense
definitions,

the ones where we say that the volume
confirms the price, they don't work in

this environment.

So what would work in this environment?
Well, the way how the price moves

and the intentionality behind it is
extremely important, right? So for

looking... On the upside, we had a
really good uptrend. Then we had a

good rally.

And then look at the next significant
rally that we have.

So we're seeing the deterioration of the
demand qualities. With that, obviously,

the momentum is also deteriorating. We
also see that in the volume signature,

right? So here's the demand signature on
this latest rally.

Here's the demand signature when demand
is healthy.

It's either increasing or it's
consistent.

So it's either has urgency and therefore
you have a lot of gaps, you know,

momentum up, or you have the consistency
of the push that suggests that still,

you know, there is some bind behind it.

On the reactions that are...

intermediate kind of like reactions, you
have the momentum push that suggests

the sustainability of the overall trend,
and that is being confirmed also by the

consistent demand signature.

What do we have on this rally, on this
latest rally from January to

July, to June?

laborious move to the upside with a lot
of reactions right so we have not had

this type of behavior where there's
going to be a reaction after reaction

reaction let me just erase all this so
i'm looking at this this and this one

might argue well what about this
reactions here i think this is a part of

formation of this reaccumulation uh with
its phase c somewhere here and this is

just an up thrust and B.

So it's more of the horizontal structure
by itself.

Here we clearly see that there is a
trending up channel.

But the way how the price travels up
really is concerning.

So therefore our attention goes to the
demand and we see that demand is of no

good quality.

Intentionality. We wanted to overcome

this resistance, and we'll talk about
this resistance in a second, and do

We want it to stay above it if this is a
sign of strength.

So, it's always a situation of the up
thrust or a sign of strength.

Okay, so, and then we're failing from
here.

Well, what about a situation, you might
say, where

this could be phase B, and then this
upthrust still in phase B, and then

going into phase C.

Wouldn't then the volume signature work
like this?

Well, definitely we could say that, but
think about the change of behavior.

And the change of behavior, as I've
stated before, is different from a

character.

So a change of behavior could be one

attribute of, let's say, bullish
behavior that we should see here.

It could be maybe like a bullish rally
in the middle of the trading range that

shows that the demand is in control.

Or it could be a bullish reaction.

And it could tell us that, okay, so
demand is in control.

Or a bearish, bullish reaction that
would tell us that supply is exhausted

or supply is poor.

Supply could be exhausted for different
reasons.

There is an exhaustion from selling and
then there is an exhaustion from selling

where they just sell and then they go
away and nothing happens.

And I think from that perspective also,
from that reasoning, we could also have

another layer of confirmation. So let's
kind of follow that logic.

Supply is exhausted.

Why? Well, because they sold into all of
this rally. So they sold here.

And obviously, this is a value selling
into the strength of the whole rally.

Then the second time they sold was
something similar.

And when I was looking at this slide and
I was thinking about the description,

of the Wyckoff story, I wasn't really
seeing a lot of supply here that would,

let's say, derail us from this trend
right here.

That was still in line with the trend.
The only bearish characteristic here was

a diminishing up thrust or upward
thrust.

So momentum was deteriorating, and there
was no really good volume signature at

the end of this move.

So naturally, where would the price come
on the reaction?

Into the end of the channel and also
into the momentum move that we have had

right here.

So from the volume signature and the way
how the price moves, you should detect

an increase of the momentum.

Whenever we have a loss of momentum, but
the price continues, usually a

reaction will react to that little price
level where momentum still has a lot of

strength. Why? Well, because the value
zone is established.

Here it is. And then this is where they
would be buying.

So nothing extremely dangerous yet.

Yet there are some signs that, you know,
obviously some selling is happening.

And I think this was very telling. So
this is where the story changes.

And here we're seeing that the reaction
and the way... how it results

itself into a downswing that is
increasing in

distance, in distance traveled.

So we have one reaction, we have second
reaction, now we have third reaction.

And it's interesting that as result to
the downside increases, what kind of

effort it is required

to have that type of extension.

And we're seeing that overall, we
probably would be looking at the

of the effort to the downside. So it
takes smaller effort to push the price

more to the downside.

So from here, we're concluding that this
type of action would be called how, by

the way, guys?

a quick pop quiz so the price moves to
the downside more on the diminishing

effort okay simon is saying ease of
movement absolutely yes eric is on that

well and so is rick excellent okay ease
of movement so we are moving

to the downside with more ease and yet
even with that there is some selling and

it's accelerating because we're seeing
that

In some instances, we could have this
cell in, let's say,

that starts to occur in the reaction at
the beginning of the reaction. And then

it kind of like slows down into the end
of the reaction. So that tells us that

there is an exhaustion of sellers.

Whatever they are selling, they have
sold. There are no more sellers or just

fewer.

And that usually...

provides with an assumption that there's
going to be a resumption of the rally.

In a way, this happens here as well. So
a lot of supply here, and then on the

next leg to the downside, we're seeing
how the price goes to the lower low, how

it did in the first reaction.

But supply level is really low.

So we're thinking there's going to be a
rally from here as well.

The third reaction has a different
construct.

Look at how supply is increasing with
each leg to the downside, which we have

three.

And we'll talk about this today as well.
So this is all in line with today's

material. So this is different. This is
where supply increases.

Supply increases more.

Supply increases even more. Obviously,
demand is coming in here at this point

value.

So we're seeing that not only in the
ease of movement, we're seeing that

from the bias to the upside to more of
the bearish bias and now to be proven,

you know, to be confirmed or to fail,
bearish bias, that is. But we also see

that in the construction of how supply
comes in into the market.

All right. Well, we've talked about the
rally. So demand is diminishing.

Intention is not fulfilled.

So with that, we're still with the bias
to the downside.

And then what happens next?

And we'll talk about some of the
complaints here at this point, why the

stops there.

So what happens next?

Demand cannot push the price.
significantly higher for the price to

the resistance and to occupy the space
above that resistance.

It fails instantly in the authorized
manner.

And as we are thinking that selling has
occurred here, here,

and then here, there is some here, then
because of

the poor demand,

We don't have to have a lot of supply to
push the price down.

So it's almost like that we're looking
at ease of movement again.

But now that ease of movement is going
to happen in the environment where both

supply and demand are kind of exhausted.

And they are less and less and less in
the signature.

So whatever prevails is going to be the
bias.

And I think that's that next layer for
us, you know, and understanding how we

actually deal with the bias
determination in the environment where

signature goes down.

It's in the result.

It's in the ease of movement.

All right. So let's see what kind of
comments we have here and if that all

sense.

All right.

Okay, let me just see this. Okay, this
distribution is a great parallel to a

trade that was available to us in the
hourly chart immediate S &P future. So I

agree. When you look at the analogs with
the markets, this change

of behavior has happened at the top of
the 2018, January 2018

rally, the conclusion, and then
February.

2018 low.

Then we had reaccumulation here,
absorption, and then there was a very

rally into the upthrust situation.

So this is a really good observation,
yes.

Longer swings to the downside, ease of
movement, and rallies back up really

struggle. Okay, great. Great comment,
Mitri, and great pickup right there.

Eric is saying volume picks up on the
last move down.

Yes, we definitely would be seeing this.

And again, you might be thinking here as
we thought about this increase in the

supply, right? So not like this, not
like this, but more like that.

Right. So if we would take everything,
so we were probably doing it like that.

So there is still an increase of the
supply as the price goes down. Why is

important, guys?

And, you know, this is something that
I'm going to be talking to WTC students

this is going to be extra material added
in the cycle on the SWIN analysis.

It's important for us to identify how
the SWIN unfolds.

In order for us to understand how the
buying or selling happens, is it only

happens at the beginning of the move and
then momentum goes away and that buying

and selling goes away?

Or is there acceleration of the bias?

So Eric here is picking up on this.

Eric is hot today. So many great
answers.

The increase of the supply pressure
comes at the end of the move, like it

happened in January.

So therefore, it suggests that as the
price goes down, there are more people,

market participants, who are selling,
selling, selling, selling.

They are more willing to depart from
their position as the price goes down.

And that's disturbing because if the
price would go down, we would probably

our acceleration of this price to the
downside of that trend to the downside.

Now, one more comment and then we'll go
to the solution.

A couple of the students I had these
comments were saying to me

that their preference would be to see
some kind of reversal bar.

at the end like the last bar should be a
reversal bar that would identify the

next swing to the upside okay well i
wasn't really thinking about this um you

know it might have come more
unconsciously in this in uh with this

here is your reversal bar here is your
commitment to the downside and then this

latest bar reverses Not just that bar,
but the three bars before that as well.

What does it mean?

Does it mean that we're going to have a
rally here to the upside? Yeah, we

could. We had the reversal. We could
probably go one more bar and then

back. That could be also a situation
that could unfold.

So the key was the bias game, and that
was from the beginning, and that's...

That's how I'm asking my content team to
create the initial slides where

we have to figure

out the bias from the data that is given
to us.

And this means that you have to go
through the whole story from the

the end, and you have to logically
create it and construct it.

All right, so let's see the solution.

Here we are, by the way, I'm kind of
included, and I think that this is going

be valuable for us as well.

And we have, you know, good data points
now, 214 votes last time that we had

had on this particular bias game on
Twitter.

57 % have said and stated that this is
an accumulation.

