Original subtitles

Today is November 5th, and this is the first class of the series number two

for the trade tape reading course.

And we started with foundational concepts in the first three classes.

talked about how to read the bar by bar, how to

read swing by swing, and also we touched upon the basics of the PNF.

horizontal volume reading, and also we've talked about some other minor

things on the tape reading. So hopefully, guys, you enjoyed those

kind of established the foundational work that we require now to go

forward with David and later on with William.

And also, obviously, you know, we're grateful to Gary Fuller for providing

members with the free session.

that followed the first three.

And it is my pleasure today, and it's a big privilege for me to introduce our

next teacher, next presenter, David Wise.

And David Wise is an icon in the Wyckoff world, and David

has been teaching Wyckoff methodology, and specifically tape reading and chart

reading, because there is some difference between chart reading and

reading.

for quite some time. And I'm sure that a lot of you had an opportunity already

to work with David, you know, in private sessions, which I would encourage you

to do, to reach out to David, you know, to either buy his book, which is

phenomenal, trades about to happen.

Check this out if you don't have this. This is the book, the material that you

should have on your desk as a Wyckoffian, you know, always.

obviously, in your private sessions.

And David also has a free daily report on S &P,

NASDAQ trading, just the markets in general.

I've known David for some years, but probably this year we've talked more

all of the previous years. And I must say that I'm just beginning to join.

communicating with David and talking about Wyckoff methodology, talking about

different spots, what does he think here, what does he think there, and so

and so forth. And obviously in preparation for these sessions, we spent

time together.

So I'm extremely thrilled that David is here again. It's a treat, treat for us,

treat for everyone.

And with that, David, how are you doing today?

I'm doing all right, Ruben. Nice to be here with you again.

absolutely all right well david it's all yours um we're starting a little bit

late at about you know 308 310 so we'll try to finish uh

this is a one hour 30 minutes class so we'll try to finish at about 4 40 ish uh

pacific time uh david it's all yours okay

As I said, it's a pleasure to be here with Roman.

I've been observing Roman, Roman's methods of trading, and I'm very

He's a dying -in -the -wood Wyckoff student, the highest caliber.

What I mean is he knows his business.

And what I want to talk about today, at least at the beginning,

people, you can make a living trading springs and up for us, and I know that's

something that's caught the attention of a lot of people.

But just as equally important is the understanding that drawing lines

on charts is essential to knowing how to read those charts and trade those

charts.

get proficient at it to spend as much spare time pulling up charts just

almost stock charts futures forex whatever it might be and drawing the

i always say that learning how to trade is like learning how to

play a musical instrument or learn a foreign language i heard a saying from

of my early teachers in life who said that repetition is the mother of wisdom.

I firmly believe that.

As I said, that's how you learn a foreign language or a musical

It's how you learn to read charts.

So it's a pleasure to be talking with Roman students again.

I normally have a relationship in giving presentations where there's a give and

take back and forth.

I understand we're not taking questions right now.

Maybe later if there's time.

But I'm going to be talking sort of to a rhetorical person.

I'm going to be saying what you might want to do here or what you would do or

what would you do here because those are the questions I'm always asking

students.

And so to start with, one of my favorite charts is the monthly crude oil chart.

It's a goldmine of...

If you were looking at this chart for the first time, what's the most

line on the chart?

And I think most of you would recognize that it's the downtrend line.

It's the downtrend line from the high.

looks just like we've interacted with it again over here, which we have.

And there's another trend line on this chart, as I'm sure as you're good

students of Wyckoff, you know that there is the reverse trend line.

We're in a downtrend, for example, which we have here.

We draw the line not just across the highs, but we draw it across the lows,

reverse trend line.

these two points connect them with the line and several years later it comes

into play but there are even more lines let me show you

I've marked it up I've shown you the primary

downtrend line and the reverse trend line across the lows that's usually

by a dashed line but I'm drawing two horizontal lines

We had a trading range in here, and we broke through that trading range with a

widening price spread and increased volume.

And it's my opinion, and I've seen it enough, and it's not an opinion.

It's a belief that markets invariably, eventually, no matter how

long ago it occurred, will test or retest vertical and or...

breakdowns and breakouts.

And you can see that I drew this support line where we broke through with big

volume and great ease of downward movement.

And several years later we came back to test that area.

And I also drew this line of support, which we interacted with many years

also. When the market, when Coonwalk made its low here,

16, right on the cusp, I had these lines drawn,

and as the market started up, I drew an up channel, a normal up trend channel.

And I drew a little circle right over here, where everything would come into

confluence between the primary downtrend line and the horizontal support

line, that this would be a place in the breakdown.

where everything could meet and you see what happened we went up we actually

shortened the upper thrust just slightly on the last up wave it's hard to see on

the monthly and then we broke down and met laterally for another year or so and

then this year we've had this breakdown and lo and behold look where this year's

rally has met resistance this old support line that was holding the market

And the market tried to stabilize it here, and here is now acting as

So this is showing one of the axioms of technical analysis, and that is

that in a downtrend, support lines, previous support lines, serve as

resistance. You see this support line became resistance here. This support

became resistance here.

of the chart.

Okay, so let me show you some more current charts.

This, as you know, is Facebook.

It's a daily chart.

What I usually will do with the students is I will say, what is the most

important line on the chart?

