Original subtitles

Hello everyone, today is November 12th, and this is our session number 10 of the

Wyckoff Practicum course.

What are we going to do today?

As usual, we're going to go through a variety of things, and then we're going

conclude our exercise that we started last time on the selection.

So I'm really happy that, you know, that exercise...

produces some kind of questions. I would be surprised if we wouldn't have

questions about that.

That would mean that you guys are not paying full attention to this and maybe

I'm not emphasizing enough what process we go through

with this exercise.

So today, let's have a little bit more focus on that. So I want to go through

everything of what we have really fast to get to the exercise and then we'll

finish. I also want to...

talk a little bit about the markets today just in general um

okay let me just see one thing hold on a second

Okay, so yeah, I want to talk a little bit about the markets. I think they're

a very interesting spot. I think this is where we're going to see some kind of

reaction.

So I want to get your thoughts on that and kind of discuss it, see what we see.

All right, with this, let's start.

As always, everything that we talk about in this class is for educational

purposes only.

Let's talk about the bias game first.

This was a very interesting one. And I think that we had 50 -50 on this one

time, right? When I asked you guys, what do you see here?

A distribution or an accumulation? I think the class divided into 50 -50.

And then, obviously, I'm receiving all of the homeworks that you guys send.

I go through all of them. So sometimes if I don't reply, like today I was a

little bit busy, but I did go through all of them.

And, you know, if there was a question, I definitely inserted it into the deck.

Why was it difficult? For those of you who did not, you know.

guess this correctly.

Could we maybe, and do we know the bias here?

Yeah, the bias is to the upside.

It's a reaccumulation.

So for those of you who said that it was a distribution, what was the

difficulty? Or maybe even for those of you who said that it was reaccumulation,

what was the most difficult part to identify that would help you out with

bias?

I want to start with that today.

We're kind of going to back engineer a little bit.

So write it down, please.

What was the most difficult part of the analysis for this bias game?

Lower highs, lower lows.

Okay, what else?

So kind of like a structure itself, a little bit downsloping.

Anything else, guys?

The second rally that failed to achieve the new high.

Okay, so a lower high.

Downslope.

The last three bars were the most difficult.

Okay. This.

Increase of the supply.

And then we have a reaction. Anything else?

Because we could just address this three and I would be really happy about this.

Let's just do that.

Okay, so let's look at the overall structure.

A downsloping structure, would you agree?

Yes, absolutely.

And then if you kind of think about the ways of how

a linear regression channel would behave on this chart.

Let's think about this just for a second.

So on the way up, we definitely would have that channel representing the trend

line, and then the mean is going to be somewhere here.

Then there is a second portion of this chart that is going down here before we

have the rally, right? So we probably would have then the regression channel

like this.

Then obviously there's gonna be something to the upside as a trend of

the upswing is up.

And then this last portion, if you take, let's say,

this part right here and include the previous reaction,

then you're probably looking at something like this at that point.

So you could see that this trading range that is

up there to the right is actually residing

on the resistance, and now it acts as a support of the

trading range before.

So you have kind of like that stepping stone and a stepping stone, but both are

downsloping.

And I think that could be the difficulty here because on the top of this, you

also have this low or high.

So the rally, even though this is the largest rally that we see here,

you know, the question that we ask, did it commit to the upside?

And I think that, you know, here we could go different ways about it.

we could definitely say that no it did not and it failed just because we're

looking for that buying climax resistance overcoming you know

that but at the same time you know we might say okay well we do have also the

down slope and the whole range and this is probably phase c at that point of

time and did we actually commit to the upside

above the downslope in resistance, yes.

Not only that, we actually spend quite a lot of time above that resistance.

I'm gonna draw this again.

Look at how much time we are spending, not just above,

but we are actually going up.

So I have this, our term,

Progressive close.

So how did that come about, progressive?

Why is it a progressive close?

Again, not from the methodology.

Because you have on up thrusts temporary commitments

that go above, let's say, And there is no commitment even there. The close was

here. But imagine that this was a close.

So you have a temporary commitment above and then an instant comeback below the

resistance point.

Here we have progressive closes.

What does it mean? We have closes that are committing above

the level of resistance that are defined for them to...

So we're using that significant bar methodology here. So these three bars

definitely committing above the resistance, and then each and one of

commits also locally.

Then the next bar that will have the same type of commitment is going to be

one, this one, maybe this one, this one, this one.

I'm not sure about this too, because the close is at the bottom, probably this

one, but not the last one.

So we could see that throughout this time that the price spent above the

resistance, it had one, two, three, four, five, six, seven, eight, nine

progressive closes.

That tells you that the duration

with which the price stands above the resistance on the major sign of

is significant enough for us to confirm that the bias is to the upside.

And obviously, that comes very easy when you use the downsloping resistance,

right? What about the fact that, no, okay, why don't we just use what we

would use, a horizontal resistance? And I think...

we should rightfully do so.

Something like this.

So then how would we analyze this trading range?

Okay, well, probably we're gonna come back to the analysis from the left a

little bit later.

Let's address the last three bars or the last four bars.

And I think actually,

Actually,

let's conduct the whole analysis because that would lead right into why we're

thinking about these three bars in a specific way.

So we have a leader, leadership stock.

Demand is very healthy, and we are not suspecting any distribution

on the way up. Look at how volume signature expands, but it doesn't really

expand to the climactic.

This is probably more climactic, rather than let's say

this. This probably shows more that demand is less, or

there is a fewer demand for this stock, and we could see this also in the

momentum itself.

Look at how these two rallies are behaving.

There is a lot of momentum, there is a lot of aggression, and then The last two

actually have only momentum maybe on the initial kickoff bar, and there is

nothing after that.

So we think that demand is going down.

Demand is fading.

And that suggests that we are going to have some kind of reaction.

But still, at this point of time, there is nothing climactic about a stopping

action, even though this is a buying climax and this is a stopping action.

There is nothing climactic in the way of the terminal culmination of the

uptrend.

The bias at this point is going to be still to the upside.

Now our next task is to see what kind of change of character we're going to see.

And by the way, we could label it slightly differently. We could do the

of the shakeout.

automatic rally, and then secondary test.

And that would conclude phase A. In a way, sometimes that's how I just label

for myself. This is just the area where you have two stops.

You have actually two trends.

One trend, and I'll gladly confuse you here, guys, because you are more

than WTC students.

There is a trend to the upside.

actually much more than that. And then there is a trend to the downside.

Both of them have to be stopped.

So it makes a lot of logical sense for me in this type of situations to think

about shake out, selling climax, especially when the move has that type

finishing touch like a climactic touch or a shake out touch with a lot of

signature and a big spread.

So therefore, sometimes I kind of label it both scenarios on the same chart.

Does that make sense?

And that defines both stopping actions and the testing for both of the trends

and down.

You guys see that?

And then we are kind of done with that action and then everything else we have

that is B.

So, okay, so what could we conclude from phase A?

We were waiting for some kind of character of this first reaction, a

character reaction.

Volume definitely comes, but is this the highest volume signature?

Is this the highest supply? Probably not. There was more supply here,

than let's say here.

