1 00:00:01,900 --> 00:00:07,640 Hello, everyone. Today is February 4th, and this is our session number five of 2 00:00:07,640 --> 00:00:08,660 the Wyckoff Trading Course. 3 00:00:12,420 --> 00:00:19,100 Today, we're going to cover the exercises, the 4 00:00:19,100 --> 00:00:24,540 homework that we had for the couple of last sessions. 5 00:00:25,360 --> 00:00:28,220 Specifically, we're going to look into the distribution homework. 6 00:00:30,460 --> 00:00:33,400 self -review the Microsoft homework. 7 00:00:33,680 --> 00:00:36,700 I'll talk about this a little bit more, but there are some spots that I want to 8 00:00:36,700 --> 00:00:38,900 discuss because they were common for everybody. 9 00:00:39,200 --> 00:00:43,240 By the way, I did receive your emails with your homework. 10 00:00:44,120 --> 00:00:51,060 So today I had time and I also felt 11 00:00:51,060 --> 00:00:53,760 healthy enough to go through all of the homework. 12 00:00:54,960 --> 00:00:59,060 I think I had a chance to reply to everyone, at least send, you know, a 13 00:00:59,060 --> 00:01:00,060 note here and there. 14 00:01:01,120 --> 00:01:07,580 I must say that I feel comfortable with how the group views the price structural 15 00:01:07,580 --> 00:01:08,980 analysis right now. 16 00:01:09,240 --> 00:01:12,520 There are some small minor things that we will discuss. 17 00:01:13,300 --> 00:01:19,920 And the next homework, which will be Apple, also will be the homework on 18 00:01:19,920 --> 00:01:22,000 labeling. So this is another. 19 00:01:22,620 --> 00:01:26,680 chance for you guys to practice structural labeling. 20 00:01:27,040 --> 00:01:31,800 Next session is going to be on February 11th. A quick comment from a student. 21 00:01:31,880 --> 00:01:37,840 This class has so much information and it's a touch overwhelming, but I'll do 22 00:01:37,840 --> 00:01:39,420 best to stay on the top of it. 23 00:01:40,280 --> 00:01:46,520 So yeah, this is a great comment. I love this comment and thank you for those of 24 00:01:46,520 --> 00:01:49,420 you who are sending your emails and just 25 00:01:50,760 --> 00:01:53,540 Thank you, neither me or the course. 26 00:01:53,900 --> 00:01:56,480 Thank you for all those kind words. 27 00:01:56,840 --> 00:02:02,700 Some of them I'll use as a testimonial. So if you guys want to send 28 00:02:02,700 --> 00:02:09,000 testimonials, I'll gladly receive those. We just save those, and then at some 29 00:02:09,000 --> 00:02:10,660 point we'll just put them on the website. 30 00:02:11,300 --> 00:02:18,200 We only disclose the first letters of students' names, so it's very anonymous. 31 00:02:18,940 --> 00:02:19,940 All right. 32 00:02:20,080 --> 00:02:22,420 Let's see what we've got for today. 33 00:02:27,280 --> 00:02:33,600 So today's session is going to be, we're going to start with the review of the 34 00:02:33,600 --> 00:02:34,600 distribution homework. 35 00:02:35,000 --> 00:02:40,060 And because I want to go a little bit fast, this is already session number 36 00:02:40,700 --> 00:02:44,580 So I will not call on anybody today. 37 00:02:45,350 --> 00:02:49,150 With an exception of a couple of spots, we'll see where those spots are going to 38 00:02:49,150 --> 00:02:54,070 be. But I just want to cover as much material as possible and go through as 39 00:02:54,070 --> 00:02:55,370 homeworks as possible. 40 00:02:56,150 --> 00:02:59,410 We're still going to talk about some of the distributional patterns, 41 00:02:59,530 --> 00:03:01,090 specifically upthrust today. 42 00:03:02,250 --> 00:03:09,190 And then whatever we can do with the Microsoft homework, we also will do 43 00:03:09,190 --> 00:03:10,590 today. We'll try to... 44 00:03:11,120 --> 00:03:16,440 review it. If we don't cover that, then this will become a self -review. So this 45 00:03:16,440 --> 00:03:20,100 means that I'm going to give you solution slides and then you're going to 46 00:03:20,100 --> 00:03:25,340 to check your labeling against mine and then to see what kind of questions you 47 00:03:25,340 --> 00:03:26,340 might have. 48 00:03:26,440 --> 00:03:30,700 As I mentioned, homework for next week is again labeling. 49 00:03:30,920 --> 00:03:36,980 We're going to take Apple and we're going to look into quite a lot of ranges 50 00:03:36,980 --> 00:03:37,980 Apple's history. 51 00:03:38,520 --> 00:03:42,500 Next session, we're going to start on volume and price analysis. 