What is the line that has been interacted with and has the most amount

points?

of any line on the chart it's a kind of a line that i call an axis line that the

market has revolved around obviously it's not this line it's not this low

it's not this high where is it all right what other can you see other

things on this chart we can look at the volume but we'll do it on the next

most of you already figured out, is that we had a high over here in

May, late May, and the market tried repeatedly to break through that line.

It couldn't do it.

But right here on this day, in late July, early August, it jumped up

with a big gap and big volume, and we continued up. I drew a channel, a normal

up channel.

a reverse trend channel drawing from this high and this high with a parallel

here you see how we got overbought in the channel look at the look at the

there so drawing these channels help show you when we're approaching or at an

extremity and you all know this by now and then at the top here just reading

price bars we had this lateral movement all inside the range of that big bar

one we closed on the high in a position to go up and instead we gap lower

and that told you we were going down and then notice where the market came back

down to the old resistance line has now served as support again

and the market stabilized right here in this breakout area in this breakout area

like to test vertical and or high volume breakouts and breakdowns. It's one of

my basic tenets of reading charts.

I'll show you more about that in a moment.

All right, let's go on.

I wish I could say, are there any questions?

This is Walmart. It's quite similar.

I'm sure by now you know that the important horizontal line on this chart

of this high.

See the breakout right here? This was the biggest

up bar after

that moment.

It's the biggest volume on the whole chart.

And there's something interesting about when we came back into this breakout

area. I hope you see it. I'll show you.

We also had another normal channel.

We got overbought.

This is the biggest bar on the chart. When I'm reading bar charts, I'll

say this again and again, but I'm paying attention to the range, the position

of the clothes, and the volume. And, of course, the interaction with any trend

lines, resistance, and support lines.

And so that certainly works. There was a frothy moment on the charts. The

biggest range, it took you above the channel. That doesn't mean you

automatically go short when the market goes above the channel. It reminds me of

a divergence for a second.

When I first started in this business, I worked in the chart room of a technical

research department, and I made charts by hand.

And there was a lady who worked in there with me.

And we would make charts on graph paper.

And then at the end of the day, we updated them.

And she told me whenever the price goes off the top of the chart,

you know it's a short.

Conversely, if it goes off the bottom of the chart, you know it's a buy.

Well, that's contrary thinking, all right.

But I wouldn't make that my general rule for trading.

But the nice thing that happened on this pullback to test the breakout, one of

my favorite behaviors is to see a test number one and attempt to go up, and

then it comes back down to test it again, and we get into a, and you know,

spring position.

And that's a great place to go along.

On a secondary test of a breakout, you get a spring.

up from there and then moved laterally ever since.

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

This is my mental model of where to find trades.

I was with Alex Elder in Cyprus in a trader's camp where I was participating

an instructor for a few hours every day.

And I was sitting in my chair listening to Alex talk.

talk I'd heard many times.

And I started drawing this pattern on a piece of notebook paper.

And this is how I view markets. As I say, it's my mental view of the market.

Markets spend most of it, and it's in my book. It's the first chart in my book.

The first chapter is called Where to Find Trades. It's not very long.

And it has this chart at the beginning.

And I say,

Finding trades is like finding fish.

They're around the edges of the trading range.

If you've ever fished in a pond or a freshwater lake, I've never done any

sea fishing. I'm from the south.

But anyway, you often have places where there's sunken logs and drop -offs

and points and hanging trees off the shoreline. And it's around the edges of

lake that you find a lot of trades.

You can snag some in the middle, definitely, but these are the places

like to look for trades.

In my basic strategies, I'm looking for upthrust, I'm looking for

springs, I'm looking for absorption, I'm looking for tests of breakouts like we

just saw on the Walmart chart, or tests of breakdowns.

strategies based primarily on the Weiss way, which we'll discuss next week.

But even on a smaller scale, you have trading ranges.

There's a market comes up to a high, it forms a trading range, and here's a

breakdown out of that trading range.

And look what it does. It comes back to test the breakdown, not once but twice.

And then it goes underneath this line of support, and it tries to...

Reverse upward or, in Wyckoff language, tries to spring.

And it fails because springs often fail in a downtrend.

They're overwhelmed by the trend.

And then conversely, when you're in a trading range and you break out, you

pull back to test that breakout.

In Wyckoff language, this is called a back up to the creek.

just call it tests of breakdowns or breakouts.

But here we have a test of a breakout.

And even here we break out above this high, we pull back on top of it, we push

off.

So this is something that it doesn't matter what time period chart I'm

at. I spend most of my day looking at a three minute S &P chart along with

NASDAQ and Dow futures.

I have them all three arranged, one on top. of the other.

And I'm watching for these types of situations along with the wave volume

of the three charts.

But I look at this on long term, excuse me, on long term charts or very

short term charts.

It doesn't matter.

Alright.

And here's another way I...

is this is an hourly chart of December bonds just recently.

I like to frame the boxes, the ranges, just like we saw on the

chart before.

You see there's really a box here between this upper line and

this lower line, or right in here.

So if I frame those ranges,

I find that the behaviors, those behaviors that so frequently occur at

turning points, you can see them. Here's where you have a

high -volume breakdown, and you come back to test it. You upthrust

the trading range that we formed here on a test of a breakout.

This was the first test.