The last bar, and let me just clean this up.

The last bar contained a lot of demand behind it. We could see that from the

demand tail.

Look where the price has closed.

It almost came back to, you know, one half of the last move.

So that was a very strong intraday move, suggested that there is a lot of demand

right there. And then the next day, there is a lot of effort to push the

down, but it doesn't go down. So this is effort versus result.

There is a lot of effort, no result, bullish.

We're still up here.

We're testing, and test happens on some increase in the volume signature, but

creates a slightly higher low, so we're still encountering some demand.

Bias is still up.

Weak rally.

This is where weak hands see in value.

They bought in.

And, you know, this is what drives this rally.

But we also recognize that through the buying that we see here and

then here, somebody actually significant bought in this

position. Why? Well, because look at this whole rally and look at where we

in terms of giving up.

the space and profitability of the previous upstream trade, we are probably

retracing one third, no more.

And then at this one third, we're encountering a lot of demand.

There is also demand in these bars right here.

And that's where people are buying on the upside.

So this is the value zone where they're buying.

We want to define that.

Everything above that is going to be overbought.

Everything below that is going to be oversold.

Once for the first time we come to that oversold condition, there is a stop in

action. Another time we're trying to go down, another stop in attempt.

So is there a progression to the downside when there is this attempt to

price down and there is an opposite force that stops that move?

you know, from further going down. Yes, so demand is there.

Demand is present again.

Now, result to the downside slightly expands, suggesting that we're still in

upward bias, but supply is present.

And therefore, duration is going to increase.

We go further investigating the next couple of reactions.

This one also has demand behind it.

There's some demand off the low, kind of like a false start.

And then after that, we see how on the last two reactions,

supply actually goes much lower.

And demand goes lower again.

Both supply goes low and demand goes lower. We could see this from these

spikes.

General deterioration of the volume signature, suggesting that whatever

we have had and attempts to break to the downsides through the support, all of

that was consumed.

So we have two areas of institutional consumption of shares, absorption.

We have area number two, and we have area number one.

So, so far, we are all on the upside,

and we're seeing that there is definitely a value bind at the lows.

We don't see a significant momentum bind on the way up, and

that's why it looks like a weak rally.

Question, why?

Why are they not buying on the upside?

What do you think guys?

If there is something missing in this picture, it's that momentum signature,

right? That we would usually have in phase D.

Okay, they pump in action July, September. It's confusing. July,

Okay, we'll go through this again.

They all bought in the value zone. That's the key.

Simon got it.

We would expect ITFs to be jumping in right here. Yes.

So that's what's so interesting.

It's almost like a momentum player if they're not present.

Right, so value bought in.

So this is long -term value.

They are for contrarian.

This is the same.

Long -term value, contrarian.

No momentum players.

So I was thinking, you know, why would this happen?

And where is that momentum? So we definitely see a lot of momentum on

advance.

And we see how momentum actually diminishes going into this last bar

here, into this last leg.

And that tells us that this is where momentum bars were present. And then

likely, they're the ones who gave up those shares.

This volume signature right here is the rotation between

momentum hands and

value hands.

Momentum hands are saying, okay, well, this price went relatively fast.

We don't want to participate anymore. We're going to take some profit.

And the value, when they see that, it's not that even that the short -term value

is available, but the value investors need large positions, so they need

liquidity. And they get this liquidity on the profit taken by the momentum

traders on exiting those positions.

So then the story kind of becomes a little bit more logical in the sense of

we see.

from the value bars in two zones here, and then also in terms of this rally

not being a very big momentum rally.

Momentum traders probably will need to see the break above the highs first, and

then they will start participating again.

Okay, well then if value here is inactive,

momentum players inactive, and then weak hands are probably out at this point

because they're exhausted with all of the losses that were brought up to them

the last four or five months, then we see that generally that would lead to

lower volume signature, something like this.

But throughout this volume signature, we could see very definitive trend.

When you look at the days to the downside relative to the days to the

you could see that demand still dominates the supply, either with

consistency of many days in a row or just even visually

in terms of how much supply, how much demand comes.

So it looks bullish, this rally.

And we understand what's happening behind that rally with the weak volume

signature. So then the bias is still to the upside, but

we are saying that if we're going to have some kind of failure, then we're

to reconsider and negate that bias.

All right, well, let's look now at the last portion.

of this chart.

We have had two major reactions.

Then we are having the third one.

If we would look at swings and would consider, let's say, the

volume or the effort that it takes to move those swings to the downside, we

definitely would see that the

Effort to the downside generally is diminishing into the third reaction.

And then when we would look at the result, we would probably say that the

to the downside also diminished.

Bullish or bearish?

Bullish.

But let's approach this in a different way.

That was too easy.

Look at the character of which the price moves and how the volume behaves.

We have supply coming in, increase of the supply.

There is some selling that happens, but then there is a stopping almost

instantly, and there are multiple attempts to go up again.

Before the price falls again on increased volume signature, but we see

demand on this bar, and there are two attempts to rally again.

the progress of that commitment is very minimal. There is only one bar that

commits to the downside, and then the price recovers really quickly.

Next time, we have the same type of, you know, non...

How would I describe this?

Not impressive commitment to the downside.

And with that also, the downspread...

is diminishing as well.

And that happens now on the diminished effort signature.

So we've seen how the strength of the push is deteriorating and the result

because of that is deteriorating as well.

Suddenly some demand comes in and then we have that

ominous three or four days to the downside where

supply is increasing.

What is the commitment to the downside?

One close, we have a tail off the low, and we have the highest

volume signature out of those three days, suggesting that there is some

behind it.

So there is quite a lot of effort that is increasing just locally, not to be

compared with this too but locally let's say from this area right here to this

definitely there is an increase in the effort to push the price down and yet

character with which the price goes down and the actual result is minimal

the bias is still bullish so as we have gone through

this whole chart the bias really has not changed anywhere

I always think about, you know, those points of vulnerability. Like, for

instance, yesterday I tweeted out, I was looking at the intraday picture and the

daily for both, actually, for oil and for the market.

There was something wrong about that, the behavior, you know, of how the price

was behaving. We're going to look at that, you know, in a second.

There was a point of vulnerability, and we're still in that point of

vulnerability, I think, with the markets. It doesn't mean long -term.

a short -term.

There's some selling that comes in, and it has to be resolved somehow.

So it's after what looks like a weak rally.

This is the moment of vulnerability where selling is coming in, and we need

see what kind of behavior we're going to see here.

Is it going to be more conducive to bullish picture or more to bearish

And that's our bias game.

Let me quickly go through the solution here. Let's look at what has happened

afterwards. We have a big bar like this. And by the way, guys, would I give you

this bar, would all of you say that this is a bullish bias?

Would you say so?

If I would give you that one more extra bar, would you say that instead of,

let's say, a distribution, you would go for the bullish bias?

And that's why this bar will never make its place into the bias game.

Because the challenge for this game, I think, should be in the

Wyckoff story that unfolds throughout the whole chart.

rather than just like, you know, one catalyst at the end.

There was one student who asked me, you know, to do exactly that, to have that

type of reversal, swing reversal, and I said, no, of course not.