And I think that this was a very
difficult bias game, so I can't

I can't really say that it wasn't.

I've given you the chart at this point
right here, and you could see the whole

downtrend unfolding. That was, of
course, very market structure related.

And this stock, particularly with this
stock, the difficulty about this stock,

if you think about the market history
and what has happened in 2008, the

was already making lower lows.

So the structure was something like
this.

So at this point of time, this stock is
stronger than the market.

So naturally, for institutional money
managers, what are they going to do

in this environment when the market is
going down?

They have to be invested in their
positions.

naturally be inclined to go into the
positions that are outperforming based

relative stress.

And these are kind of like very
interesting questions with the money

And it happens not that often in the
markets because you have to have that

cyclical big downtrend to be in this
type of the situation where the

is holding up.

And then it just collapses.

The most recent example of this was in
2018, where we had that reaction to the

downside. And a lot of the leadership,
like Novadir, Apple, looked exactly like

this. There was a tendency to stay in
the leadership, and that's what created

that type of structure.

Why is this important?

If we would be thinking about when it
happens in this cycle, in the price

we would know that the market was
already in the downtrend.

And then we know that this stock was
still occupied and populated by

many institutional investors.

Why?

There is...

a relative value for them in this stock
at this point of time so i'm not

saying absolute value relative because
absolute performance here is just

basically break even but relative to the
market you are outperforming so

naturally they would be thinking if we
are outperforming our clients are going

to be satisfied even if the stock you
know just goes down and the market goes

down even more And that outperformance,
especially during the bear markets,

produces influx of new money and
increases the assets under measurement.

So naturally, they will be still
populating this position, and with that,

will overcrowd this position.

We kind of could see how the
institutional volume signature is not

right? So they are just staying.

Some of them, like value investors, got
out, and that's what stopped this

movement from further moving up.

This poor rally is just a function of a
lot of institutions are crowding this

particular stock and not getting out.

Why is this important? Because when they
will, it will collapse fast.

as majority of them will be trying to
get out.

And we see that both in the volume
signature that increases dramatically.

So this is where institutions are
capitulating.

And they are capitulating out of a
litter.

And this capitulation, it just happens
in the same way. And we'll discuss this.

There's going to be value capitulation
first.

That value capitulation is going to be
on the way up as the price still goes up

into this trend.

Then there's going to be early
capitulation right here, institutional

late institutional capitulation, and
then general capitulation.

Both retail and institutions are just
getting out no matter what.

And we'll study all of those. Please
note that there is really not a lot of

signs of distribution in this area
whatsoever.

There are none.

There is really none with an exception
of maybe this one here, but I don't even

count that.

There was just exchange of shares here
and somebody.

distributed the stock and somebody
picked it up.

So obviously just exchange between the
strong hands and the weak hands.

So whenever we talk about distribution
or distributional structure,

the assumption is that distribution
happens throughout the whole structure.

That's not true.

I mean, like the chart does not show us
that.

If there is one thing that doesn't fly,
it's the chart, right? So we have seen

this from the volume signature. There is
no heavy institutional participation

from the beginning of 2008 into August.

The distribution has happened before
based on value or over value, and then

distribution happened on the way down.

And we see that some of the institutions
were luckier and smarter.

you could see the smartness of money
based on their exit. And then some of

were just trend followers and some of
them were just weak hands.

All right, let's come back.

Something that I said that produced a
lot of comments.

Okay, I'm a bit confused. The last long
rally from February to July

is the bias up, but I think that the
bias is to the downside

from Simon. Simon, actually we defined,
we changed the bias right

here, remember, on this ease of
movement, effort diminishes, result

So from here then, The bias is down, and
because of the poor rally, then that

confirms the bias to the downside.

In analyzing the chart up to August,
could it be assessed that supply in

is less than the supply in May?

Supply in August.

Okay, hold on a second. Which August are
we talking about here?

Supply in August.

Simon, what are we talking about?

And the price may go up.

Okay, supply in August, then supply in
May.

Okay, supply in August is more, not
less.

At least that's how I see it, Simon.

Right, so we're comparing these two.

I don't see that supply is...

Okay,

so this right here, but this is just,

we're kind of like taking this out

of context, Simon, I think, because
we're looking, what are you looking at?

You're looking at a part one of the
reaction in the uptrend, and then you're

just taking kind of like the last leg to
the downside.

That doesn't really make sense.

If you're comparing something, you have
to compare apples to apples, right? So

therefore, like one reaction to another
reaction or one rally to another rally.

So let's go to another question.

Can you explain how you drew the trading
range?

Sure.

Okay, so that also was very interesting
because...

The question here was, where did change
of character has happened?

We can't really say that this is a
change of character relative to the

reaction. And sometimes it happens like
this, that whenever we have

a leadership, there are different ways
of how leadership is being distributed.

This is just one of the ways. This is
where value investors are distributing

into the strength.

And that kind of... creates a smaller
distributional range right here that has

its own structure, phase A, B, C, and
then this causality,

this small causality produces the first
initial move to the downside.

And that first initial move to the
downside is gonna be our change of

our true change of character.

If that's a change of character, then at
the low you're gonna have the automatic

reaction, and then at the high you're
gonna have a buy -in climax.

That defines

the levels of the support and the
resistance.

So the only thing that I've changed here
for these two lines is really just the

slope.

Slope here, I'm just looking at as many
points of touching as possible on the

resistance, that's number one.

And support, I'm just seeing that there
was this high or low tendency.

And I'm just using that for, in this
particular case. You could have done it

like this, which would catch this area
so nicely, would not catch this.

So that's how I've done this.

All right.

Another question.

I recall, Dmitry, in the previous
webinar, advising of a high -level view

chart. Would it be fair to say this was
distribution as the price is at the top

half of the trillion range with
increasing high volume of the top?

Well, you could potentially think about
it this way.

Now, if it helps to identify that. So
what is it that we're doing?

Okay, well, think about, again, Two
forces, and I'm still trying to come up

the more kind of evident analogy on
this.

So imagine two forces. One is the force
of buyers,

and they are leading this trend.

And then another force is, let's say,
value sellers.

So as the price goes up and the bar is
pushing the price up, we see this

from volume signature and how the price
reacts.

The value investor says, okay, well, at
this point, this is the value point for

me.

And this value point suggests that I
have to take profits.

Maybe even exit some completely.

So what is the value investor is going
to do? It's going to sell into that

strength. That selling increases the
volume signature and

temporarily stops the price from moving
further up.

So it's almost like a punch to the
uptrend.

The uptrend is still very strong.

And therefore, it's still sustainable
and it could absorb the supply and move

the price up again.

As the price goes up, the value seller
again sees another value point and

sells again.

Another punch.

So think about this maybe like as a
boxing, right? So first punch, you know,

boxer gets up, still a lot of strength.

Could we, you know, withstand a good
punch?

What's going to happen on the second
punch?

Probably less, you know, recovery energy
just

because the first punch was quite, you
know, sufficient. You know, look at the

volume signature. This is a lot of
effort. This is a big punch.

Dmitry is saying, you know, he loves
this boxing analogy.

Maybe, yes, maybe boxing.

I would rather... I prefer something non
-violent, you know, but, you know, for

this example, I think that the violence,
you know, is going to be present.

So again, stop in action.

But then the second punch was such where
maybe if the third punch happens,

and even if a smaller or lighter punch
happens,

The first two kind of knocked out the
uptrend to the point where the third one

is just kind of takes you more down.

And that's where you have that ease of
movement.

So you go to, you fall down as a boxer
on that third punch, and it wasn't even

that great.

So that tells you that you don't have
any legs behind you, right? So

then what do you do? You kind of...

trying to avoid being in trouble by not
exerting a lot of energy.

That's what this rally is about. And
then you're gradually just going to

collapse and capitulate at some point,
and you're going to lose that fight. So

that's how this fight in McDermott was
lost by the buyers.

But it's very specific to the leadership
characteristics, the way how the

distribution unwinded.

It's also very specific to the overall
market at that time.

And that was the challenge as well. It
was just this mixture between the market

behind on the background is already
going down, and I'm showing you a

stock. So a little bit tricky from that
perspective.

Is it distribution during the buying
climax range or is it rotational selling

buying? Well, a good question to ask at
that point, right? So is

this a rotation between institutions or
is this a distribution?

I would say that it's probably both.

Why? Well, because we've seen how the
value investor

distributed the stock, but it doesn't
mean that other institutions distributed

that stock as well, right? So where did
they distribute the stock?

Right here on the way down.

So this is the rest of the institutions.

So therefore, who picked up this site?

Some weak hands.

And weak hands could be both.

retail and institutional hands.

And obviously with this volume
signature, institutional hands are

So from that perspective, there is a
rotation that we see from

value selling to short

-term institutional, short -term value
institutional buying.

And that is weak hands.

So rotation has happened. There was an
exchange of shares from strong hands to

weak hands, from strong institutional
hands to weak institutional hands.

And then those weak hands are
capitulating somewhere to the downside.

All right. All right, guys.

Maybe we need to stop here and just go
somewhere else.

Okay, Dmitry, thank you for your
comment.

And let's bring up this point maybe in
another discussion as well.

All right, great.

Homework, the next bias game.

This one is pretty easy.