This was the second test.

of the breakdown we turn down there here's another breakdown here's another

and you see we have another test of the breakdown and another up thrust and down

here we have a special little thing i'll blow it up in a second but i've been

showing all the high volume vertical price bars with these blue arrows

This is the biggest up volume on the chart.

All right.

All right. So that's worth paying attention to.

There's another box. You see, I drew a line of support over here where we broke

through. I just continued the line of the box, and we rallied up to it, and we

formed another trading range.

We have an up plus there testing this breakdown by drawing these boxes or

rectangles. It's very useful in recognizing my model of

where to find trades.

And I like to show that to students. I don't have to do it, but I showed this

some of my students.

Yeah. And this also reminds me of a book by

Nicholas Darvish, How I Made $2 Million or something like that.

He was a ballet dancer.

quite famous, and he wanted to study the stock market. He had a

broker, and he developed a system for drawing boxes

around trading ranges, and he became extremely profitable.

His book is available on Amazon. I highly recommend it. It's very readable.

It's not an in -depth technical book.

shows his basic ideas, and it's somewhat akin to this.

Now let me show you this little area here.

I've blown it up on the next chart.

And this brings to mind, you can see that we have a spring at the bottom of

trading range, and then we rally above the top of it.

And notice that on this pullback, an inside bar,

Notice the position of the close.

What does the position of the close tell us? It tells us that we encountered

buy.

Otherwise, we wouldn't have closed that far off the low. We closed even above

the midpoint.

So we've had this big up bar, large up volume.

You notice that it engulfs one, two, three, four hours.

I used to go to a website I know you all know about, stockcharts .com.

And stockcharts .com has, and I think they still have it, they had scans that

were based on candlestick patterns.

I'm not a devotee of candlestick patterns. I like bar charts like Wycroft

But certainly candlestick charts have their place.

You have information that is worthwhile.

But one of the scans was the engulfing bar.

And I noticed that when I looked at the list of stocks that day, or any day,

that had engulfing bars, I noticed

that many of them were associated with a spring.

So I would go to that.

to see that there was a pretty good -looking scan.

I mean, not scan, but screen.

And it works sometimes. I've found things. I consult with traders who

want me to give them some trading ideas on equities, and this would be part of

their language.

They would understand.

But as I looked at this over the months and years,

I noticed that sometimes you had the same construction, an engulfing bar,

engulfing one or more bars to the left, but then to the right you had an inside

bar.

And I thought about that, one or more inside bars.

And I thought about that, and that sort of represented a kind of compression

that I thought was advantageous.

to the likelihood of a spring and of course you can

see that by closing above the midpoint with this big effort to take it down

that's a pretty sight and then of course it breaks out and closes near the high

and out of the box and there's a pull back here

a scan for Trade Station.

I called it Outside Bar, Inside Bar.

And I used it to find that setup where you have a bar that engulfs one or more

bars to the left and then you have one or more bars to the right that are

the engulfing bar.

Sometimes it's just one to the left and one to the right.

But this one has two to the left.

I'll be about eight to the right.

And this was a particularly interesting, this is Orange Corning.

This is February 2016.

It's one of my favorite charts. I remember when it came up on the scan.

It came up on the scan on the first inside day.

And I didn't see much there.

But I did see where this could be purchased.

I mean, there's some good places. If we were interacting together, I would ask

you, which bar was the best bar to buy this spring?

And most of my students like this bar, and they love this bar, and I can't

them. But there's an even better bar, and it embodies a Wyckoff concept

right here.

And what do you think it is that turns me on to that bar?

It's certainly not the range.

Certainly it has to do with the volume.

Notice that the volume on this bar is almost as big as the volume on this bar.

And this was an amazing bar. We opened up on that day.

We sold down to here and reversed to close near the high.

Tremendous activity.

Big volume.

Potential spring position.

I don't know if I'd believe it, but then it comes back down on this bar.

And this is the bar that tells me you'd better go long.

And the reason is, and I'm sure some of you know already from Roman's teachings,

the volume on this bar is almost as big as the volume on this bar.

But it's a third of the, or it's probably a fourth of the size.

You see? So what does that embody?

What concept does that embody?

It embodies what Wyckoff called bag -holding.

I call it the same thing, but I also use the term effort versus reward.

They're interchangeable.

Bag -holding means that somebody has his arms spread wide apart and is letting

the sellers sell everything they have and own to him.

And he's taking it all.

much as they offer.

I don't have it with me. I've shown this in other presentations, but if you go

to your chart service and call up U .S. Steel in March of 2009 at the bottom of

the big down wave from the 07 high, there's a little narrow range bar

that made a slight new low, and it had the biggest monthly volume on the chart.

You had some months in there that were bigger than these on a monthly chart,

bigger than these, but with a tiny little range, huge, huge volume.

It's the same behavior, effort versus reward or bag holding.

Somebody is taking everything that's being offered. It's a great place to get

low. You might start with your stock here just to give it a little room, but

could protect underneath it.

Certainly once it moves up.

You can jam yourself under there.

All right, let's go on.

All right, now I've got some charts here. This is part of an exercise that I

give my students.

Drawing the important horizontal lines again.

What's the most important horizontal line?

And what's the market going to do?

This is manpower.

So the first question is, what is the most important line on the chart?

David? I don't think we can – did you say something?