You know, there's no fun in that.

Okay, so how does the price move after that?

We kind of see in a lot of absorption of the supply here.

So it happened in three places.

Here, here.

than here, then we naturally should feel at this point the ease of movement.

Why? Because, well, a lot of supply has been observed by this time.

And also on the top of that, we should finally start seeing momentum players

coming back into this position.

This has been a leading stock and now it changed its behavior.

And it starts showing some elements of the momentum, especially on this first

bar, and then on the third figure and moves.

And look how flat this reaction is.

One of the things that are important to understand with reactions is the angle

or the slope of the price.

Once it becomes more horizontal, so we need kind of like this slope to go from

more vertically down.

I don't know how to draw this.

Okay, so from more vertically down to more horizontal.

And when we have this, that's when we could say that supply has a specific

character.

And this character is such that suggests that supply has been exhausted.

What we could expect from here is not only continuation, but then also

acceleration at some point.

Maybe joining the cache can, you know, come up with a scan for us to catch this

type of reaction.

You know, vertical reaction, less vertical reaction, and then the slope is

horizontal, something like that.

Okay, let's go to a question.

from Simon.

I like this whole analysis. I mean, I like the process of the analysis.

It's very tedious, but if you do just one exercise per week, it's worth it.

So Simon, obviously, I'm commending you on that.

Conclusion, as we see, was not a successful conclusion.

let's figure out where we went wrong, and Simon, you know, let me know.

Write it down.

Let's go to the first question. I interpret B282931 as bind by the CO. Is

this correct?

All right.

And this is easier, you know, to go to those bars

once you have all of them labeled. Okay, 28, 29.

And 31.

Yes. And we went through that.

Absolutely. So I'm not going to go through the explanation because we just

All right. Second question. With the rally with falling volume, how do we

identify an ease of movement to the upside versus the weak rally? And I

that we've done that too.

Simon, I think we've covered that.

All right. So let's not stay on this.

So I'm saying I had in mind that it was accumulation, but second guess my

analysis when we got to RA16.

All right, where is that?

Where is RA16?

In phase D.

Okay.

Right here.

Okay, so what's...

Weak hands rally, okay.

I think that we could make a mistake here.

You know, I think that it would be okay.

What do you do with the weak rally?

You basically want to have some kind of confirmation that this weak

rally leads to a bearish action.

So that's how we would avoid this mistake or that's how we could possibly

this mistake.

So thinking about what does the weak rally mean?

Well, the weak rally means that either the bullish pattern is going to fall or

this weak rally is just going to be a part of the reaccumulation.

So you need to go here and to figure out what that week rally actually meant.

And initially, you probably will be thinking, yeah, there is definitely

that is coming in. But what kind of supply?

Not as much. What kind of result? Not as much.

Subsequent supply, a lot of effort, not a lot of result.

Less effort, kind of even less result. Lots of effort, not a lot of result.

It seems that if we would just say the weak rally needs to be confirmed, then

obviously that could be the way to go away from this mistake.

Okay, great.

I saw a lot of gap into the downside and that made me think more distribution.

Yes, that's true.

Lots of gaps here, but at the same time, what do these gaps produce?

It gaps down to the previous support, and it gaps down to the previous

And the distance, you know, of travel there are not that impressive, you know,

just relative to the whole structure.

All right.

Let's go to the next bias gain. Here it is.

I'm going to let you look at this for maybe 15, 20 seconds.

And then write down what do you guys think this is.

Is this a reaccumulation or is this a distribution?

I'm going through this myself in my mind.

All right, let's see the answers.

So we have about...

60 % of you saying this is the reaccumulation, probably around 65,

65, maybe even 70.

A couple of you are saying this is the distribution.

A few of you, more than a couple.

Okay.

Well, let's see what it's going to be.

There are certain things here that right away.

catch my eye.

I wonder if you see those.

All right, guys.

As usual, this will come out tomorrow on our Twitter, and then on Friday you can

see the solution.

If you have not done your analysis of this

exercise before Friday, please don't look at Twitter.

Do the exercise first and then look at Twitter if you like.

All right, let's go to the next question.

Actually, let's go to this right away.

Rony is asking a question. In this instrument, I have earlier

look at this as two separate ranges, but I'm thinking they...

are both part of the larger upsloping range.

And that's why we're coming to this larger structure. It's easier to see the

structure from away, kind of like see a larger structure than just like

zooming in into the last up thrust or something like this. My reasoning for

is that despite the gap in July, this one right here,

there hasn't been a clear change of behavior in the price structure until

last push to the top. Am I seeing this correctly or am I looking at a very

backing up action?

Both. I have also added its relative strength compared to the index. So let's

just deal with the relative strength.

It's a leader.

Right away.

I wonder against what?

By you know against the industry group. We're probably looking maybe like

against peers I'm not sure And what is the structure here

uptrend?

Lots of Capitulation but lots of fine as well supplies exhausted there is buying

here. So in this area right here. This is our value zone

so anything below when it comes into contact with a lot of liquidity is going

be bought okay something like that

this as well and then and then on this bar right

here we're jumping up and this is where supply comes

and it stops

produces the first initial reaction first test and then still there is some

absorption and now at the higher level then we have some buying here

so the bias looks bullish it's just that we need to overcome

this area and we can because of this supply right here so therefore

your bias still should be to the upside and you should be thinking that unless

this up thrust is gonna fail in such a way that is gonna show some weakness,

something like this, then I'm still thinking that this is a reaccumulation.

And supply at this point has been just pretty high.

It was here as well.

So therefore, it might take even several times to try and to have

this type of attempt to get away from this area.

And therefore, that could suggest slight continuation of the duration of this

range. And that's how I would be thinking about this picture until it

something of the distributive character.

where the price commits to the below support in the way how I've shown to you

the sign of weakness.

There is a rally that follows that decline, and it's weak, and then there

breakdown to the downside in the way of the capitulation.

Until I see that, I'm thinking bullish here, and I'm just thinking, let me see

if there is an opportune time to come into this position.

In a way, just slightly reminds me of AMD.

For those of you who are in WMD, you guys know that I had a position

in AMD.

And I said that, you know, I see a lot of like great patterns here,

analogs with the past, suggesting that we're going to have a very...

big rally in AMD.

And my position was opened

here.

So in a way, I'm kind of making somewhat of the same mistake.

I'm just basically going with an idea that, well, this is the stock that

I'm gonna hold on for some time, so there is no really reason for me to you

try to be fancy here and try to enter somewhere later uh you know maybe we're

just gonna have one test and then we're gonna go up from here so i entered it

there um i knew that because of this supply right here

that we had also it here we're going to have some duration for this range

look at the next time we have that increase of the supply.

Again, we need to test.

And only when we are successfully passing this area, this becomes a true

breakout.

So very similar in that way pattern.

And we have to think about this latest action as increased supply and the

big question mark, what's going to happen next?

Can it consolidate at this level and then go up? Very bullish. Or more

would it go even lower?

And then the question is going to be, how is the structure being labeled after

that?

All right, great.

Thank you, Ronnie.

Let's look at the markets really quick.