So I'd be surprised if we wouldn't have
more than 80 % success rate. And by

the way, I still would like you to keep
the record for each of the bias games

that you have done, right? So I want you
in the percentages, or

you could just say out of 10, five, I
guessed correctly, five, I didn't guess

correctly. So I want you to keep that
count on. And at the end of the

I want those numbers. So you'll email me
those numbers. All right, so this is

the homework.

Good luck with those guys.

And again, I think that this one is
going to be extremely easy.

Let's look at the anatomy of the trade.
That was a very interesting, not just

couple of days, you know, three, four
days.

I thought this comment from Corey was
really good.

We were discussing, you know, where
SunPower could potentially go.

We're thinking about some kind of
reaction after the rally or the rally

out. The rally did not materialize. So
Corey was saying that we're expecting

some kind of potential phase C if this
is the backing up action, right? So if

this is the range.

So I think that at the point, this is
exactly how we would be thinking because

we said that we've experienced a major
sign of strength.

and we know that from here we're going
to go into a backing up action that is

going to be a major backing up action as
well so we know that the duration of

the range is going to increase it's not
going to be just this area and then

we're going out we just bought in here
with an idea as i think that the class

was communicating at that time that
we're going to go through the

And then we're just going to be in this
position.

So that was the logic at that time.

And this is actually not the latest
price. So let me update this.

Here you go.

Look at that.

And, guys, you have to remind me, where
did we have the stop loss?

Did we have the stop loss just below,
slightly below this area right here,

somewhere? below 11 or was it below 10?

Did we use two support levels away?

I just don't remember.

Remind me really quickly, between nine
and 11, was that, well, 10?

Well, to me, that really doesn't matter
that much.

So, I mean, between nine and 11,

where if it's between nine and 11, we
are either hit today or we're not hit.

So I'm not sure.

I think, okay.

Eric is saying, I think that we were two
support levels away because we were not

moving. Okay, well, let's just say that
it's just slightly below 10 and that

we just enter in the first trench. We
were not in the position.

And therefore, you know, this is where
the stop loss is. Okay, so the stop loss

is not here. That doesn't really mean
anything for this position. I mean, like

at this point, what are you going to do?

Are you going to still stay in the
position or are you going to get out of

position, scale out? So let's go through
the poll first.

And let's see what you guys are thinking
about this.

What should we do at this point? Should
we close the position? Should we keep

it? And what would be the logic behind
keeping that position?

Okay, interesting.

Okay, one more vote.

The more we are voting, the more it is
to

the closing of the position. Okay, let's
do this.

Let's close the poll.

And please note that the price is
actually

at $10 .40 as of today. So the slide
that I have

is a little bit outdated.

Okay, so we are somewhere here. here
this is the range for today

also a down day all right so what are we
saying okay forty percent keep it fifty

percent close it ten percent keep it and
sell some um so i would say that

probably this is fifty fifty uh in both
cases here to keep um you know still the

majority is saying to close it um okay
well uh yeah absolutely i mean like we

definitely just Can't close it, but
what's the analysis here? Because

why are we doing this exercise?

This exercise is not constructed

to be in the necessarily winning
position all the time.

This exercise is constructed to be in
different positions, whether they are

winning or losing positions.

And the key here is to...

kind of soundly understand the logic of
how we're handling and managing the

position.

That's what this class is about,
tactics, execution, and all that stuff.

So what is it that we're doing?

So the class is saying, let's close it.

Okay, well, I think it makes sense to
think about a closure here.

Let me bring some arguments towards
this.

Let's say that...

If we've been in this position for some
time, there is a lot of sense to take

some profit as we go into a major sign
of strength.

So probably we would be thinking that
this major sign of strength is going to

have some kind of buying climax
characteristics, maybe some testing.

We would be thinking also that a big
backing up action, major backing up

could translate into the trading range
and then we have our stop loss kind of

like a catastrophic stop loss let's just
say that it's just below 10 so we're

very close to that we're heating here
and we actually overcame

the support trend line that we've seen
on this chart

so we are we just committed below the
relative strength is below the moving

average we had a low high here the
momentum had such a divergence from the

so we needed to see some kind of
expectations of the

price going down at this point so the
key for us would be probably to exit on

the way up like on this bar right here
on the first test the failure of the

or the failure of the up thrust right
here if we are exiting and if

we're profit -taking so exits profit
-taking

and then if we are

long -term investors the biggest
question that we have

is it a distribution

is this a

and I don't mean late distribution, is
this a terminal distribution

where everything what have been
accumulated throughout the years in the

have participated in the move to the
upside, and now we are done.

So I want to ask you this question,
guys.

With everything what we've seen on this
chart in the last three months or so,

maybe two months, and especially with
this you know last five days move to the

downside are we in the distributional
pattern that is the terminal

or is this just a temporary distribution
what do you guys think

okay

and i just kind of feel like i have this

I'm leading you to this answer, so
everybody's temporary, temporary to the

distribution. Okay.

As a long -term investor, we've
accumulated the shares somewhere here,

still as the price was establishing
itself on the way up,

probably throughout this period of
vertical absorption, which reminds me a

of Feather.

So everything else is the momentum to
the upside, some supply that comes in.

So I would say for the long -term
investor, you're probably thinking that

anything below $8 where I bought is
probably going to be really bad.

else is just going to be volatility,
speculation, and so on and so forth. I

don't necessarily see a lot of supply
coming in.

It might not be a distributional supply.

We definitely had some value selling on
both of the moves to the upside. We see

that. We recognize that supply has
increased, and this is the supply that

stopped the price from moving further
up, maybe because the stock has made a

freaking times three in less than a
year.

So in a lot of the value investors where
they have such a great return,

they're going to profit take.

And that's what happens here. And some
of them are going to be totally

with this position for the rest of the
year.

And they would say, maybe I will come in
somewhere later.

I think the key here is just to
recognize this buying climax and then to

plan as to what you are doing at this
spot.

Because your options are so different.
If you're a swing trader,

then you're definitely out.

That's your exit.

If you're a long -term investor, then
you have options here. You could

do nothing.

to your position, you could hedge, and
you could do the hedge in different

ways, and then you could just take some
profits.

There is no sense to add to the position
at this point, but there is a lot of

sense to do other things.

I think that the key here is to do those
other.

uh two things either hedge or take some
profits

uh and you could do actually both you
could take some profits let's say

uh you could sell uh let's say like one
third to one half

of the position and then for the rest
one half of the position you

can hedge

And the way how you hedge, you could,
let's say, sell premiums, sell calls.

You could buy puts.

Whatever the strategy you could have.
You could also try to figure out and

maybe a stronger candidate at this point
in the same group.

And then...

do the spread trade, but this is a
little bit more complicated, so spread

trade, buy stronger asset, buy stronger

solar stock, and then

sell SunPower.

That would be your pair trading order.

spread trading.

Let's not think about that. I think that
the easiest concepts are going to be

just take the profit or just hedge.

I think that for the long -term
investor, hedging is a much better

Why? Because you still have the same
type of size if you hedge. And you want

to make sure that on the buying climax,
you have that hedge strategy, which

makes your position neutral. And if the
stock goes down, then you're not losing

a lot of equity.

This is something that we will be
talking about in December.

This is going to be like the culmination
of all of this knowledge coming

together. I will literally show you in
the price cycle different positions of

where the stock could be and what those
positions would mean relative to the

signal.

that we're receiving.

And then we'll talk about specific
tactics that will be defined for the

position. So like position number one,
position number two, position number

three, and so on and so forth.

So each position will be associated with
the specific identification.

And behind this is going to be specific
rules and scams to find those

spots.

And then the next layer is going to be
tactics.

What kind of strategies we're going to
use at the specific spot in the price

cycle. So I'm just talking about
specific spot here.

This is the spot that tells us that the
long -term uptrend

is...

confirmed by major sign of strength and
it needs to be confirmed by the backing

up action still and that we are in the
short term overbought condition

at this point, at this buying climax and
in this trading range. So therefore,

we're going to expect some kind of
change of character.

A change of character comes after the
buying climax.

Is this the change of character relative
to the previous reactions?

Probably not, right? So it's just a
change of character to the last move to

upside.

But this looks more like a change of
character. So we're probably gonna have

like a meaningful change of character.
Maybe it's gonna stop here. Maybe it's

gonna go even slightly lower to about
this area right here. I'm kind of

hoping that we're gonna struggle here so
that...

there would be some knowledge coming out
of that struggle.

But let's say that if we have that
change of character, the price touches

moving average, and then it just
rebounds up and then consolidates. And

stay in that consolidation, in that
backing up action for quite some time.

So that's what we're trying to do here.

We're trying on the real example, try to
go through all of those

price cycle positions.

where we are seeing the emergence of the
trend, short term overbought condition,

so therefore a hedge position should be
initiated here, or some profit taken.

By the way, my initial position was
initiated somewhere here on

this reversal right here, some add -ons
on the way up, and then I closed out

over 90 % of my position on this bar
right here.

So this was the predominant trade.

Reasons, exactly this, exactly what
we've been discussing, you know, the

climax.

So now I'm approaching this exercise as,
well, together with the class, we have

this position, we rent it on this bar,
and here is our stop loss. This is how

we're managing it, and then we'll find a
way how to analyze it.

All right, guys, I think that's it for
this segment.