Yes, David. I'm sorry for interrupting because you're asking questions, and I

thought that maybe we could interact with students a little bit with this

question. So shall we receive some answers, and I could tell you what

are saying? All right, tell me. Okay, so which price level – is the most

important line, do you guys think? So we have a couple of answers.

Axis line around 88, around 82, 88, 89,

85 and a half, 88, 88, 88, 84, 88.

We have a lot of people in the right area.

Yeah, 88, 87 and goes on. So 88 is the most common answer.

That's up here.

And you can draw it up here.

And there's definitely a lot of interaction there.

Right here.

But I think it's this line.

Because look at all of this. I mean, definitely this was an important line.

There's another ice line, a smaller one over here.

A smaller support line that the market interacted with several times, too.

And there's a real good story here as well.

But I really like this line because of the many times that we came back to it

and then turned down.

And then, of course, are there any other lines you notice on this chart?

to this absolutely yeah so guys what is another important line please tell us

okay 83

this low we ride higher low lower high we're coiling all right

now looking at this behavior uh what do you think it's going to do

is you're going to go up or is he going to go down oh that's going

to be a big question so answers are coming in

50 50 yeah but i can understand that because it's not overt it's not an overt

situation you've got this downtrend line here and this uptrend here

which we went a little bit below here we had a lot of effort to go up on these

two bars closing well off the low like that usually particularly if you're

higher but even if you're lower comes near the high, it does reflect the

presence of some bind.

So we come back up here and we have a drawing up for volume.

We're testing a big breakdown bar over here again.

We tested it once here. We tested here.

And this time we're testing it again on even less volume.

And I think that's...

Does anyone see an uptrend on this chart?

People are saying yes.

Maybe somewhere specifically.

Where is it? Yeah, so December 4th, October 26th, November 9th.

That's an easy one.

December, December 5th.

Look at that outside downwind reversal.

As we turn down, we didn't get great volume.

on that downturn, but we had that reversal action and great ease of

movement on both bars, and that's what set up this whole break.

All right, let's go on to another one. David, I have my own question here

associated with what you just showed us. So those two bars off the upthrust, as

you pointed out, they don't have...

Would you say that the increase of the volume signature was, you know, on that

capitulation bar that came next is the result of that ease of movement, no

volume on those two bars?

I think that's a very good explanation.

Also, I consider range almost as important as

volume.

You know, I have point and figure charts on TradeStation.

And for many years I didn't have volume to go on them.

And I used to plot the range, the true range of each column

underneath the point and figure columns as a proxy for volume. And

it worked very well.

So I think just the size and ease of movement here.

up here, it was an inside bar.

It didn't draw out much volume. And anyway, the rest is history.

Now, this is a beautiful up thrust, but it's deceptive because a lot of Wyckoff

students will say, well, it's low volume. It can't be bearish.

Well, it has wide range. That's just as good.

All right, let's go. It's a good thing.

This is a stock that's no longer listed. I can't find it.

Back in 2016, I think.

Where would you draw?

How would you frame this trading range up here?

Where would you draw the resistance line and the support line?

That's the question.

Let's see. Draw the resistance line here.

in david resistance uh 28th of october on the 28th of october so

i'm assuming around 30.

um 29 27 up here right yeah up there

27 as the support 30 as the resistance 27

and 29 and 50.

So as a support and resistance. Resistance at 30, support at 28.

Yeah, I understand.

Now I'm going to draw it a little differently.

I want to draw a box.

And I want to bring out springs and up thrust, test your breakouts and

breakdowns. So I'm going to draw this line of resistance off this line.

So it highlights or underscores.

in the trading range, I don't have a support line except here, unless I want

draw it here.

But if I draw the line here, then I have a low here which I can carry over to

the right.

So I have a box from this high and this low.

Also, I see that my pullback is testing this breakout, this

big gap up with this huge volume.

And look at where we found support on that bar, right there.

So this is another test of the breakout.

I don't think it's a spring.

It's close to it, but it's much less volume.

And there was a threatening bar or two in here, like this one, where it tried

go up in reverse to close on the low, but there was no volume.

And so we've come back up, and what's it going to do?

that question sure let's let's do this let's have some answers go

down okay what else

okay

so just one answer okay but guys yeah let's let's go a little bit faster

than this go down

Okay,

well I can understand those things.

This is a very bearish bar right here.

It doesn't have big, terribly large volume.

But it's a negative bar. It's not an engulfing bar.

But we turn down, we close weak.

We were certainly in position to go lower.

The sellers had the upper hand.

And they didn't follow through.

Follow through is something I think about a great deal of the time.

And you can see on the next bar that we tried to rally.

We did a pretty good job of rallying, but the close is near the low.

It's not overly impressive.

It doesn't make you feel warm and fuzzy, that little rebound.

tests the low of the previous bar and reverses up to close near the high.

So again, we've had a lack of downward follow through.

I think I'd consider going long on this bar and putting a stop there and saying

to the market, prove me wrong.

I think it's a place to make a bend on the long side. I think it probably is

some kind of absorption.

One of the things you have is a threatening bar with no serious follow

I don't think Wyckoff devised that definition, but that's one of mine.

It's in my book.

I want to deal with this trading range.

I want to get highs and lows in there too.

Let me just show you.

I would draw a line from this high and this low and this

low.

Notice the liftoff over here in the spring.

We had two tests of the liftoff and then the spring. We had another liftoff and

test of it.