52 00:03:43,000 --> 00:03:47,580 And our first task is going to be to dive in into the volume and spread 53 00:03:47,580 --> 00:03:54,500 analysis. We'll discuss what we're looking in the spread, on the 54 00:03:54,500 --> 00:03:57,160 price side, on the volume side, and so on and so forth. 55 00:03:57,640 --> 00:04:02,020 There's going to be two homeworks. Homework number six is going to be on 56 00:04:02,020 --> 00:04:03,020 volume spread analysis. 57 00:04:03,620 --> 00:04:09,140 And then we're going to start what I call a systematic exercise where we're 58 00:04:09,140 --> 00:04:16,120 going to start introducing the concepts of volume and effort against the price 59 00:04:16,120 --> 00:04:17,120 or the result. 60 00:04:18,279 --> 00:04:24,300 And that exercise is going to last for about maybe four to five sessions, 61 00:04:24,540 --> 00:04:26,900 depending on how quickly we're going to go. 62 00:04:27,920 --> 00:04:32,700 Meanwhile, on the theoretical side, we're going to discuss a couple of laws 63 00:04:32,700 --> 00:04:37,660 are going to be extremely important to us in the way how we approach this 64 00:04:37,660 --> 00:04:38,660 exercise. 65 00:04:39,950 --> 00:04:45,010 are the laws of supply and demand and the law of effort versus result. 66 00:04:46,450 --> 00:04:53,370 And again, you know, if we don't have time, self -review of the homework on 67 00:04:53,370 --> 00:04:54,450 label, Apple. 68 00:04:55,590 --> 00:05:01,550 Otherwise, you know, two homeworks that we're going to have next week. 69 00:05:02,170 --> 00:05:06,190 Now, don't jump to the conclusion that this is too much. These homeworks 70 00:05:06,190 --> 00:05:09,910 actually are going to be just one slide each. So you're just going to have two 71 00:05:09,910 --> 00:05:10,910 slides. 72 00:05:10,950 --> 00:05:13,550 So don't worry beforehand. 73 00:05:14,050 --> 00:05:17,150 All right, so that's the plan for the next two sessions. 74 00:05:17,970 --> 00:05:23,470 And let's jump to our homework review of homework number three. 75 00:05:24,050 --> 00:05:25,670 That was on the distribution. 76 00:05:27,500 --> 00:05:31,480 And we went through the distribution. I gave you kind of like the theoretical 77 00:05:31,480 --> 00:05:38,360 material where, you know, I've discussed the schematic where I discussed the 78 00:05:38,360 --> 00:05:44,500 Wyckoff events, and I suggested that all of you would not only review those 79 00:05:44,500 --> 00:05:50,560 slides, but also to remember the characteristics of all of the Wyckoff 80 00:05:50,560 --> 00:05:53,000 that happened in the specific phases. 81 00:05:53,770 --> 00:06:00,090 That's extremely important for timing and for bias definitions. 82 00:06:01,330 --> 00:06:06,390 So hopefully you've done so. So the first stock is Callaway Golf. 83 00:06:06,650 --> 00:06:08,350 This is the weekly chart. 84 00:06:08,790 --> 00:06:12,030 So we are looking at the uptrend. 85 00:06:12,350 --> 00:06:18,390 And when we look at the uptrend, we want to distinguish a couple of things. We 86 00:06:18,390 --> 00:06:22,050 want to understand what kind of characteristics, all of the reactions. 87 00:06:22,830 --> 00:06:28,350 are going to have on the way up we also want to understand where the trend 88 00:06:28,350 --> 00:06:33,430 emerges and where the trend ends in this case we are given probably a slightly 89 00:06:33,430 --> 00:06:39,550 limited amount of information but we could maybe put 90 00:06:39,550 --> 00:06:42,030 the trend lines like this 91 00:06:45,640 --> 00:06:50,920 And at the break of this channel, this is where we would consider that the 92 00:06:50,920 --> 00:06:53,340 is done. It's a break of a trend. 93 00:07:00,240 --> 00:07:07,040 And also, we could look at the character with which the price is moving 94 00:07:07,040 --> 00:07:14,020 up. And we could see that there are quite a few climactic runs into areas of 95 00:07:15,500 --> 00:07:20,360 consolidations on the way up almost everywhere you kind of could see that 96 00:07:20,360 --> 00:07:26,920 increasing volume signature and then going into the 97 00:07:26,920 --> 00:07:32,000 overbought condition short -term overbought condition and the last run 98 00:07:32,000 --> 00:07:37,820 necessarily seeing an increase in the volume signature so we see on the third 99 00:07:37,820 --> 00:07:39,500 leg to the upside 100 00:07:40,680 --> 00:07:45,020 the character of the volume actually starts to diminish. 