Let me see a comment. The small reaction
in late June of 2019

had

less volume than the upthrust in mid
-April

of 2018.

The next high reaction in June.

I'm sorry, this one right here.

Oh, you mean this.

Okay, all right, I got you.

Yeah.

Okay, so the question, could that give
us the confidence it would not be

distribution, especially when that
resistance lines was broken to the

Okay, so something that is being taken
from the WTC exercise that we usually go

there.

identification of the supply on the way
out and how we go through this level.

This is a very important task because
you basically are trying to

gauge whether you're gonna have some
kind of continuation of the move

after supply emerges.

And there are quite a few spots like
this that we see in the uptrend where

breaks to the upside, supply occurs, and
then what do we

expect from this, and how would we
interpret this?

So there are quite a few instances here.

I'm sure that this is not all. There are
kind of like smaller instances as well.

Let's see, like this one right here, and
just some smaller ones, but I don't

think that we need to go through.

all of them. But we're seeing the supply
coming in and the shares are being

sold into the strength.

And then what happens after that supply
spike?

Reaction. What happens after the supply
spike?

Reaction. What happens after the supply
spike?

Reaction. What happens after the supply
spike?

Reaction. What happens after the supply
spark?

spike reaction.

What happens after the supply spike,
which is less

than any other supply spikes that we had
so far?

Reaction, but horizontal reaction
without the continuation to the

If you could see that everywhere we have
that continuation to the downside where

We're going down, we're going down,
we're going down, we're going down,

going down.

So what happens here is that the sellers
still provide the

force, the effort that stops the price
from going further up.

And once they sold into this trend,
they're not selling anymore. Maybe

selling, you know, like here on the
continuation, and then the price

This is the first time in 2019 that we
see that change of behavior, not the

change of character, but the change of
behavior.

The way how supply comes in is the same
way, but it's less of the supply. That's

number one. So the effort is less to
resist the uptrend.

That's great because that tells us that
supply is exhausted.

There is more chance for the price to go
through this level now.

at six dollars and then the price
structure itself of the reaction is

it's not uh vertically uh constructed um
and then we definitely don't have any

supply uh there so that's a change that
happens then the next time supply comes

in as a spike supply actually increases
and it's at the higher level it's at

eight dollars now so we are basically
tasked in

you know, all of this attempts to go up.

Would we break through that level?

Would we sustain that uptrend?

Would we be able to observe this supply
at the higher level now?

And indeed we do. And instead of the
vertical reaction, again, we have a

horizontal one.

So we have done the same.

Action at $8 as we did at $6.

Supply came.

The market observed the supply. We
reacted more horizontally.

And then the next supply comes.

And also a horizontal structure was just
a sign of strength in the middle.

And we're still observing that supply
that came right after the test. After

supply comes, you know, we have a
successful test.

And then the last one, supply comes at a
huge quantity. This is the largest

supply. So here we also will be thinking
relative to the magnitude of the

supply. If we're going to have a much
larger structure, would the structure

on? Would we have this horizontal
structure rather than just reaction to

downside?

And that would be our judgment on the
very long, long, long -term trend.

Okay, yes.

good observation there all right guys
let's retire from this segment let's

at the time for 11.

okay great all right let's uh jump into
the q and a's uh from simon we've been

looking at the point of entry and point
of exit using the key wake of events can

we still use wake of to also assist with
swing trading, such as when within a

trading range. Would this be simply
identifying the climactic actions, for

example?

And we should have a chart here. Okay,
so let's go to the chart.

Doesn't really matter what chart we're
taking. So let's say we have this sun

power, and we're looking at the
consolidation. So the question here is,

The question here is about trading range
and how

we would trade it.

Would we be trading it as isolation
trades? Absolutely.

So we are thinking about here what?

We're thinking about mean reversion.

which is basically you have the mean and
the price deviates around this

mean. And we are in the trading range,
so we are in the horizontal structure.

With this, whenever you recognize this
environment, you have to go to

oscillators to define the extremes.

And you just basically buying and
selling extremes.

Now we have to put our WICAF layer on
this as well.

And therefore we'll be thinking about
the structure and specifically what

structure phase analysis is gonna be
extremely useful.

We would want to understand that once we
have experienced a selling climax,

perhaps here.

We could expect some kind of move to the
upside, which does not happen right

away, by the way. We have a whole
structure, a trading range that belongs

a stop in action.

That's how the price has stopped here,
diminishing supply characteristic, and

then a suggestion for the rally.

So what we would be looking for is some
kind of short -term oversold condition.

in order for us to create short -term
swing trade with the target

at previous resistance.

In this case, the resistance was not
well defined. Well, maybe here, and then

obviously on the highs of the
preliminary support.

So here we are kind of expecting the
price to go into this area.

You are trading this.

Then you define automatic rally high.

And the reversal out of that could be a
trade out of the extreme where you're

expecting the price to go to this
secondary test.

That would conclude phase A.

Then you could buy it with the
expectation that there's going to be a

phase B. In this case, an upthrust
action, which was so nice.

So you know that you are here in the
extreme overbought condition.

So at the first signs of capitulation,
and you could even just think that this

was a capitulation right here. So a
trade could be established here. But

for sure, and then on the open of this
bar, and then on the continuation here,

you're expecting that the price is going
to come down to the level of the

support. And then you're just, again,
trading it back and forth, back and

until you recognize the elements of
phase C.

And then when you trade phase C, then
you just stay in this position.

And that's the key, just to define that.

By the way, look how dramatic this
change of character looks now.

It's probably even more dramatic than
what we have had here.

This is kind of like the spot that
reminds me a little bit of...

the structural way of how the price
traveled.

A lot of aggression, volume signature,
and then some kind of smaller

range, and then a very quick move to the
downside.

So what are we expecting here?

We would be using the same analog, and
we would be thinking, if we're going to

have this type of consolidation where
the rallies are mediocre, we might

actually have a continuation.

So the long -term investor that was
accumulating the shares here, will be

capitulating somewhere here.

The long -term investor would not be
capitulating on the first change of

character because it means still nothing
to the idea of the long -term trend.

Okay, great.

Next question, do we have an equivalent
diagram of the above for the

redistribution that details the points
of entry and points of exit?

I will bring this up in the news cycle
of the WTC assignment.

And once I have that slide, I will
present it here in the practicum. So you

will have this.

And then the comment, Tobias' game is
absolutely fantastic. Such a great

exercise to put the theory into
practice.

I've been looking at Tobias' game on
Twitter and then the solution that you

later on. Yes, I want to point your
attention, guys. Do not look at

solution unless you are done with your
homework.

because it's the same week that we have
the same game.

You have one day head

start on the whole Twitter group, and
that's advantages of having a

class on Tuesday.

So whenever you send me your answer,
then look at Twitter, and usually the

answer comes on Friday.

On the Twitter feed, I find it a little
difficult when scrolling through to

match up the bias gain with the
particular solution slide.

Is there a unique identifier that you
use to match them up for is

searching on the Twitter feed?

We will think about this.

So, Simon, thank you for this feedback
because I actually agree with you.

It is a little bit hard to find.

When you look at the solution, you know,
to find the original slide and to find,

like, what did we start with?

So I'll think about that.

This is very interesting. Eric is
asking, so do we become mean

reversion traders within the trading
range until phase C?

Well, not necessarily.

And again, in December, it kind of will
all make sense.

I will put different layers on the price
cycle and we'll look at this from

different angles and it will all make
sense. But the mean reversion trade will

always be on.

Here's your mean reversion trade that
happens in the trading range.

And then this is your mean reversion
trade that happens in the uptrend.

What am I doing?

Well, it's the same trade.

It identifies short -term overbought,
oversold conditions,

but it's just in a different
environment.

So throughout the whole price cycle,
there are traders that are just doing

Our goal, and again, in December, I will
show you guys what to do and how to do

this. And you kind of could see how that
trade unfolded for me, right? So

accumulating somewhere around six and
then getting out after the first signs

a buying climax here.

And that's just a tactic that I'm using.

in the in the whole price cycle but
we'll talk about how the mean reversion

trades at the specific spots are going
to be the trades that we want to do as

well so we'll talk about that

all

right um let's go to our material 420
excellent

Let's talk about the volatility.
Specifically, let's think about the

entry and exit, you know, how volatility
identifies those for us.

We kind of seen on SunPower a really
great example of the volatility.

Volatility, a measurement of change in
price over a given period.

So I want to make sure that everybody
understands the way how I am applying.

you know, this volatility definition.

A measurement of change in price.

So it doesn't necessarily mean a
measurement of change in price that goes

Usually volatility would be associated
with increase of price

action to the downside.

And rightfully so. Whenever the price
goes down, we have more intensity

people capitulate.

based on fear and panic, and that
produces a much

quicker moves to the downside.

But we also could have the same type of
exuberance or aggressiveness to the

upside as well.

There are some spots where there is an
urgency by institutions to be in the

position, so they are more aggressive in
their buying.

And volatility is gonna be

a measurement of that change in price.

It is usually expressed as a percentage
and computed as an annualized standard

deviation of the percent of change in
daily prices.

Okay, well, this is something that I was
drawing with the previous cycle, and

I'm just using this as a slide, so
please forgive me for all of these

but it just basically...

a discussion on the stop losses.

And we usually start our discussion with
the price stop losses.