We shorten the thrust. That looks troubling.

What's this market going to do?

How many people think we're going up or how many think we're going down?

So our first answer is coming in. Go down, go up, down, down, up,

up, up, up, down, down, up, up, down. That's a pretty good

standpoint.

It is a trading range. But it's a very obvious piece of behavior here. You

a lot of people deal with accumulation.

I'm sure you've studied the Wyckoff method, model of accumulation, where you

look for preliminary support and selling climax, automatic rally, secondary

test, sinus streak, LPS.

When I took the Wyckoff course in 1971, I was very excited about learning that.

I was going to learn to read the footprints of the large operators that

well defined by that model of accumulation.

But alas, when I started looking at charts on my own, I never could find, or

rarely did I find, at least exactly like that.

Maybe I was a little too rigid.

Over the years, I've sort of come up with my own way of depicting or

describing accumulation and distribution.

And one of the things that I've seen on many charts where the buyers are

accumulating stock is lack of follow -through,

lost opportunities by the sellers.

Look at this trading range.

we came down to the bottom of that trade range. We even broke below it here and

bobbed back up.

We keep coming back down to that low and we don't break down.

We reverse.

That means that somebody is persistently buying into weakness.

Maybe somebody works for a firm and wants to own 50 million shares of

Schlumberger.

71 or better.

Or 70 and three quarters or better.

And when he gets away from that, they back off. They're buying.

I've seen it on lots of charts.

One that has a lot of them is an SLV in different years. You'll see it.

Where you have these horizontal trading ranges keep coming back down and it

doesn't follow through in the reverses.

Someone's using weakness to buy.

Conversely, I see distribution many times as banging against the top

and closing high and having a chance to go, even breaking out sometimes, and no

following.

That means somebody is using strength to get short.

They're not chasing it.

They're just using strength to add to their short position.

You can think of charts on USO a few years back.

It had a marvelous example of that.

So follow through is an important indicator to me.

what's the most important horizontal line on this chart everybody should know

all right and while you guys are thinking david uh there was just a

question on the previous chart so was it you know a breakout or breakdown

It's good.

Everybody's on the... It's this line across here.

I would actually go all the way back to here and draw a line.

Because we tested it here. Maybe we even sprung it. I don't know. No, we didn't.

And then we went up, we tested the high, and we came down to the...

it's going to do

coming

in going up up up lower going up up

up trading range a lot of people see it going up that's excellent

that's what we do and it starts with this bar right here

of upward movement.

You made just a slight, you see how you closed right on the low there?

You had a great opportunity to go down and then you took out the highs of the

previous four bars.

And on the next to last bar, you try to go down and you close well off the low.

And on the last bar, it's engulfing.

It goes underneath the low of the previous bar and reverses to close above

Big volume.

I'd say she's ready to go up at least up into here.

So what's he going to do? What's the most important horizontal line on this

chart?

And while we're looking for the answers, David, another question. Is there

something to say about the intention of the last bar breaking the high of the

previous high volume bar?

Like on the previous chart?

constructed. It doesn't guarantee anything, but it's a bullish look

tried to take it down. We tested the lows of the fourth bar from the left,

from the right.

I think it's very noteworthy,

important.

Okay, and we have some answers for the next chart.

Indicating to us here, to David, 14 and a half, 14 and a half, 14, 14 and a

quarter, 14 and a half, 14, 13 and a half, 13.

That's interesting.

Well, I know that one would draw this line here to see, to point out the up

thrust.

But I would draw the line from this low here.

Because we had stopping volume, we tried to rally.

We had this wide open breakdown right here.

And you notice every time we rounded into this breakdown area, like here, we

turned down. And we had a lot of volume, too, up here.

And then we'd make another big high volume run to break through this area

break through this high.

And we don't make it.

What's he going to do?

to see price bars attempt to rally where they keep closing on the low, or

attempts to go down and they keep closing back to back near the high.

It shows the presence of selling, in this case, persistent selling.

And you know, you've got four bars in a row closing on the low right here.

You're not making much progress, but it's an anemic looking situation.

exciting market.

I recommend it to anybody who wants to get involved in futures.

The margin on corn today is around $990 or $1 ,000 a contract.

A contract is 5 ,000 bushels.

So if the price is $4, that's $20 ,000 worth of

corn that you control for $1 ,000.

That's the inherent leverage of the commodity futures market.

And, you know, I guess the average daily range, I don't know what it might be,

maybe four or five cents at $50 a penny.

And this is in 2019.

Coin had been in a trading range since 2014.

And in 2019, it...

that trading range. You can't see all of that, but you can see we've been in a

downtrend of some sort.

And we took out the low of 2014.

And seasonally, corn is a good market for seasonal understanding.

Corn is usually planted in March or April.

If there's any trouble with the weather or getting out into the fields, you

often will make a seasonal low.

And you often make seasonal highs in July or August, sometimes June.

If you don't run into too much hot weather or any locusts or any plague or

anything like that, if you're making a crop, you might turn back down.

on the upside in the May period into June or July.

And looking at this chart, I've drawn a downtrend line, and I've drawn

a reverse trend line, creating a falling wedge.

What does a falling wedge represent?

It represents, in a Wyckoff terminology, shortening of the thrust, if you draw

it upward or downward.

you can see we're making less and less progress.