So there is obviously something that is being talked about probably

everywhere, you know, on the technical analysis front, and that is we don't

a lot of volume behind the move.

Well, we know for sure that we could definitely travel without

a lot of volume signature. We don't have to have increasing volume signature.

to travel with the ease of movement where the price actually commits above

that's what produced in this you know a lot of angst right now among technical

analysts and traders that you know this is a fake breakout uh

but yet look how it broke out and how many

progressive closes we have

Maybe not this one. One, two, three, four, five.

Five closes.

The price spends a lot of time above that breakout.

So that's very encouraging in itself.

Secondly, takes less effort to

do what? To push the price out and to actually stay above the resistance. So

that tells us that supply,

is exhausted why is it exhausted well because it was all

observed here first then here everything on the way

down then a little bit here and probably here too

then again on the way down a lot of liquidity here all of this this is all

buying

And then again here.

So now that we've visualized where they bought, so obviously what are they

buying? They're buying value or they are buying by valued investors, by

value investors.

By the way, This is such an interesting conversation that, you know, we

constantly have with Bruce, you know, on WMD.

So buying value, who's buying value?

Value investors are buying value.

That's why value was outperforming all this time. So look at the levels of the

buying and the supply. So supply plus demand, right?

Supply plus demand.

Supply plus demand. We kind of see that there is a deterioration of that

availability of the supply. Less supply available and

it takes less demand to push

the price up from high to low.

So we see how effort to the downside deteriorates throughout.

these three reactions because of that value bias.

And that's the thing. I think that the mistake that the analysts are making

right now, you know, calling this a fake, is because momentum traders are

this market.

There are not a lot of stocks, actually, that the momentum stocks that are

running away really, really hot. So you have to be extremely selective.

A lot of them kind of like don't have that theme.

behind them.

So therefore, there is no growth element.

It will come later on in the later stages of this rally.

And there is more buying as the price goes down.

So what does it mean with the most current picture?

We see some kind of trading range.

on the intraday level, some kind of deterioration where we might be

okay, well, we have to look into that.

And then we also saw where momentum stopped, where the buying stopped.

This was the last rally. This is where it stopped at 3 ,000.

This is where it stopped before.

Before.

So you kind of could see what I'm implying here, and here is that first

zone.

This is going to be an extreme for this reaction.

So I think that if we are going to have the reaction, we're going to have the

reaction not because it's a distribution and supply

is present or was present.

No, it's a reaccumulation.

It's because demand is exhausted.

And therefore, we naturally will have some kind of reaction.

Unless big news come, you know, very bullish news, and then we have something

like this, like a climactic run.

So then on the bullish news, we probably would have something like this.

Actually, you know, supply is not that great here either. So again, you know,

suggest a continuation.

But if we're going to go down here, then most likely we would probably go to the

3 ,000 area. That would be a really good area for us to fall.

That would scare us some weak hands. They're going to start selling.

Increased supply would increase temporarily, would be observed by value

investors. And after that, on the next breakout, this is where momentum players

are going to come and they're going to be extremely aggressive and they will

push this market up, up, up.

So when we look at the more recent range on the hourly.

So here you kind of could see that maybe this last bar right here after this up

thrust is slightly misbehaving. But in reality, we still need to break, you

know, a very large kind of like picture.

There are quite a few spots that look the same. So we need to break that

to the downside.

And we've seen an increase in effort, an attempt.

So let's see how that's going to happen or if that's going to happen.

Look at this latest bar right here today.

That's a change of character bar, but it has to be followed on the downside for

the bars, and we still don't have that. We don't see that.

Would it be fair to say that the flat volume results in price momentum falling

as we see price spreads narrow and price is starting to mushroom over? Yes. And

this is something that we're actually covering in this November special.

I talk a lot about the momentum, how it looks, how we could identify it.

This November special is the prelude to the October special that we've already

done with John.

And it just explains step by step how momentum should look on the failure

or on the continuation, on the confirmation. So if you're interested,

for that. We still have two classes to go. I'm very excited about that.

All right, and I think that's it.

All right, well, let's see what's going to happen. I mean, we're just kind of

like seeing, you know, some deterioration, some exhaustion in the

then we're seeing some deterioration in the structure. We're still not seeing a

lot of supply.

But also at the same time, look how the Dow is also, you know, consolidating.

Harold Russell has not been going up.

We're seeing gold starting to have smaller spread.

Less effort to the downside, suggesting a rally, which would mean that the

market could be in jeopardy here.

Oil as well.

And this is the comment about oil, because you guys know that I follow oil

almost each day.

This was the rally that kind of spooked me. And then this, I started thinking,

there is something wrong here.

Look at the effort to push the price up.

There is a really good rally after that initial consumption of supply.

We're not necessarily making the higher high, but we are making two closes

above.

And then the next time, the rally comes exactly to this point again.

So that shows us some kind of limit as to where the price could rally.

And then it did it again.

So right here,

I went on the Twitter and said that this is a point of vulnerability.

It's either going to break to the downside or it's going to break, you

continue with the move to the upside.

So, and it seemed like in the morning, yeah, it might continue, but then look

how supply comes in and we are damaging the structure right

here so it looks to me that we are going to have some kind of reaction

so we'll have to see all right that's

it for the markets where are we four o 'clock okay great good timing

Let's go to the next question. This is something that we will be covering this

Thursday in the November special, but because this question was originally

the practicum, and I promised you guys we're going to cover some of it here.

I think it's a fascinating subject because my mind was thinking about this

for quite some time, and I'm still thinking about this, contemplating what

is. What is it?

How do we measure those two things?

And we're talking about the price velocity against the price momentum.

What are those?

And how do we see this?

So from just different sources on the momentum and the price velocity.

Momentum is the rate of acceleration of securities price of volume.

There is a momentum with which volume can accelerate as well.

That is the speed.

at which the price is changing. And I think this is where, you know, that

confusion comes. Speed and velocity, kind of the same thing.

And therefore, you know, from this type of the definition, you know, you might

be somewhat confused. At least I am.

Simply put, it refers to the rate of change on price momentum for a

asset and is usually defined as a rate.

This I understand.

is easy for me to understand. I understand that there is a rate of

I understand also that there could be a different rate of change.

So we could have like a rate of change on the rate of change. And that would

define the velocity itself.

But we can't say that the momentum is just that rate of change on the rate of

change. It's just a rate of change of the price.

on this specific taking period momentum is analogous to a train and i love that

definition so let's just go through this analogous to a train thereby the train

slowly accelerates when it starts moving right but during the ride

the train stops accelerating so think about this here is our train

i'm not such a big kind of like i you know to draw all of this stuff but

okay

so at the beginning when we start our movement

what happens with um

with velocity in the momentum momentum starts

to increase but gradually Velocity also starts to increase, but gradually

as well.

Then when the train, let's say, gets to, let's say, 60 miles per

hour, what happens then?

Velocity stays the same, right?

It's at 60 miles per hour. So it's kind of like...

It went up and then it stays the same.

But then what do you think, guys, happens with the momentum here at this

Is momentum increasing or decreasing?