We usually would say that we want our
stop loss to be, let's say,

a significant bar away, or maybe two
significant bars away.

And one of the stop losses is gonna act
as a price, and the second stop -loss

is going to act as a time stop -loss. So
what's the difference there?

With the price stop -loss, we're
basically waiting for the price to hit

that stop -loss, that price, and then we
are out.

So for instance, as the price was moving
up, we're using this staircase here,

and then it gets us out here.

At the first sign when the price touches
that stop loss and that order becomes a

market order and being triggered.

The time stop loss is going to be
associated with some kind of timing

tool, timing reference.

So for instance, we could say that if
the price goes below this level and at

close, it is below that level at the
close of that bar.

Then we are exiting.

And that would be our time stop loss
based on the time period identification.

We're also going to have a volatility
stop losses. And the first time I heard

about volatility stop losses was from Ed
Secorder. So Ed Secorder was at the

time when I first had an opportunity to
meet him.

at golden gate uh class and hank was uh
you know brought him up for us uh

a very unique trader um a very unique or
personality as well

i would say and i think i know him a
little bit better that i've talked to a

of people about him and heard a lot of
stories

So not going to go into the personality,
but let's just think about him being a

trader. So he was one of the first
coders in late 1970s, early

1980s, who was coding different money
management systems.

The market was different at that time.

The Korean obviously was, you know, with
different market ideas. He was very

successful. One of the things that he
talked about in that class was how to

out. And volatility stop losses was one
of his kind of like favorite subjects to

discuss. What is that volatility stop
loss? It's when volatility starts to

increase either to the upside or to the
downside.

And it brings us to the overbought
condition in the longer trend.

in the trade that we participated.

And once you go into that overthrow
overbought condition, your volatility

loss will kick in.

And you would want to tighten that stop
loss and still it's gonna be based on

some kind of price reversal.

But you could also use, let's say,
volatility from the perspective of how

volume comes in.

as a confirmation and maybe as a
confirmation of the reversal itself.

Well, let's look at the volatility in
the price cycle.

Actually, let's first identify how we
look at the volatility, right? So we

look at the price and we could define
the areas where volatility increases,

right? So for instance, on the upside,
increase of the volatility.

On the downside, increase of the
volatility.

Something like this, right, where we're
going to be identifying some extremes

where maybe the price overcomes, you
know, regular environment

and regular structural spots where it
might go into some oversold or

condition.

How would we catch that?

We could catch this visually. There is
no... a reason for us to use any of the

technical analysis tools but if you want
to use technical analysis tools

bollinger bands which is based on the

moving average and deviation around that
using the standard deviation

we could see how volatility increases
and decreases so we would have pockets

where The price moves, volatility
increases. We could see how the band is

increasing. The price goes into the
consolidation, volatility decreases.

And therefore, this technical analysis
dogmatic statement that

after the contraction, expansion will
come.

We could think about contraction
expansion from different perspective

perspective of the rotation right we
could say that during the contraction uh

there is a short -term weak weakness and
therefore short -term value that is

being created and with this short -term
value then institutions want to go to

that and be buyers once expansion
happens that

leads to the

deviation from the mean, and that leads
to some kind of extreme, short -term

extreme. The short -term extreme
produces the mean reversion trade,

profit taken, and that, in fact,
produces some kind of reaction

that leads into the trading range, that
leads into the contraction, that leads

into the expansion.

The cycle repeats. It's over and over
and over again.

All right, so why are this Keltner
channels and Bollinger Bands as tools

important to us? Well, they identify
those extremes in different environment,

whether this is environment of the non
-trending environment or environment

as a trend.

Let's look at some examples.

3D system, daily chart, Bollinger Bands.

We're thinking about the Wyckoff context
here, the trading range.

And as we look at the Bollinger Bands,
look what happens.

On the way down, and this was a
potential phase C, we have multiple

oversold conditions. But as we go to the
long -term support,

this is the oversold condition that we
are mostly concerned about.

This is of interest to us. We want to
see some kind of... kick off in the

momentum, I'm using the rate of change
here, that could bring the price in

such way that would show a different
behavior.

So for instance, overcoming the moving
average in a significant way and then

staying above it.

Instead, touching it, going down,
touching it, going down, touching it,

down, touching it, going down, touching
it, going down.

So something different, a change of
behavior.

And when we change that behavior,

We want to make sure that we understand
how the price behaves around the moving

average, how the price behaves in terms
of the volatility, how the price behaves

with the momentum.

And we want to note where those touches
happen.

So, for instance, tactically, it's going
to be extremely important for us to say

that we could have a touch of the long
-term moving average and then...

this moving average will be touched
several times and we could have

type of trades from here we could have
swing trades

that we know could last

uh for the time frame that we need and
then once the price is going to be in a

more short -term weakness position

then we're going to consider this more
as the long -term opportunity for us to

go in and to establish the position.

And again, in December, I'm going to go
through the whole price cycle. I will

identify for you all of the position
spots, and we'll talk about different

tactics and different interpretations.
So it will all come together, and that

would be...

kind of like the final product that
white analytics is going to have um

what else here question what is obv and
how does it

differ from the bone we normally look at
on balance volume so we want to

look at the cumulative volume signature
where we are calculating the

up and down volume on the updates and
down days And that cumulative volume

us, let's say, an increase in the buying
activity, where

buy days volume exceeds the down days
volume.

And that usually shows you, especially
in the original accumulation, the way

accumulation happens.

It's a little bit more problematic, you
know, with reaccumulations, as you could

see, you know, if this is a
reaccumulation OBV.

line is going to kind of like regress,
stay in the trading range, and hopefully

just show you that it's going to go up.

But in the original accumulation, there
is a period of time where the trend

emerges.

OPV actually could play a really
interesting role.

Well, the same stock, and we're looking
at almost the whole price cycle, at

least from the beginning.

This is our phase C in the big
accumulation.

And we said that we want to note the
places where the price is going to have

very short -term oversold condition that
is going to be significant, something

like this. And these are going to be our
long -term investment add -ons.

So a long -term investor is going to be
interested in this type of

opportunities. Where else do they come?

Well, here it is.

Here it is again.

Here it is again.

Here it is again.

And throughout all of these
opportunities, whether you're coming in

position as a long -term investor or
you've been staying in this position for

quite some time, please note 2009 to
2014, five years.

So that's a pretty sustainable uptrend.

extremely interesting spots to us.

And again, in December, we will talk
about what kind of trades are the best

trades. And if you're thinking about
maybe even long -term trades, I will

you right away that those are not
necessarily going to be the best, most

optimal, most efficient trades if we
were to extract the maximum amount of

using all of the instruments that are
available to us. And I will tell you the

reason why.

But at this level, we want just to
notice where we would be

aggressive buyers in this price cycle as
long -term investors.

So short -term weakness close to the
technical oversold

condition.

There's going to be some other places
where we will originate swing

positions.

Those are going to be minor reactions.

These are the minor reactions.

So this is a major reaction.

Major reaction, major reaction, and I
would say even probably this is a major

reaction. This major reaction.

This definitely is a major reaction and
this major.

So one, two, three, four, five.

We'll talk about three. This kind of
like is a special case for us.

Everything else, and I probably would
take this one as well.

So three.

Let's just label it like this.

Three, four, five.

So we have.

Five major reactions in this cycle.

Those are great spots for the long -term
investor.

We also have quite a few minor
reactions, right? So these are the

are going to be maybe into the middle of
the channel.

These are reactions that are going to
come in the trend between two major

reactions.

And they will always have some kind of
swing opportunities for us

that are more short -term oriented swing
opportunities.

And it's going to be easy for us to
trade those reactions once we

you know, how they occur, where they
occur position -wise, you know, and how

trade them. This is where the Wyckoff
layer would come. This is where the

volume.

uh spread analysis would come time in
phase in and so on so forth so you kind

already see where i'm going with this so
there's going to be quite a few

minor reactions

minus swing opportunities

Those are all tactics. This is the way
how we would be trading this whole price

cycle. Okay, so then we're definitely
also going to have some of the

momentum trades.

We usually would identify those in two
spots, and I'll show you today which

we would be thinking about.

I'm going to try.

different color here this is also okay
so momentum off the bottom

off the bottom into the climax off the
bottom into the climax off the bottom

into the climax those are the two
momentum spots for us

we'll

talk in a second why You know, it
happens this way. Why off the bottom and

the climax? And what's in between?

And then we're also going to have the
trades that are going to be mean

trades.

Mean reversion trades could be different
for us, right? So we could be very

short -term oriented for the mean
reversion trade. Or we could be long

oriented.

or rather longer term oriented, where
this mean reversion trade is

gonna happen into the strength with the
short term elements indicating

that there is a temporary distribution
on the profit taken,

is taking place, and you could either
have a trade at those spots if you're

aggressive,

I've been conducting quite a few of this
lately.

I've shown you two of those trades and
one in gold where I'm campaigning gold

and yet I'm hedging at those spots.

And then TLT the bonds, kind of the same
trade, the same idea.

So we will specifically identify the
spots

in the price cycle where this overbought
condition happens, and that would

trigger a specific strategy to take
place.

So at the end of this strategy, which
I'm calling right now the system, I

have the name, so if you have the name,
that would be great. Come up with the

name. We're going to have multiple
strategies

that is running at the same time.

long -term strategy that is going to
have different tactics, swing strategy

that is going to have different tactics
as well.