I drew a horizontal line off this high from which you

can see the big volume that turned us down.

And then I made this, framed this trading range.

And lo and behold, it brings out the spring.

How many people think we're going to spring?

tells us that we're going to spring.

Can I just go on and not keep asking questions?

No, no, no. Please go ahead. I'm on it. So, yeah, people are saying spring,

spring, spring or fall.

It's a delicious spring.

What makes it delicious?

What makes it delicious is... The very last effort is in

line with its close volume, like a follow -through, the close.

Clothes are great.

Volume is big.

Engulfing bar on the last bar.

I'd say I'd buy this with my

grandmother's money.

You could put a stop right under that low and buy as much as you can carry.

Look at that consistently heavy volume.

Little reward for the effort.

So it's going to go up.

That's the influence.

All right. And seasonally, it's the right time of the year.

All right. Watch.

Here's the next two days.

The next to last bar, we rallied vigorously with huge volume.

Those near the high.

How many people think this is an upthrust, that we're going lower, or

hesitation before we go higher?

Anybody want to venture an opinion?

First answer is upthrust, hesitations, going lower, hesitation,

higher. All right, let's put it another way.

How many people, if they bought that spring on that low day, that

reversal day, how many people would get out and take their profit?

If you bought it on the high, let's say

414, and you got out here, you made $800 a contract.

Let's say you bought five contracts.

You just made $4 ,000.

You're getting money now. Some amps are coming in.

If you'd like to hear them. So sell half out.

Add to the position.

I take profit. Sell half.

Take partial profit. Stay out.

So kind of like all over the map.

of all levels of experience.

And some of them have been around as long as I have and are famous.

They've written books.

And then there are some other people who are just starting out.

And you'd be amazed at how many of them want to grab the money.

expenses is finding out expense.

Finding out if a trade is going to work.

We've just marched out four years of a trading range in a pretty big

spring position.

So there must be a big cause on a point and figure chart out of that

trading range.

So I don't think I'd be in a big rush to get out.

have to be willing to make myself vulnerable to enduring the unknown.

And I think if anyone wants to become a successful trader, I said trader, not

investor, but it's true for investors too.

You've got to be willing to make yourself vulnerable to finding out if

going to work or not.

How many times did I get out on a...

He certainly didn't add.

I'll tell you who would add.

It's Roman.

Roman is one of the best pyramiders I've ever seen.

And he would add.

I'll show you where he'll add.

Alright, let's take a look.

So the next day it goes higher.

The volume is still running heavy.

But we close near the high.

So that's good.

doesn't come off at all, and an opportunity to come off, all you can do

out.

Find out if you're right or wrong.

I always tell people, Hamlet made a statement long ago, nothing is good or

but thinking makes it so.

Thinking makes it so.

So you're just thinking it might be bad, and I should take my profit.

Then it's going to go back against me.

resistance. You've got a big wide range.

The bar is not a big wide volume, excuse me.

The volume is, the range is not that large, and it closes near the low.

How many people want out right here to take their profit?

Alright, so let's see the answers. The first one says sell all.

Second one, hold.

We probably did it on, you know, we're taking more profit here, I think, you

know, as a group. We are.

But, you know, to be bearish, unfortunately, you need to see some sign

of supply.

That would help.

So be bearish.

And I don't think I see anything that's really bearish. You can, you know, our

mind can construct all kinds of things.

the close and the heavy volume.

We obviously had some selling.

Maybe what we do is pull back on top of the bar and test the breakout.

That's about the worst that I can see right now. Of course, he can do

You know Mark Douglas, who wrote Trading in the Zone?

He had three tenants that he always talked about.

Anything can happen.

No one knows what's going to happen.

probabilistic endeavor.

So anything can happen.

And we're all very much aware of that.

We're very quick to take quick profits.

You know why?

Because there's fear.

And remember, fear is nothing but thought.

If you're running through a field and you look down at your arm and blood is

streaming down your arm,

Suddenly your heart takes an extra beat, and you're worried about what happened.

You feel fear.

You're thinking.

It's nothing. It's just a scratch.

All right.

David, we have a question here for the chart. So the

question is, what about the large selling bar

in India?

explain and then also i thought that i i saw kind of like a remark question uh

about how do you explain this high volume on the last bar so the high

signatures on uh beginning of uh i'm sorry end of uh march kind of like that

capitulation bar and then the uh last bar with the high volume signature well

think what we have here is what you heard people say they would take profits

The market has come back to a previous resistance point, and we're meeting

selling by longs taking profits.

We're meeting selling by longs who bought over here and held on and now get

chance to liquidate.

And then we're having new shorts stepping in to see if they can't get

started on the downside.

And maybe they know enough Wyckoff to think this is a potential upthrust.

to the downside around the beginning of April?

That's just plain vanilla supply.

This volume.

Is that what you're asking me?

Yeah, so the question was about that particular bar. Yeah, it was large.

Well, I don't think we're testing this bar. I think they're unrelated in that

regard. I think the relationship here is between this point and this previous

resistance level.

It's not so much. I mean, obviously, we meant supply here.

And we trapped a lot of people who had deep pockets.

And they say, well, you know, corn's a pretty gentle market. I think the

situation's going to be bullish.

And I'll just hold on and look to add.

David, a question from me.

So if I would look at that capitulation bar about the beginning.

still a bullish indication, even though demand is not pushing the price with

more momentum.