What do you think happens at the 60 miles per hour? And, you know, let's say

that this is the speed with which the train travels at that point of time.

Let me actually kind of like

send a curveball to one

of you.

Hey, John, are you there?

John, you scan.

You want to unmute yourself?

You want to chat about this a little bit?

Sure, I'm in. What do you think happens with the momentum when the train gets to

60 miles per hour and velocity stays that way?

Well, hopefully it doesn't crash.

Well, for sure.

Well, momentum at that point had to

increase to get to that speed, and then it may stay constant at that higher

level. I would say definitely it should increase first, right, because we are

pushing the train.

and momentum starts to accelerate to get us to the velocity of 60 miles per

hour. Right. From there, and on the chart, we're going to see it like this,

right? But then after that, we hit that 60 miles per hour. We don't need to have

any more momentum to stay there. Velocity kind of can stay at that point.

momentum will start to actually decelerate.

It starts stopping accelerating.

And we could see, and there's going to be like zero acceleration, constant

velocity at 60 and zero acceleration.

And, John, I was thinking about this, you know, on the chart. Let me just

this really quickly.

Yeah, that is one of the tricky things about momentum is that it can.

it can decrease while price is still increasing. It's just a slower rate.

Exactly. Increase. Very tricky, but it's the case.

Yeah, it is the case. Because once that velocity has been gained, it's almost

like the velocity is defined by the presence of the momentum traders

and their activity in the market because they're providing that push with their

buying and selling. So we could see that, for instance,

let's say right here on, let me just go to the

specific here.

And this is something that we will be covering this Thursday.

So I want you guys to think about, you know, if you're not there, you know, you

definitely should be there.

Let me actually take another picture.

Okay, so for instance, let's just look at this latest run. This is a good

example. And John, please correct me if I'm wrong.

So we have a momentum to the upside and then another wave that overcomes

that previous momentum right here.

And look at where it stops.

It actually stops before the previous low. So there is some divergence right

there. And this is something to think about on its own.

But then what happens next?

The price still goes up.

And yet momentum goes down.

So it's almost like there is enough acceleration right here for the price to

keep this velocity and there is no need for any more buying.

Why? Well, because at this point, all of this momentum buys together with

some stopping action reflect what?

Buying.

First buying on the way down and now buying on the way up.

So supply is so exhausted that it leads to what we are saying to be a

weak rally or where demand is actually exhausted. Usually this type of weak

rally is going to have the reaction into the zone where momentum has stopped

going up, somewhere here.

So then look at where we land with that.

And if we have that highest value zone area right here, then we could apply the

structure and say, okay, well, at specific spots, we want to be extremely

aggressive, like here.

John, what am I missing here on the velocity and momentum?

I don't think you're missing anything.

It's just a fascinating subject when you modulate the length of time that you're

looking at the rate of change.

shorter -term, medium -term, long -term, and combining them together can

really give a phenomenal picture of how price moves.

In fact, that would be maybe a topic for November special is

looking at multi -time rate of change.

This Thursday, we're going to look into multi -time frame rate of changes.

three rate of changes here um i was more even referring to the swing structure

right so for instance the low and we have first push second push and then

the second push has like this highest rate of acceleration and it makes a lot

sense because when the train starts you know uh you know to to go the most

acceleration is going to be like at that you know not necessarily the first

steps right so there's going to be like uh initial push it's almost like the

value investors are absorbing the weight of the train and then as they start

moving it's much easier to move one once the train moves right so once they

consume that you know that initial weight and then the first big push and

after that all other pushes are kind of smaller right so the swing ends here in

if we would take this as one swing and we would be thinking okay well let's

at this short -term momentum picture this is where acceleration has ended

and then there are just some pushes additional pushes you know but they

are much smaller acceleration there is lower and yet look at how the price

so we need to understand this concept on a much much deeper level well joan i'm

looking forward to thursday

Great. See you then. Yeah, and we're looking forward to maybe like a scan or

from joining a scan.

Well, we've got one queued up, and we're going to work with that one inside and

out and see how small changes in rate of change affect the outcome of our

scans. Very, very fascinating stuff.

Well, I can't wait. I can't wait. Thank you, John.

All right. I'm going to put you on a hot seat here.

All right.

So that was a good question.

Okay. Well, Simon, good questions, but let's just, you know, let's just

move on from this and then let's keep this in the November special. But this

was.

A question that I was addressing in my mind for a couple of years now.

And I think this is probably the first more serious thought because we are

studying momentum a lot lately.

All right, anatomy of the trade, trade desk, quite a lot of latest price

movements here.

For those of you who are in the swing position, that probably is a great...

you know, indication of what you were expecting to see. We've talked about

type of bar where it's a big significant bar, the bar that actually overcomes,

you know, previous points of the resistance out of this area. We

as kind of like this long -term oversold condition, and we needed to see some

kind of reversal action.

Before that, and this is something that November Special is going to allude to

in the third session,

We had a lot of buying, and then we had absorption of

that supply that was available at this level, and then we have a synchronicity

of the effort and the result.

At this latest bar, today's bar, that is probably one of the most attractive

bars for the actionable points.

I also like here, and this is from Arvin.

kind of suggest to us that we're gonna get back into

the long term resistance zone.

So that makes a lot of sense.

What do we have here? Reversal one, I see, okay, 21

times four.

All right.

I wonder, Arvind, if we would take, and lately what I'm doing is, I'm kind of

trying to see where the trading range is to the most significant number. So

that's 200.

And I would take 1 % of that.

So that would be, for us, $2.

And then maybe to see for the box size.

So here we have $4, so this is twice as much. Just to see with the $2, what kind

of count we're going to have. Something tells me that we might actually overcome

the high if we do that.

All right, guys, well, what are your thoughts here on Trade Desk?

Would you go in into this position now, especially for those of you who were

thinking about maybe a distribution, a redistribution?

How do we look at this position now?

And obviously still relative strength is not there, at least fully.

Price is showing a lot of promise.

Would you become buyers here?

Let's see it.

Maybe we should just conduct the whole poll.

Are we buyers here or not?

And you can say yes or no.

okay let's go through this yes yes yes yes yes yes

yes again all right so other yeses okay awesome

so i'm going to consider this as a buy bar for us

and then the stop loss i would assume that it's going to be below the selling

climax i don't think that we're going to go for anything else but we also could

go slightly below what we think could be a phase C at this point.

All right, so homework.

Follow this talk now, because we're in the position, and let's analyze it. So

send me your analysis of this talk, whether bar by bar or whatever you guys

see there, if there is some kind of interest.

So let's, to put it on the chart.

you know send it to me and like with arvind i could i could put it into the

slide all right great another question another bias game

previous in your explanation of this bias game the green circled reaction you

advised that this reaction is bullish as volume is falling

During my assessment, I saw this as an ease of movement to the downside, which

read as bearish.

How does one tell the difference?

Okay, a little bit of the repetition here, but very useful repetition.

So we'll look at the reaction, and then why would we say that it's not an ease

of movement, but a bullish reaction?