101 00:07:45,320 --> 00:07:48,800 That suggests that demand is being exhausted at this point. 102 00:07:49,460 --> 00:07:56,360 And then we see in the last bar on the volume increase, which suggests 103 00:07:56,360 --> 00:08:01,280 not just demand increase, but increase in the supply. 104 00:08:01,480 --> 00:08:06,520 This is the volume equation that we're going to be very... 105 00:08:06,840 --> 00:08:12,280 familiar with once we start going into the next session and when we will start 106 00:08:12,280 --> 00:08:15,940 discussing volume signature and how the price reacts to that. 107 00:08:16,840 --> 00:08:22,300 Well, then the next two bars have also quite a lot of volume signature. 108 00:08:22,700 --> 00:08:28,520 So we're seeing how supply has increased over the last period where we had a 109 00:08:28,520 --> 00:08:34,659 reaction. So with that, we're seeing some kind of change of behavior. 110 00:08:36,490 --> 00:08:38,530 in the supply signature. 111 00:08:39,190 --> 00:08:41,690 So let's look at the price. What does the price do? 112 00:08:42,710 --> 00:08:46,630 Okay, we're seeing a reaction still within confines of the trend. 113 00:08:47,690 --> 00:08:49,110 So that's normal. 114 00:08:50,210 --> 00:08:54,350 Still, even if we look at this reaction and we would compare it to the previous 115 00:08:54,350 --> 00:09:01,210 reactions, we're seeing that maybe the size of this reaction just ever 116 00:09:01,210 --> 00:09:05,370 slightly more, actually a little bit more, so distance increases. 117 00:09:06,190 --> 00:09:07,190 but not significantly. 118 00:09:07,810 --> 00:09:12,450 And it still happens within the boundaries of the support and the 119 00:09:12,450 --> 00:09:13,450 the trend channel. 120 00:09:13,690 --> 00:09:19,550 So until we see some kind of break over trend, we might even assume that we're 121 00:09:19,550 --> 00:09:20,550 going to have a continuation. 122 00:09:20,910 --> 00:09:27,110 On the other hand, knowing the history of the stock, we know that 123 00:09:27,110 --> 00:09:28,790 there was a consolidation. 124 00:09:29,210 --> 00:09:34,030 And this was the last point at which the price has stopped going up. 125 00:09:34,590 --> 00:09:39,850 and all of the other points were just the retest of the same stop in action. 126 00:09:40,170 --> 00:09:45,590 So from the historical perspective, we know that this was the stop in action, 127 00:09:45,710 --> 00:09:48,070 and therefore this was a climactic action. 128 00:09:48,470 --> 00:09:53,890 The reaction prior to that was a preliminary supply, although not a lot 129 00:09:53,890 --> 00:10:00,330 supply that has come at that area. So sometimes it's not going to be that 130 00:10:00,330 --> 00:10:01,430 significant to us. 131 00:10:01,830 --> 00:10:03,770 Preliminary supply will be... 132 00:10:04,030 --> 00:10:10,010 an indication of where we might see some kind of 133 00:10:10,010 --> 00:10:14,790 stopping action in different phases on a very short -term basis. 134 00:10:15,130 --> 00:10:20,570 So this area could provide some kind of area of support in the near future. 135 00:10:21,990 --> 00:10:28,750 As we recognize the bind climax, the next reaction is going to be an 136 00:10:28,750 --> 00:10:30,130 automatic reaction. 137 00:10:31,720 --> 00:10:36,180 We have discussed the buying signature, some supply increase, but it's not as 138 00:10:36,180 --> 00:10:42,880 significant as some supply that we see on the chart in the prior spots, 139 00:10:43,200 --> 00:10:44,540 in the prior reactions. 140 00:10:44,800 --> 00:10:50,900 So therefore, our conclusion here on the bias is still that we are most likely 141 00:10:50,900 --> 00:10:54,840 going to continue to the upside at this point of time. 142 00:10:57,380 --> 00:10:59,460 As the price goes up, 143 00:11:00,460 --> 00:11:06,320 And the reverses on this bar right here, we recognize that we are in the 144 00:11:06,320 --> 00:11:07,360 confirmed trading range. 145 00:11:07,820 --> 00:11:13,900 Buying climax and automatic reaction define the boundaries of the 146 00:11:13,900 --> 00:11:16,980 range with the support and the resistance definition. 147 00:11:17,660 --> 00:11:24,240 And then the next leg up, which is the test of the local test of the 148 00:11:24,240 --> 00:11:29,620 climactic stopping action, and then subsequent reversal defines that we can 149 00:11:29,620 --> 00:11:36,300 higher. and therefore we are from now on in the non -trending environment or 150 00:11:36,300 --> 00:11:40,560 consolidating environment, and therefore we have entered phase A. 151 00:11:42,600 --> 00:11:47,940 Next couple of tests, and they are secondary tests 152 00:11:47,940 --> 00:11:53,300 as minus sign of weaknesses. 