And those are going to have different
tactics as to what we

trade at which structural spot and how
we trade it.

So by December, all of this is going to
be...

kind of fully rebuilt.

And then we'll talk about this spot. So
not today, but this is something

different. This is not a minor or major
reaction.

This is a full -blown mid -cycle
reaccumulation. So we'll talk about this

as well.

Let's jump to the next slide, a number
of slides.

Characteristics of trends. This is the
material that I presented in the bow for

those of you who have not attended.

This is just an abbreviated version of
the characteristics of the trends.

It will become more apparent of why
we're using this when everything will

be put together.

Here I just want you to notice the way
how the price cycle, the long -term

cycle, develops. We're still in the
uptrend, if you can believe it, for

Apple.

And we're still in this huge, huge price
cycle of expansion.

We see where institutions got in into
this position.

There is no denying that there are
different stages of how they were

coming in into this position.

So early accumulation, very aggressive
accumulation on the way up,

and then late accumulation.

What are they doing now?

COO is inactive.

What does it mean, by the way, COO is
inactive?

Does it mean that the COO does not have
a position?

Eric is saying he is neither buying nor
selling. That's correct. But my question

is, do they have any shares at this
point?

What do you guys think? Mitter is
saying, okay, not buying or selling.

Okay, and both of them are saying, yes,
they could. Yes, if they haven't

distributed. Well, do you see elements
of the distribution yet, Eric, here in

the volume signature or in the price
action?

No, no distribution yet.

So therefore, what's the conclusion
here?

The conclusion is such that this whole
area right here was a prolonged

institutional accumulation of Apple.

And now they're holding this position
and they're not getting out.

That's what it means to be inactive.

Inactive meaning not being in the
market. Okay, I understand.

That could happen as well, usually in
the stock that is going to be abandoned

completely by strong hands, and the
price will be

just kind of like floating and
fluctuating on smaller speculation

or maybe just weak hands are kind of
moving it in a drift.

We see a lot of those stocks, especially
in the liquid markets.

usually liquid stocks are going to have
some presence, some institutional

presence. But in the liquid stocks,
there is an abandonment sometimes by the

and they don't participate.

So that's a different activity.

In this case, they've been extremely
active for the number of years. They've

in into this position. By the way, we
are thinking about this long, long -term

cycle. They got in here and then on the
momentum, they got in.

all the way up. So this whole move from
2003 to 2007 is just accumulation on the

way up.

And then they started adding to the
position on the next move up. And then

the last two or three legs up, they are
not really participating that much.

And that's where momentum has been lost
for Apple. And if Apple...

goes down it should come to the area
where lastly there was some elements of

accumulation not in the trading range
but on the way up and this is this you

know uh move right here and it's uh
slightly below 100 so

like on the level of 2015 trading range
right here 2016.

um

It would be interesting to see that, but
we have to see some kind of elements of

the distribution. We need to see a break
to the downside. We need to see an

increase in the supply signature for us
to talk about the distribution yet.

Okay, well, let's look at the
characteristics.

How does price move?

Like all of these moves, all of these
legs up, do they have similar

characteristics? I was going through
different stocks and doing this visual

backtesting.

definitely there are certain ideas,
certain textures, certain

actions that come out and you see them
right away.

So what are they?

There are periods of absorption where
the price kind of, let's say, has a

movement in the direction of the
uptrend, and yet, let's say, the volume

signature goes down.

You could also see the absorption, like,
you know, it could be a horizontal

absorption. You could also see the
absorption with somewhat of the

vertical absorption type of action where
the volume signature increases, there

are multiple reactions, and every time
the price reacts, then it goes up again

and then it goes down again. So this
laborious move to the upside where there

not a lot of momentum just suggests,

that there is a lot of absorption that
is happening as the price travels up.

Then we also will have elements of the

momentum in that trend. This is where

institutions are gonna be getting into
this position aggressively.

And with that, the price will move
aggressively up as well.

So institutions are coming in into this
position, our buyers.

And they are aggressive buyers, agro.

Agro buyers.

This usually will move the price really
quick.

And then the last phase.

It's going to have some kind of
speculative qualities. Why would we have

speculative qualities in the last phase?
Well, because supply has been observed.

Then supply has been observed as well in
the momentum phase and even more so.

And the price has moved to the next
level where supply is not available.

And then in the last move to the upside,
imagine that supply has been observed.

What kind of move are we going to have
without the presence of the supply or

without a significant presence of the
supply?

Most likely, this is going to be a very
fast move. This is where swing

strategies are going to be more
appropriate.

And we could define the areas in the
trend by the

strategies that we could use.

And that's, again, something that...
will incorporate into the December

material. Let's look now at examples of
the downtrends. Same stock, same price

cycle. Let's look at the downtrends.

They seem also follow the same stages

as an accumulation or they have the same
kind of like elements

that are attributed obviously to the
distribution here.

Contrarian effort. This is the value
investors that are selling into the

strength.

So usually they're going to come in in
the last move to the upside into the

climactic action and the changes of
character are going to be the first

where they're distributing.

up thrusts um also going to be you know
the points where they will be selling

into the strength of the movement uh to
the upside

uh those contrarian efforts are gonna
stop the price from moving further

up or gonna be attempt to stop the price
from moving further up After the value

investor is out of the position, we're
going to have some early institutional

capitulation. Those are going to be the
money managers that are going to be

very, very smart money managers. They're
going to recognize a couple of things.

They're going to recognize that big fish
is coming out of the position,

and they're going to also recognize
deterioration either of the current

or a break of the trend.

So in the first case, we could see a
deterioration as a low or high.

We could see deterioration on the change
of character.

And then as the price falls, early
institutional

capitulation happens. This is the smart
money getting out.

Late institutional capitulation is going
to be associated with the continuation

of the deterioration. And usually late
institutional capitulation is going to

such where the break of the current
environment or

a trend is going to be very obvious.

And why are we talking about all of
those things?

Well because if you recognize the
characteristics for the late

capitulation, this is where you want
your swing trades to happen.

Obviously in this case to the downside.

So you would initiate the trade here,
you would also initiate the swing trades

during the general capitulation phase.

General capitulation phase is something
that happens

After smart money is out and there is
weaker money that is left, whether

institutional or retail, and it's going
to be

associated with a general panic.

This is where everybody is giving up on
this position.

And we see that in the second example in
2000.

right so obviously associated with the
market move but still look at this

general capitulation usually going to be
aggressive either in distance or in

character as well as the late
institutional capitulation also would be

more aggressive than the change of
character from the value cell and also

the early institutional capitulation
okay i hope it all makes sense

A couple of questions.

Dmitry is asking, for swing trading,
while keeping the bigger picture in

would we use intraday data, four hours
or hourly chart, for smaller wake -off

instructions to identify points of entry
and exit to swing trade the campaigns?

Dmitry, that's usually how I do this,
but I'm always kind of like in front of

the screen, so I can do that.

If you can, I think that daily chart is
totally fine as well.

From Simon, does this mean with general
capitulation that we wouldn't

necessarily see the down move with
increased volume?

What is this, HV, high volume, increased
volume?

We usually will see, and we think about
the general capitulation as the majority

of the hands that are left are going to
capitulate.

So therefore, your volume signature
should increase in general.

And then you might have some variations.
So for instance, in this capitulation,

even though it's still aggressive, I
mean, like look at this area right here.

This is a pretty big decline in a very
short period of time.

155 to 50 cents.

Wow. That's a huge decline, and it
happens in one year.

Obviously, late capitulation here was
much more attractive for a swing trader,

but you would be thinking of a swing
trade that's going to have multiple legs

it. You're probably going to have one,
two, three legs, which makes a lot of

sense as well.

All right.

So we could see the, we usually on
general capitulation would see that high

volume signature assignment and that
would identify a number of market

participants getting out of that
position.

So I want you just to remember this
sequence. Maybe this is the sequence

of smart money or rather the smart money

barometer. of where different market
participants are exiting.

Our smartest of them all are gonna be
the value investors, and they're gonna

sell into this trend.

Our next smartest group is gonna be
early institutional investors that are

capitulate early.

They are not gonna produce a significant
change of character, but it will show

on our map that they are selling.

And then, When everything fails in the
institutional world and no absolute or

relative return is being given,

late institutional capitulation happens.

And then the weaker hands, the,

I don't want to call them dumber hands,
but, you know, still not

as smart bunny are going to move last.

And then they can.

going to capitulate last.

Please note, and this is not a
coincidence here as well, after initial

institutional capitulation, what happens
next before general

capitulation? We kind of drift, right?

Trying to go up. Why? Well, because the
first three

market participants

are inactive here again.

And what does happen here? Why do we
have those volume spikes, multiple

spikes? Well, because this is a mean
reversion trade in place.

This is all mean reversion, and they're
usually going to come at those points of

extreme, either at the top or at the
bottom.

CO is inactive. So CO is not the value
investor.

CO is not the early investor that's
going to get out. CO is not the late

institutional investor.

All of them have made money on those
moves.

CO is a composite of these three.

And that's the confusion I think that we
kind of had because usually CO would be

associated with strong hands, and this
is correct.

But there are different type of
institutions that would comprise the CO,

usually CO will be done before the
general capitulation happens. And that's

of like that difference. So strong
hands,

weak hands.

and then within the strong hands
smartest

smart slightly

off of smart something

like this so I like how

inactivity here happens before the
general And we see that from the volume

signature as well.