An ease of movement to the downside would suggest,

a commitment below some kind of support

do we have that well here is our support we don't have commitment below that

here's another support we don't have commitment below that so therefore

intention fails and we don't have an ease of movement well what do we have we

have a high low we have uh supply diminishing here And that

only suggests that supply was available at the higher levels, but at the lower

levels, it's actually consumed.

So there is an absorption at the higher level that has happened with this price

action.

So now we would be expecting that probably at the same level, we're going

have supply again.

So that's the difference there.

Ease of movement, we're going to have a commitment. We don't have it here.

And then on, let's say, weak reaction, we would just

have

deterioration of the supply.

So it would be a weak reaction for the supply. And we see that, you know,

through the volume and through the structure.

Is a movement to the downside applicable if we do not go past a support level,

but go below a significant bar to the downside?

Yes, that's exactly that.

You know, we're looking, you have to think in terms of the magnitude, right?

if you have this move that contains multiple bars, so then we would be

definitely looking for the support area that would have, be defined also by...

the previous reaction of the same magnitude.

So we can't just say that because this bar has been reversed, then there is an

ease of movement.

Relative to the last commitment to the upside, there is a ease of movement.

And it's not even an ease of movement. There is an increase of the supply, and

the price commits to the downside.

So effort increases.

result increases. There is no ease of movement on diminished result, and yet

the commitment. That's the difference.

So don't mistaken the magnitude of different reactions with just the

of the bar in the specific swing.

All right, great.

Now let's look at the time, 420. Okay, we actually might be slightly

ahead today.

So that's great, good pace.

So we went through the first two stocks on this exercise, stock number one and

stock number two. For the first stock, we said, well, we are probably in some

kind of climactic action.

From here, we would be expecting the price to go aggressively up slightly

42.

That would be our interpretation.

Stock number two, we said, is very interesting. It has a lot of strength.

and we've defined strength throughout the whole trading range we thought that

this was phase c even this looked bullish so we said that we're going to

and buy and we would be expecting an acceleration from here because of how

active actively supply has been observed in this area we see that the volume has

increased there is a lot of institutional presence all right so now

to stock number three and stock number four

okay

and before we actually go to stock number three this is a really good

from arvin so let's go through this rn is asking whenever evaluating a stock

versus industry group so here's industry group and a stock which is more

appropriate structure analysis or percent difference analysis.

And I'm assuming, Arvind, that percent difference is going to be what? It's

going to be kind of like the same idea behind

the relative outperformance because the relative performance is going to be

based on those numbers.

You know, what's the difference, let's say, between

They move to the downside in one acid relative to another.

And we would want to see relative to each other what moves

further down.

The way how we compare, we usually do a comparative analysis based on the

structure. So that would be important to me. But then if you have a relative

strength line, then definitely consider

applying it to your chart and seeing what the trend of that line is.

And I wonder how you would interpret this here. So let's go right away to

number three and let's talk about this.

And let's talk about the comparative strength.

I'm gonna identify specific points, significant points, and you guys just

it down to me.

you could just write down one letter, S or W, for strength or weakness, or

stronger or weaker.

So at this point right here, is the stock stronger or weaker than the group?

Stronger. At this point, stronger or weaker?

weaker at this point stronger or weaker

weaker at this

point stronger or weaker weaker

at this point stronger or weaker

stronger at this

point stronger or weaker

stronger. Let's stop here.

We are probably taking either,

we are taking either this low for the group and we see how the price dropped

here.

Or we are taking actually this significant low and we're synchronizing

the group.

And then we're seeing that on the stock, the price came to the same level

for the group we actually dropped from that level so the group is weaker and

stock is stronger okay next one uh this point right here

stronger or weaker

stronger

This point right here, this low.

Stronger or weaker?

Stronger.

This point right here.

Stronger or weaker?

Stronger.

Alright, let's do this point right here. Stronger or weaker?

Stronger. This point right here. Stronger or weaker?

Stronger. And the last point. Stronger or weaker?

Weaker.

Why weaker?

Look at this. High, low, and here we are just horizontal.

So, definitely weaker.

So what is happening with the comparative relative strength?

We've been in the leadership stock, and then we go through the period where the

stock is of no interest to the investors, especially

in this area right here. So there is some selling that is happening.

We see that supply is going up.

is going up, is going up.

Someone is selling and then someone is out of position.

And that's why price kind of drifts up, has some supply again, and

that leads to the change of character, which is this reaction.

Okay, well, there is no supply after that whatsoever.

Actually, there is more demand, really good rally.

So we are seeing that after this change of character, there is more bullish

bias.

And then this last portion, this is something that we want to decipher.

There is a little bit of the increase in effort to push the price up.

Overall, what do you see for the result?

Are we expanding result, increasing result, or are we decreasing result?

result is increasing to the downside or result is increasing to the downside

all right so everybody's saying decreasing okay great

yeah how how is it decreasing well we had previous reaction of the

same magnitude that was quite significant and here we just don't have

this much smaller uh What kind of selling do we have? Maybe this bar right

that's the most that we get. This is more aggressive.

And then a higher low relative to the previous area.

So this is also a really good result for bulls on the slightly increased effort.

So slight increased effort to push the price down, inability to do so, suggests

presence of...

at this point and we kind of could see this, the price falls and then quickly

goes up. So there are some momentum bars that are present there as well.

So now let's deal with the last maybe week here or that big bar.

How would we interpret that?

Does this bar changes the bias?

Let's answer this question first. What do you guys think?

This big bar to the downside with this volume signature, does it change the

bias from up to down?

Okay, do you need more time to think about this, guys?

All right, so we're in two camps.

Some people are saying, no, it doesn't change the bias, and some

people are saying, yes, it changes the bias.

All right, so how would we change the bias here?

So one of the suggestions here from people who are saying, yeah, the bias is

changed, is an ease of movement.

All right, well, we just went through this.

We're definitely committing to the downside.

Do we commit below a significant support level that would tell us that this

is an ease of movement, or are we just talking about a reversal of the swing?

we need to commit below somewhat of the significant level

and here we're just stopping right there is so much aggression with which the

price moves and there is some volume increase here

but it's not that big right so we had supply coming in um at

some levels that were

even more impressive before that, this is the supply that is coming in.

This is the level of the supply that comes in on that particular bar.

And there is no commitment below, so no result.

Therefore, it's not that threatened.

And don't forget what we're seeing here. Strength, strength, strength.

everything is strong until this point remember that signature

on on phase C where we have institutional

buying throughout the whole structure and then we have

a short -term weakness that usually would identify phase C

And usually because of that weakness, investors are going to see some value

and they're going to be more drawn to this stock.

Oh my gosh, am I giving you the correct answer to this whole puzzle?

I don't know.

Well, at least it looks to me like, you know, there is a lot of presence here

after all of this volatility.

And now, you know, some value and I'm thinking I got to get into this stock.

How? Well...

basically anything on the way up, you know, I'm taking.

All right, well, let's look at stock number four before we go to the

All right, so we probably should

do the same.

Let's start from this low right here.

Is the stock stronger or weaker?

at this point

stronger

how about this point right here stronger or weaker

Stronger or weaker?

Stronger.

Stronger or weaker?

Okay, next point is gonna be this close right here

versus this close.

Stronger or weaker?