Would you consider this, overcoming this line, more bullish? Yes, I would. I

would.

Put it that way, I would definitely do it.

I don't see anything.

I mean, the last bar shows us we had some selling.

It closes near the low and it has big volume.

extended the line but we're trying to consolidate or hold on top of this

resistance so we've got a bigger box here from this high to this low here

spring on the end of it and maybe we're going to build a top or absorb

we'll have to see

is a threatening bar.

It tries to go up, reverses down, has good volume, closes near the low.

There's potential to go lower.

Let's see what happens.

So look what happens now.

It turned around very quickly, and we had three straight up bars.

The last two had a real big volume.

we get overbought in the channel.

Next to last bar has big bar. We close on the high.

And the last bar is very large.

Bigger volume.

Closes well off the high.

Near the low. A little bit under unchanged.

How many people want to take their profit now?

Exit will stop to 464 on the remainder.

Yeah, yeah, out.

So, yeah, majority of the group is taking profit here.

I understand.

It's bearish behavior.

We're overbought in the channel.

We could get hit here.

So, I think the idea of taking some partial profits.

it kills the up movement.

We could stop and hold here for a week or so.

It's not enough danger yet.

Very much.

But some prudences certainly do.

Look what we're doing now. We've got one, two, three, four more bars.

lateral movement.

They're almost inside the fourth bar from the right, the last three, but

not quite.

The closes are clustered together. The last three closes are clustered

but the last close is near the lower of the bar.

The volumes are all constant.

Is this threatening?

Or would you buy back?

Some answers. Move stop to 420.

Buy more.

Not me, not buying. Buy back.

Buy. Not threatening.

What is the PNF count?

Hold. Buy. Yeah, that's right.

Well, imagine we've got a four -year base, so it's got to be a pretty big

But we're in June.

Everything must be bullish for the crop.

I bet you Roman would add.

I know he would right here.

Right? Well, I would definitely, yeah, after this action, I would definitely be

a thinker. After this part, we form the box, we spring it, reverse up to close

near the heart.

How many people would buy back?

to do it.

Now look what happens.

You can hear Roman when he was... What does this mean here?

What is the behavior that we have here?

So people are saying test.

Last point of support.

Test. Test of the screen. Screen test. Test.

That's right. We're on the screen board.

looks beautiful.

I'd buy it with my grandmother's money again.

Any that I took off, I'd put back on.

You should buy it.

Alright.

So we go up.

The last bar closes off the high.

So it represents a little selling.

It's logical. We come up to a previous high.

selling if we're taking quick profits again now what do you think

how many people want to get out here

hold

move stop to 450 hold

hold i will buy move stops to 580.

people willing to endure the unknown it's good there's really nothing bearish

here not yet now look at this trading range and

there was one more answer david which kind of showed what happened here

expecting pullback to the box yeah that's right that's just

a breakout

You know what that bar means on that bar. What do you think it's going to do

now?

Are we going to go up or are we going to go down?

Back holding. Up. Go up. Up. Up. Up.

Rally. Rally. Up.

Up. Yeah.

Bit threatening. Knee. Go down.

Yeah.

Well, there's something that I don't like here.

I noticed that...

Most of the closes are near the low.

So we've been trying to go up, and we haven't been able to lift away. We've

back on top of previous resistance.

So I think I'd raise my stops to maybe under this breakout bar

just to play it safe.

it's the biggest bar on the chart when it comes back to the

probably would be looking for confirmation like above 480 or something

right now i wouldn't i think the wind has changed we can flail around

here but i mean there might be a fast pop on the upside to make some money the

narrowing of the range on the last bar in a very low volume and testing the

bottom of the box again is certainly a friendly spot

find something that, as I told you, I'm interested in buying, spring, selling,

up to us, testing, breakouts, testing, breakouts, or test selling, tests,

or breakdowns.

This is none of those.

It's pretty unanimous.

It's good that your students recognize that.

Some people would still think that the uptrend isn't intact, but it's not.

See, we're in the month of July.

This is when Mr.

Trump imposed his tariff on China. And China pulled back on buying

some of these U .S. agricultural products.

And that changed the wind.

And the corn market declined until April of this year.

And another terminal shakeout of the five -year trading ring.

resistance. And wouldn't you know it, it would be on the weekly chart, this bar

right over here, that we tested on the weekly chart last week.

We turned down the week before, I don't remember.

But anyway, I know I'm a bit fast through all this.

We have one question on this chart here.

that loss bar or wait for the breakdown and test of the lower level i'd say it's

a good place to make the bet on the short side put a stop above the high and

it moves down from here i lower my stop above the high of that bar i would do

it this is an overtly bearish changing behavior even though the volume is not

huge as we had elsewhere

nice it is to frame these trading ranges and have those lines on your chart to

see the market come back to them again and again.

Look how many times we interacted.

We were drawing a line here, a line on the next day, and you had the spring,

had the upthrust, you had the breakdown, tested the upthrust, anyway.

Well, I do have a quiz here.

If everybody wants to do it now, we can do it, or you can...

Take it home.

How do you want that to be handled, Roman? Either way, you know, we have

about five minutes, you know, so we could definitely do it.

The question here is, find the best trades on this chart.