There's nothing that's going on.

All right, great.

Now let's practice this.

Let's go to trends. And specifically
what I wanted is, I wanted to go through

the price cycle and look at volatility.
And I also wanted to look at the

character of the next move. All right.

Volunteers, maybe this is something that
I probably need some help with.

And any stock that you want to discuss
that maybe in the last 10 years

had a significant rise and significant
fall.

So let's just identify some interesting
candidate.

Give me a symbol, maybe a volunteer.

All right, Eric wants to step in, but we
still need some kind of symbol.

Hi, Eric.

Are you there?

Eric, are you there?

I can't hear you, so maybe something was
the microphone.

Okay, well, guys, think about any of the
stock that, let's say, had some kind of

big, big runs.

So how about some of the momentum
stocks?

Miners.

well what i meant is you know where we
had a move a significant move to the

upside you know was the conclusion okay
um not the

most recent moves okay well here is the
price cycle that we see here

okay all right

yeah we could use this oh yeah hi eric
hi sorry No worries.

I'm always having headphones issues. I
have to go in and physically, or not

physically change it, but anyway.

No worries, no worries. Okay, so looking
at the whole history of this talk, so

let's kind of, from the historical
perspective, try to

identify where we are in the price
cycle. What do you think, Eric?

Like at this point right here, where are
we in the price cycle?

Well, I guess what's confusing me a
little bit is, you know, I don't see a

here for the last 10 years.

We've kind of been, you know, from a
relative perspective, going sideways,

really. Okay.

This is a good first step. Okay, so we
need to identify, like I'm talking about

position.

here right so i call this mapping we
need to find on our map of the

price cycle where are we in the price
cycle so we are going to have in the

cycle what we're going to have an
accumulation we're going to have a

distribution we're going to have a
reaccumulation

redistribution we're going to have also
some

minor Corrections on the way up, minor
corrections on the way down.

Where are we?

I'm going to say reaccumulation.

Yeah, well, there is no other answer so
far.

So we are either in the distribution or
we are either in the reaccumulation.

We have had a trading range that lasted
for multiple years. We have had a

markup. that has lasted also for
multiple years. And then we have had a

range. So we are probably somewhere
here.

The reason why we're saying this, well,
we're looking at what this is, gold

mining, so extremely bullish bias for
the whole group.

And we're thinking that the price could
potentially continue with its move to

the upside, especially if the world
economy is going to hit some kind of

hard,

we're definitely going to be favoring
gold and gold mining stocks as a flight

safety.

So therefore, we are thinking that this
is probably a big reaccumulation in the

larger price cycle.

This view could change if the price is
going to start behaving differently, but

for now, this is what we're assuming.

Okay, this is where we are now.

Let's think about what has happened
before.

I want us to think about certain
characteristics that I've discussed,

characteristics, that would

identify specific strategies and
specific traits for us.

So let's talk about those traits. We
usually would be attracted into this

right here because this is the area of
the markup.

area of the trend.

And I'm going to expand this portion,

and then we're going to go through
different items on the list here.

could we take another stock, guys?

Actually, no. Let's just do exactly what
we...

this and let's say 97 okay so here is

the whole markup and let me just
increase maybe the height let's do

okay

slightly better

okay so um

Let's figure out the volatility points.

Where do you think the volatility is
going to be the highest for us on this

chart?

Based on what I see?

Yes.

Well, we see volatility highest

as we leave the trading range in the
middle of 2005.

And we hit the kind of the buying climax
with the volume signature there in

April of 08. Okay, great.

Where else?

And think about the volatility
definition, right, guys? So volatility

change measured by the standard
deviation, so where DV can, you know,

below the min.

Okay, so here is where deviation has
happened in the extreme way.

So we definitely have a lot of
volatility to the upside. Okay, where

Would we be thinking then maybe this
type of spots as well, where that

So I would probably be thinking maybe
like somewhere here at the end of the

climactic run, right? Right, yeah, so
April of 2008.

Somewhere here, maybe somewhere here.

Please note that in 98, we have that
volatility off the bottom, right?

So we were in the extremely oversold
condition, and then we go into the

overbought condition. So every time this
happens, Eric, what kind of extreme are

we going to experience here with the
rally?

Being probably in the overbought
condition?

Yeah. Right, so overbought.

and overbought because we were still in
the downtrend, those are overbought

conditions.

Overbought, overbought, overbought,
overbought. So even without

placing any type of volatility bands or
using a

simple trend line,

something like this and actually I

got okay

let's use another trendline and ever use
the reverse trendline to

identify the overbought yes I'm using it
right now okay all right absolutely

let's go let's kind of repeat so we

and please don't forget this is
logarithmic all right all

right um let's just put it somewhere
else

okay

all right so right away

on those volatility spikes

we see the conditions that are
overbought conditions.

And that's in this whole markup phase.

So what do we do with this?

Well, as we've discussed, that increase
in the volatility suggests that we have

to be much more aggressive with the stop
losses.

And we should be also much more
aggressive with our profit taking

with hedges as

well. So we would be thinking mean
reversion trade,

mean reversion trade, profit taking plus
hedge,

profit taking plus hedge, profit taking
plus hedge.

What would that do to us, right? Or
rather our equity line?

So if we are thinking about this mean
reversion trade or a hedge trade, how

would we develop that?

Well, obviously we would be thinking
about what comes next after the buying

climax.

A change of character.

And a change of character is going to be
associated with automatic reaction.

and increase in the supply signature.

So we could place a trade opposite to
our long -term

trade if we're long -term investors, or
if we're swing traders, just to get out

and to have a quick swing trade to the
downside, let's say.

And those are high probability trades,
if you can imagine.

I mean, it's just happened this way
that, and

I was thinking,

Maybe in life in general, it's just like
there is a norm and then there is a

deviation from the norm.

And the more there is a deviation, the
more extreme it is.

And therefore, when you see the extreme,
just kind of go in the opposite

direction, a contrarian view at that
point of time.

And usually that norm will come to a
mean.

And that's what we're having here.

So hedge trade, we don't really need a
lot.

We just want to catch that first
momentum to the downside and to

equity curve from that point of view.
So, and again, we'll talk about this in

December a lot.

So from what I heard you say, basically
what you're trying to catch is the

change of behavior into the...

Yes.

Right. For different purposes, right? So
we're either in a long -term campaign

and we're hedging, a long -term campaign
and we're profit -taking, or we're

swing traders, we're exiting, and we are
short -term swing traders, we just want

to play that mean reversion trade.

Okay. So we need to understand who we
are.

Absolutely. Okay, so this is on the
upside.

Now think about...

the downside once we have an established
uptrend.

This is also going to be extremely
useful and attractive to us.

How do we look at the long term?

Well, we identify the places of price
behavior where the price

spends, let's say, time below the moving
average, but still in the channel.

and close to the channel itself, like
this one right here. And those are going

to be our major buying opportunities in
this cycle.

So we are doing a mean reversion
opposite to what we've done with the

to the upside.

And please note that usually we would
hope to have some kind of

local volatility here.

on the increase, some local volatility

increase, some local volatility
increase.

So we wanna see that because it usually
will tell us the timing of potential

phase C.

And in this case, Volatility comes on
the change of character.

So usually volatility to the downside is
going to be change of character, change

of character, change of character,
change of character, and then potential

C in the reaccumulations.

So those are going to be other spots of
interest to us. And then let's look at

the texture with which the price moves
up.

Where is our momentum stage? Where is
our speculative stage? And where is our

absorption stage? Eric, would you like
to give it a shot?

I think that from this perspective,
maybe it's a little bit harder.

But let's just see what we can come up
with.

So the three options were absorption,
speculation, and

momentum, right?

So I would say starting in 98, you know,
October 98,

well, even before that, I

guess that's October 97.

We have, it looks like, some preliminary
support on the way down. So there's

some absorption of supply happening
there.

October 98, that's the selling climax.

We seem to go into a trading range until
01.

So there would be some absorption
happening there, and then we have kind

first evidence of an uptrend move at the
beginning of 01.

So that would be the beginning of our
momentum stage, 01 to

middle of 02.

How about this? How about we approach
this, let's just kind of like approach

this from the perspective of the
definitions, right? So speculation and

momentum. I think those are the ones
that are easier to identify.

For instance, where is our speculation?

Speculation is at the last part of
the...

of the up move, and it's usually kind of
more parabolic in nature. Right. So let

me just give you a different
perspective. We're kind of like looking

area, but we're not seeing really what
has happened here just because this is a

log scale.

Okay.

Here's your parabolic move, right?

So that has some kind of speculative
nature.

So I would say that maybe this whole
thing has its own like speculation

wave.

And that also has like those three, you
know, major things.

Momentum increase.

Then we have absorption.

And then we have the final speculation.
This is where the price, you know, more

than doubles.

and then before that we could see and
it's kind of like a maybe like a fractal

within the fractal on the log we better
see the beginning of the move so usually

when we talk about the momentum we will
be let's say looking at some momentum uh

indicator or even just on the price
action itself so here's the momentum

a momentum here

There's gonna be a lot of momentum out
of the preliminary support just because

there is just an attempt to buy and it's
gonna be something different.