Stronger.

Why stronger? Look at where it closes relative to the previous significant

low. So we're just really close to that low.

And then look at where it closes on the industry group and look.

how much distance is between that close and that support or now access the

resistance line.

So the stock is still stronger.

Wow, what a pattern, right?

The stock is stronger, there is a big demand tail right here, looks very much

like a shakeout, lots of volume signature.

And it all comes in the stock.

that is actually stronger than the industry group itself.

We definitely should be very cognizant that the group is actually in the

downtrend.

And we see lower highs and lower lows.

But we also should recognize that something is going on with this group.

There was an attempt to stop

So probably this is a climactic action.

Automatic rally, secondary test, phase A.

Then there is a lot of time that the price has spent in phase B in the upper

part of the range, and look for the stock as well. This is one of the most

favorable patterns that we could have on the structure, where phase B

suggests that

institutional trend followers got into this position.

Now this pattern unfortunately will always resolve itself in the double

and the retest of the previous low with some of the capitulation that we're

gonna see from those institutional trend followers, they will be thinking that

they didn't get into the position at the correct time.

So they will give up their shares, from here liquidity will increase and the

value investor is going to buy.

That will support the price and from here, the price will go up with more

synchronicity on the result.

So therefore, a very strong stock in the group that might be also experiencing

some buying, the group probably will follow the stock. This is a leadership

stock. So this also looks very attractive.

So therefore, when we come to the decision slide here, I want you to

look at these four stocks.

Again, consider what we said about those stocks and tell me one

stock, the one that you would want to buy at this point. Which stock do you

think will outperform all of them?

I'll give you some time to think about this.

All right, let's see at some of the answers that you have. Okay, so stock

three. Guys, by the way, I might have said something, but, you know, about

number three, I've just seen a lot of kind of like bullish characteristics

I like the structure. I like this weakness at the end. That's great. But

like this stock too. Like stock number two appeals to me.

Stock number four appeals to me also for different reasons because if this is

phase C, I want to be in it relatively early. I think that first we're going to

have some kind of minus sign of strength, maybe like into 125 area,

130, and then we'll consolidate and then we'll go up. So initial long -term

position could be established here.

So you have to think long -term.

which which stock could potentially outperform uh you know in the more

meaningful way all right well everybody's going with stock number

see what happens all right so stock number

one we said that there's going to be that first initial reaction above the uh

preliminary support high

Happened that way, so nice. We could have here a trade. If you're a swing

and you're thinking in terms of the efficiency of how you use the capital, a

trade, let's say, from 35 to 42,

which is a 20 % move in

about, what, less than a month, so maybe like three weeks.

is actually quite effective if you are doing something like that.

You could also find that probably in some other stocks here that you could

especially this one right here, number four, because this is a deeply oversold

condition. And just recently I've been tasked to think about

the benefit of switching.

between positions to produce more velocity with which you generate the

Now, this is a little bit crazy because you have to be extremely correct

with your calls. Otherwise, that's not gonna work. So I'm not actually gonna

advertise this or talk about, but it was an interesting thought.

So if we would be thinking in terms of the efficiency of making the money in

shortest period of time, Stock number one and stock number four will be our

candidates just because of the deeply oversold condition and the push up that

they usually would have in a relatively short period of time.

So here we have one month and from 100 we go to about

130. So that's plus 30 % in one month.

We don't have that in stock number three.

Although, hold on, I might be totally incorrect.

So this is what, 14 bucks on the

58. So probably, yeah, also 20%. No, kind of the same.

So this also would be very interesting.

Okay, and then here we have, let's say like 49 to about

55.

Six bucks, so yeah, not as much.

50, yeah.

So that's okay. So stock number one, two, three, and four kind of were

presenting us some of the opportunities. And then again, why does this happen?

Look at where we were, right? So short -term weakness

defines short -term oversold condition, doesn't it?

then oversold, then oversold.

It's out of those oversold conditions where mean reversion traders come and

see that there is such a deviation from the fair price.

They know that they could push this and create such an acceleration, such a

momentum that will increase velocity really quickly.

And then that will push the price up. And we see this in all three cases.

We see it here with the continuation.

We see it here.

We see it here with continuation.

Simon is asking, how do we, what is this?

Assert a stock in the oversold condition?

Well, that was my question to you guys, next question. But okay, if this is a

question, I'm going to give you a hint.

Out of these three stocks, one, three, and four, I would be picking

three and four.

As certain. Yeah, as certain.

Okay.

Why three and four?

Because there is a structure here, attractive structure, right? So we are

potential phase C in the stock number three, and we are in the potential phase

C shakeout action on stock number four.

So both in phase C have kind of like short -term conditions of weakness.

And obviously, stock number four, if we were faced with the dilemma, if somebody

would come to us and say, in the next months or so, you have out of these four

stocks, pick up the stock that is going to produce the largest result.

You know, what kind of stock you're going to look for?

you're probably going to look for the stock that already has concluded its

structure, right? So phase C, and it's going to be in the oversold condition.

John, I think this could be one of those skins, right? So phase C in the deeply

oversold condition with bullish conditions.

Phase C, oversold, bullish buyers.

And then both three and four are like that, four even more so because of the

shakeout action and it produces the largest return.

So you could just create strategies just based on that.

So how do we do this? We want the structure and we want that oversold and

want that bullishness.

Okay, what else? We said that stock number...

Two is very attractive to us long term because when we were here, this is where

the point of entry would happen.

Because of a lot of things here, a lot of strength, a lot of bind in this area,

structure is there as well.

We are thinking that probably we've consumed a lot of the supply in this

and the move to the upside could be quite fast as well. By the

move, we mean more longer term move.

Here it is.

And we're seeing that volume deterioration and the movement of the

let's talk about this a little bit.

First of all, let's answer this question, guys.

What do you think? Why is the volume signature going down?

Why does the volume signature go down?

Supply and demand both decrease.

Correct.

Why else?

Less and less demand as price goes higher. Correct.

Buying at lower prices.

Well, Sharon, let me rephrase this for you.

I think this is where we're seeing that bind.

And this bind is all value bind, right? Because it's on the way down, on the way

down, on the way down, on the way down, and then on the way up.

Here is our value zone.

This is where they bought in.

And we probably seen the binding to this area right here.

And then when we look at this area,

what are we saying? We are saying that both momentum has increased and

velocity has increased.

And then we look at the continuation and we are saying that

In this case, momentum starts to decelerate.

We don't have as quicker rate of change as we had between 49

and 55.

It's smaller.

So momentum will start to deteriorate. It will have some local jumps up,

but long term it will start to deteriorate.

And then

velocity will reach certain level and will start to deteriorate as well, a

little bit.

But still it will be more sustainable than the momentum

deceleration itself.

And that comes because they have bought in this area and then they just let the

price be.

kind of travel on its own. They are not buyers anymore, but they are not sellers

either. And that supports the price and its uptrend and either movement

to the upside.

Indeed, this whole area has multiple commitments to the

upside, and yet it happens on the diminished volume characteristics.

So extremely important to see that.

Okay, what else? I like how stock number three has traveled, right? So we have

increase in momentum and then decrease in momentum.