Where is the best trade on this chart? While they're thinking, David, this is

such a famous chart, I'm just like, you know, obviously I'm not going to say

anything, but for those of you guys, you know, who are seriously, you know, into

trading and investment, you should recognize this.

this chart i'm sorry again did you say recognize this chart i think i do but i

might be wrong um you know but yeah you you know i just didn't hear what you

said to them oh yeah yeah so they should they should recognize this chart i

think they should definitely how many people know what it is

Let me just guess myself.

So, 1929 to 1932?

Yeah. This big bar here is October 29 crash.

Just think how many people jumped out of buildings, out of the windows of

buildings, because they lost so much money.

And all they had to do was know where to go short.

is the best short all right so where is the best short guy so short at

280 after big volume uh

yes i think that that's the uh yeah yeah

so yeah so that's the only uh answer that we get sell the

failure of the up thrust

testing the breakdown over here, and then your breakdown.

And notice, by the way, how many times you test the breakdown,

how much money you can make testing breakdowns or understanding

that rallies in a downtrend meet resistance against previous support.

As I said, that's a major...

Axiom of technical analysis.

Draw this line, and you see we tested it.

Draw this line, and you see we tested it.

Draw this line, and you see we rallied up to it again.

Draw this line, same thing.

Notice down here we had a rally, we had a high or low, and the next high pulled

back but held on top of it.

So this was a buy.

Just that simple observation.

Selling rallies in a downtrend when they test previous support.

That's the essence of it.

Of course, look at the volume you had on this liftoff, the change in behavior.

And that was a great low for a long time.

I mean, we never took out this low.

I don't know if we went under this high or not.

45 or 44.

I don't remember.

Anyway, well, I certainly enjoyed presenting some of my thoughts,

ideas.

Next week, I'll talk about tape reading with the white sprayer, which would be

closer to the original Wyckoff techniques for looking at minute data.

new charts or bigger charts too and looking for trades

I've got a lot to show you next week well David first of all thank you so

this was you know just a fascinating start to the series and I just want to

reiterate guys sometimes you know such simple ideas that we disregard like

of the volume no volume um you know bullish bars bearish bars in the context

the rally or the reaction those seems to be simple ideas but you have to come to

the understanding of those ideas through a lot of practice and you know we just

kind of seen how you know masterfully david is just showing us the simplicity

you know through obviously so much experience david we have um

a question here. What about the homework?

May I suggest, you know, a possible homework for our students here?

Well, I would just... I had intended that the quiz would be the homework,

Okay. Why don't we expand a little bit on this? I would just say, draw the

lines. Yes. So why don't you guys... Spend as much time as you can when you

a free afternoon on the weekend instead of watching the Patriots.

why don't you take this chart 1928 to or 27

1928 to 1932 Dow Industrial and you could take

monthly you could take weekly you could take daily and draw all of the lines on

those charts and just send it to us to Wyckoff associates at gmail .com then

I'll show it to David before the session and you know maybe something will come

out of that

here yeah how about that i'll tell you take a look at an apple monthly i

should have included that as a sample but the apple monthly all of the big

pullbacks on the monthly chart has pulled back the previous highs it's

perfect yeah so we could do

Would they pull back to test the breakouts above those highs? The

this term.

We could do either Apple or the Dow from this era.

And, yes, Hamid is asking, can you post on the website? Yes, I'll post it as a

homework with two charts, Apple and Dow Jones Industrial.

You guys go ahead, submit your answers, and I'll forward those to David.

Great. David, what a great presentation. What a great start.

And it's just, you know, I've been kind of like captured by your presentation,

just trying to, you know, extract some of the nuances, you know, some of the

details that, you know, sometimes we overlook. And, David, just a

full of those details. So thank you so much.

My pleasure. I always enjoy talking about WICOC to students who are

Absolutely.

Well, thank you guys so much. Thank you, David. And we will meet next week at 3

p .m.

So don't forget that your access information to the video and the slides

homework will be sent out today after 8 p .m. Pacific.

about this?

Well, I did do a little salesman work here.

Sure. My wife put together this page some time ago showing the different

products for most of the products that I sell.

Of course, I sell the White Sway plug -in for these different platforms.

My book, Trees About to Happen, and then this four DVD set.

I catch him in train rehearsals. He says a lot about springs and up the rest. It

comes from a workshop I did with Alex Yelda in the Dominican Republic in 2007.

And of course my other product, it's not shown on here, is mentoring.

So, and consulting as well.

Well guys, go to David's website.

Here's my phone number, address, email.

website go to david's website and check out all of these products again

highly recommended uh you know the book is something that you must have you know

on your table each day and just uh make a habit of reading it almost each day or

each week you know and reread it you know in in our classes and with david's

permission we

some presentations by students on specific chapters. Oh, I know, yeah, I

that. That was fantastic. You guys did such a great job. It was a creative idea

on your part.

Yeah, it came from Hank, you know, from Golden Gate University. That's what he

liked to do, you know, students' presentations on some chapters of the

And, by the way, David, just on a personal note, as I'm listening to you,

especially at the beginning, I was thinking a lot about Hank.

also this very passionate delivery of material, you know, on Wyckoff

Methodology, so thank you for that.

My pleasure.

All right, guys.

You might help me get out of this. I don't remember how to do it.

Oh, you know, we're just going to close it off, and that's going to be it.

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

All right. Talk to you later. Take care.

Bye -bye. Good night, everybody.