Here is a momentum as well.

So we kind of identified that and on the
rate of change, you're gonna see that,

right? So all those big spikes.

Those are the momentum spikes that we
look for. So I think that the

original momentum phase is going to be
somewhere here. It's just a little bit

obscure. But if you think about the
pricing here, so from $2 .50 to about

$8 .50, so that's a big momentum move in
a year. And then

we are going into this prolonged period
where we...

we have some kind of absorption.

And it also has different segments
behind it. We see that the momentum has

of like this spikes up momentum.

This is that reaccumulation as a
rotational pattern.

What happens here?

Well, there is on the value, there is a
lot of bind in phase

A and early phase B.

And what happens here is that
institutions,

some institutions that are strong hands,
they are selling, as we've talked

about, and then some strong hands are
buying.

Those strong hands that are selling are
kind of seeing maybe like a short -term

deterioration, so they're taking
profits.

The strong hands are...

buyers, they are seeing that the future
valuation is probably somewhere high, so

they are willing to come in on the
liquidity and observe this supply.

Please note what happens after this
phase A, early phase B rotational

reaccumulation.

Almost apex formation, diminishing
volume characteristics and inactivity by

CO.

That's it, there is nothing else. After
that, there is accumulation on the way

up that has kind of like the same stages
maybe even of what we have

had somewhere here of the momentum.

So momentum always would sustain the
move of the loss and that's what we need

for the price cycle.

Okay.

So can I just ask a question here? Like,
I understand what you said from 99 to

01 was, you know, momentum move. But,
you know, from what I see, like I see 99

to 2000 as a momentum move, and then
we're down for a year.

So is that a period of absorption?

And then we have another momentum move
from 01 to middle of 02, July 02.

Another, you know, sideways action
for...

about five or six years, and then
another momentum move?

Well, don't forget, I mean, the stock
itself, right, so has a specific way of

how it moves depending on the cycles in
this particular industry and so on and

so forth.

And, yeah, usually we would have that
type of sustainability of the

The sustainability comes from buying by
institutional hand.

So we see a lot of buying here. We see a
lot of buying off this low. We see a

lot of buying into the climactic action.

Then we identify the next series of
buying.

And again, we'll be talking about this
in November.

Then the next series of buying.

All right, so somewhere here.

Here and then the next one right so here
we go Okay

here as well

Here

And then the buying is just

subsides and then it comes back here
somewhere So you could see what

this buying

that is being identified by the momentum
and this this one's due of course

what it does to the trend it originates

the trend then it sustains the

trend

So they are buying and then they're
going away. They're inactive. They're

of holding this position.

And then when the price deteriorates to
the levels where they're willing to buy

again, their previous value zone,
they're going to buy.

That's going to be shown on the momentum
and the volume signature.

And that's going to push the price
higher again.

At the overbought condition, they're
going to originate the mean reversion

trade. And that's going to depress.

the price for some time.

You know, this is a specific pattern
here, this rotational reaccumulation

happens early in the trading range.

And then once we go through the trading
range, it's when the highest momentum or

the biggest buying starts to occur,
that's when sustainability of the trend

going to reoccur, occur again.

And then in the areas of the
reaccumulation, again, if we're seeing

there's going to be some kind of
continuation. We see that here.

And again, buying off the value.

So you could see how big institutions
are not necessarily have to be present

each day in the market. They usually
don't. They establish the position. It

takes weeks and sometimes months, and
then they go away.

And because they don't do anything,

That locks up the supply, and that's how
the price goes up. And it's because

there's no selling, the price is going
up.

And there is some additional buying. And
then coming back into the short -term

value, buy again, pushes the price up,
creates the trend.

So that's what creates the trends
themselves, you know, those

momentum buys by institutions.

And that's what sustains the trends as
well.

All right, Eric, what else?

I'm kind of like as you're speaking
there, I just have this aha moment.

I don't know.

It's almost like putting your, you know,
you're in your car.

And, you know, there's a big push on the
gas, and that gives you like a little

boost of acceleration, and then, you
know, your speed starts to fall off.

Another push on the gas, speed starts to
fall off. Good.

Push on the gas, yeah.

Yeah, good analogy, yeah. So it's like
additional acceleration that you give

the car.

A little impulse.

Yeah, a little impulse, and then it
carries you through for some time.

And then because that...

second portion, right? So initial
impulse, and then the second one is

have that deterioration of the momentum,
right? So this is initial

deterioration. Deterioration will bring
some of the selling at some point.

But all of this is not that kind of
difficult, you know, to put together

when you understand how the price moves
and all of the points, the position

points in this price cycle,

then you could kind of figure out where
the failure could potentially

have and where the confirmation of the
resumption of the trend could happen.

then it becomes all a question of
selection.

Do I want to be in this stock or this
stock that are structurally in the same

position and that exhibits maybe
different characteristics?

So we'll talk about this as well.

All right, Eric, I think that's it for
today.

This was kind of like on -the -fly
exercise.

I was kind of thinking about what we're
going to do, and I think that we've done

everything. I can't think of anything
else. Do you have any other questions or

maybe anyone else?

No, I'm good. Thank you.

Okay, great. Eric, thank you so much.

Okay, a couple of questions we do have.

When you're referring to volatility, are
you only referring to price, not

considering volume, or does volume
complement your

assessment?

Both. I look at both. Usually the
emergence or increase in the volume

would produce what to the result?
Probably expansion.

So therefore, volatility would increase.

So volume is closely associated with how
the price reacts to the increase in the

volume and the volatility in general.

And the last question. That's
interesting. Okay, from Mitri. Armand,

go, just wondering what are your
thoughts on the competition coming into

brokerage business? Many brokerages drop
in commissions. Yeah, and today we had

that. type of day where I just put this.

Okay, so who dropped the ball today?

Schwab, right?

So Schwab said that we're going to have
no commissions.

Charles Schwab, am I correct?

And this stock chart does not even show
this, okay.

Let me show you on other charts here.

Here we are.

So in some instances we had like 20 %
drops, I think, in some brokerages.

look at some others.

A -Trade.

let's do symbol now what's the symbol
for your trade i keep on spacing out

do you guys remember

Okay, so here is that drop in E -Trade,
Meritrade,

and more so. And please note, all of the
downtrends. So it's not like it has

happened so unexpectedly.

Whoever is in the industry, they know
the trends of the industry, and

the smart money were capitulating
earlier.

So let's just say that we close out.

this picture and you know, what would be
the bias on this chart?

Well, we're seeing some increase in
volume signature on the way up, right?

what does that do? That's increasing the
volume signature.

It stops the price from moving further
up.

We see a lot of volatility and the
climactic run.

We're probably assuming this is value
selling into the strength.

So then we would be thinking, okay,
where is our early investors

that are going to capitulate slightly,

not slightly, but smart money, but that

usually sell after there is some kind of
deterioration of the trend.

And I think that this area right here
depicts that.

by early institutional hands.

They are seeing the deterioration in the
price they are getting out.

They are maybe looking at some
fundamental reasons they are getting out

Then the late institutional capitulation
is probably going to come somewhere

here.

And then a general capitulation is
something that came today.

This is where everyone is giving up.

There is no reason to hold on to this
position.

The structure of the business changes,
and that's going to produce a different

structure. Until investors understand
how you can make money without judging

a commission, and your profitability
levels are going to be at the same

as before, then they most likely are
going to be disregarded in the stock and

the group in general.

What are my thoughts about the
competition?

I definitely welcome it because, as you
guys could see

maybe from your brokerage statements,
even with current pricing, which is very

low compared to, let's say, 20 years ago
when I started trading and investing at

that time, that was ridiculous.

Right now, with all of the free options
like Robinhood that we have,

I think this is the This is the
direction that is being given to us. I'm

as to what business model they will
have. So how do they make money? Do they

advertise, and that's the main revenue?
Do they sell something to the investors

that generates their revenue as well?

Or maybe they have their commission
built in the spread itself.

And I have to read on this a little bit,
educate myself on the business concept.

Definitely for it.

Okay, last question and we're going to
stop here.

Could the high volume be considered
buying by contrarians?

Well, definitely somebody is buying on
the value, right?

But the main move today is to the
downside. If you would be thinking, are

more sellers here or buyers?

There are definitely more sellers, but
there is a lot of buying that is

happening here as well.

The buying by itself does not mean that,
you know, the

selling is done, right? So, for
instance, don't confuse a high -volume

with intelligent buying or a timely
buying.

We could say that, all right, well, here
there was a lot of buying as well.

What did it lead to?

Just a quick rebound.

So you have to put this into the context
of where that high volume signature

occurs. You might say that there is
maybe more of the mean reversion

trade that is possible here, and that
produces some buys on this bar,

rather than necessarily long -term value
plays.

Although that might be the case at some
point, and we should just wait and see.

All right.

Yeah, that's what I thought, Eric. So I
think that brokers right now, yeah,

making the money, you know, behind the
commission.

So I think this is where it's all going.
So kind of like the commission is going

to be building the spread itself.

Okay, guys, I think that's it for today.

Good session, quite a lot of material,
so I kind of wanted to put it out there

so that then next we would just go
through the exercises and all that

All right, guys, until next week, don't
forget about your bias game. Send me

your charts, send me your questions, and
I'll talk to you next week on

the Eats. Thank you, guys, and bye -bye.