Why would momentum decrease here, guys? What do you think?

And actually, let me just go, I guess, to that particular stock.

Let's just see it. Stock one, two, and then three.

Let's look at it with more details.

Momentum was increasing.

Actually, after this, it was slightly decreasing, but definitely in this area,

if we're comparing this to momentum is decreasing.

Why would momentum decrease? What do you think?

ITFs have bought at the lower price level already.

Okay, yeah, they bought in. I mean, the value have been buying for some

time.

Momentum probably was getting in somewhere here. We don't necessarily see

of momentum there.

They don't need to acquire anymore, less urgent buying.

Well, if they're getting in on the momentum right here, then they are just

holding here, this position.

So momentum players plus value.

And as they hold to this position, at some point, some supply comes in

into the market. And as this supply is being introduced, they're kind of

consuming that supply.

And this laborious move to the upside.

Looks like a big feather.

So some supply comes on profit taking.

And they observe this supply. So COO observes.

Vertically.

It's being presented, it's being observed, presented, observed,

observed.

But there is no like an original momentum push that we have at this

point. Usually this type of development of the uptrend characteristics where in

the first phase you have your momentum buys, by the way I was talking about

in the bow.

you know, character of the up move and of the down move, the structure of

the characteristics, then you're gonna have vertical absorption.

And usually when this happens, because momentum by itself, momentum has

those absorption characteristics, you have the first zone where there is an

absorption, second zone where there is an absorption, and

you're definitely going to have the third zone that is going to be

wave and it's going to have less supply.

And it's at this less supply rally, this is where swing positions are going to

be extremely important and where leverage also will play a big role.

We want to have the trade, the swing trades with a lot of acceleration.

either in the first momentum zone or in the last speculative zone we

don't want to have let's say leverage positions where we have all of those

and big spread type of the reactions on increased volume signature in the

vertical absorption period

that's just kind of like the whole

structure here and then

What else?

Let's go to our next

slide where we have all of them together.

All right.

Now I want you to look again at these four stocks where they are right now

and tell me which stock would you choose

here?

We're continuing with the uptrend theme here.

I don't see any violation yet on the distribution side.

None of them exhibit any distributional signs in the last portion of the chart.

So this would mean that all of them should go up, continue the uptrend.

one would you pick out of four?

I'll give you 20, 30 seconds to think about it.

All right, let's see your answers, so please type those in if you haven't yet.

Okay, so we have not as many answers for some reason. Okay, should I give you

more time, guys?

So maybe we'll stop here. So majority of you are saying stock number three.

And then a couple of you are saying stock number four and stock number two.

All right. So let me kind of like think about this really quick.

Would definitely be thinking that probably stock number one.

uh is attractive at this point that's number one and then stock number four

why

am i choosing this two well all of them are leadership stocks

all of them are bullish stocks they're all moving in the same direction all of

them have had some causalities

I think that there are two points that we need to bring up here for this

selection, for the next selection. I think causality itself, right? So we've

talked about stock number two. We said here is one causality.

Here is a larger causality.

Stock number three, there is a large causality right here.

Stock number four, it had a causality right here. Now this causality has

expanded.

So quite a lot of causality right there. Stock number one, we talked about no

causality at this point, and yet now we could have maybe

something like this, or maybe even this or this.

So all four of them have enough causality to make big

moves.

which ones made big moves and which ones did not yet.

Obviously, one and four have not moved quite substantially yet.

So we would be thinking about these two stocks as having that potential

causality to have much larger moves. At the same time, we want to look at the

second thing. So we looked at the causality.

And the second analytical piece that we have to consider, what is the short

-term performance?

Because the short -term performance will define short -term leaders.

Again, if the goal was to come up with

the stock that will outperform in the next months or three months.

Which stock would we choose? We probably would be choosing based on the

outperformance, which will be short term. So where are we seeing

outperformance? Well, probably in the last three months since August.

Here and then here.

Here and then here.

Here and then here.

And then here.

Which stock, or maybe stocks, are stronger?

Which ones are exhibiting ability to hold on on the

reactions and not lose a lot of ground?

What would that indicate to you?

probably that institutions are not selling those stocks.

And if they even do, you know, that supply is being observed and there are

successful tests.

Whereas in some other cases, we might see some short -term synchronicity

between profit -taking and how the price reacts to that.

It doesn't mean that these stocks are not going to

continue their run actually in fact stock number two is probably

potential phase c the volume signature is correct and then stock number three

probably is in a trading range of some sort at least maybe there's going to be

another attempt to retest or something but stock number one and stock number

uh four are in the interesting places

where they've experienced very correct

structural

changes.

And now we're seeing those structural changes resulting in the outperformance

over the stocks that we look at.

And they suggest that short term they're going to outperform.

So one of four definitely would be on our list to consider. I would

say that then out of these two stocks, one and four, which one would you

Out of one and four, which one would you choose?

Four. Everybody's saying four. Why four?

What is the reason?

High in the structure than one.

Yeah, and there is, this last rally has a lot of momentum behind it.

and this last rally that we have since september low has some momentum but not

as much it still probably will outperform two and three um

but four looks very very interesting and attractive well let's see what happens

next okay so here we are revealing what stocks they are

and the groups

So the first one is U .S. banks and a Citigroup.

And this is in 2016.

So we're seeing that structure, phase C, feather grinding out,

consuming the last point of supply, suggesting that there's going to be an

acceleration.

And the whole group accelerates. That's after the election.

So initially,

This is something that we could consider as a short -term swing position because

we see how the price could potentially accelerate and outperform.

Stock number two was from the insurance brokers, Marshall & McMillan,

MMC.

And we said that it's not like it's not going to go up again. It's going to

continue its movement. We're probably in phase C.

But relative to other stocks, it might not accelerate as quickly.

Stock number three, we said at this point, probably

would be in some kind of trading range, or at least it would retest first before

going up.

Ultimately, this was kind of the stock to be in, stock number three.

aligned technology from the medical supplies group.

And that outperformance all started here.

This was stronger.

This was a really good momentum kick.

So another point of entry at this point and on the way out. And look at how the

price moves.

But short term, it didn't outperform.

And then stock number four.

was Boeing in aerospace, and we were right here.

And from this point on, this was the stock definitely that actually

all of them.

And number four, with all of this local outperformance, big course build, a lot

of institutional presence in this shakeout area, that was just a very...

Good structure to be in, and then a short -term strength suggested further

outperformance. And short -term, look at how this swing into March is just

producing such a great profit. So 135 to 185,

50 % run during that time.

And the whole group is also performing really well.

All right, well, I think that's it for today, guys. We kind of went through

really quick.

Oh, maybe we should stop here.

All right, yeah, let's stop here.

So for the homework, obviously a bias game, as usual.

Look at the trade desk because we've opened officially, you know, as a class,

this position. So I want your analysis as to what...

It's going to happen throughout the week.

And then I'll see you guys next week. Really good class.

We are kind of covering a lot of ground, a lot of, you know, some in -depth

concepts. So it's definitely very useful.

I'll see you next week, guys. Thank you so much.

Bye -bye.