153 00:11:55,310 --> 00:11:58,930 So let's talk about this. Why are those secondary tests? What are we testing? 154 00:11:59,070 --> 00:12:05,570 Well, we are definitely testing the low of the automatic reaction in 155 00:12:05,570 --> 00:12:08,190 phase A. This is the main test. 156 00:12:09,030 --> 00:12:15,770 But the low of this test are lower than the low of the 157 00:12:15,770 --> 00:12:19,050 automatic reaction. So therefore, lower lows. 158 00:12:20,140 --> 00:12:23,320 So just some kind of weakness, structural weakness. 159 00:12:23,720 --> 00:12:28,600 Whenever you see structural weakness, right away look down, look at the volume 160 00:12:28,600 --> 00:12:33,140 signature and see what supply is doing. We kind of could see that, yeah, there 161 00:12:33,140 --> 00:12:34,300 is some supply signature. 162 00:12:34,880 --> 00:12:40,660 There is definitely some increase, overall increase of the supply activity 163 00:12:40,660 --> 00:12:45,020 phase A. So we're looking at supply in B. We're looking at supply in A. 164 00:12:47,440 --> 00:12:50,600 it produces just minus sign of weaknesses. 165 00:12:50,860 --> 00:12:52,920 So we should be on the lookout. 166 00:12:53,120 --> 00:12:56,820 And here we would be thinking about the bias as 167 00:12:56,820 --> 00:13:01,420 still short -term bullish 168 00:13:01,420 --> 00:13:07,020 with weak elements. 169 00:13:09,200 --> 00:13:14,600 So that suggests that at any point, you know, if... supply comes in or if the 170 00:13:14,600 --> 00:13:19,260 bullish picture structural picture is going to deteriorate we probably would 171 00:13:19,260 --> 00:13:24,640 thinking that there is some kind of bearish at least short -term bias 172 00:13:24,640 --> 00:13:30,280 bias that could be defined so as we go up we're seeing some kind of excitement 173 00:13:30,280 --> 00:13:31,740 on this rally up 174 00:13:32,560 --> 00:13:35,700 These are two possibilities at this point of time. 175 00:13:35,920 --> 00:13:41,020 We could be looking at the possibility of a sign of strength or an upthrust. 176 00:13:41,260 --> 00:13:45,940 Sign of strength will be in phase D of an accumulation. 177 00:13:47,540 --> 00:13:53,460 An upthrust could be either in phase B or in phase C 178 00:13:53,460 --> 00:13:55,260 of a distribution. 179 00:13:57,860 --> 00:14:03,270 One of the things that we will pay attention to on this rally is the 180 00:14:03,270 --> 00:14:04,770 with which the price goes up. 181 00:14:05,110 --> 00:14:11,070 We know that the sign of strength definition is going to be 182 00:14:11,070 --> 00:14:18,010 a rally that's going to travel from phase C throughout the whole 183 00:14:18,010 --> 00:14:24,770 trading range and above the resistance 184 00:14:24,770 --> 00:14:27,490 that was created in phases A and B. 185 00:14:28,870 --> 00:14:35,760 It's going to stay above there for some time, spend some time above, 186 00:14:36,100 --> 00:14:42,420 so not having the capacity to just think on the bad demand 187 00:14:42,420 --> 00:14:48,540 or emergent supply, and then have some kind of reaction 188 00:14:48,540 --> 00:14:55,260 to new support, which before 189 00:14:55,260 --> 00:14:57,160 that acted as a resistance. 190 00:14:58,260 --> 00:14:59,260 Characteristics. 191 00:15:03,920 --> 00:15:10,880 of sign of strength are gonna be expanding spread, specifically up 192 00:15:10,880 --> 00:15:17,500 spread, and increasing demand. 193 00:15:18,820 --> 00:15:23,400 All right, well we see how there is some kind of increase in the volume 194 00:15:23,400 --> 00:15:29,560 signature right here, and as this volume signature increases, the price moves 195 00:15:29,560 --> 00:15:32,040 up. So there is definitely some demand. 196 00:15:32,490 --> 00:15:37,790 We just need to define what kind of demand it is, a good demand or a bad 197 00:15:38,190 --> 00:15:40,630 weak hands demand, strong hands demand. 198 00:15:41,130 --> 00:15:43,670 We will see this only on the confirmation. 199 00:15:45,350 --> 00:15:50,750 By the spread, we could think that this could be a legitimate sign of strength. 200 00:15:51,050 --> 00:15:57,790 By the definition of the sign of strength, we need to commit 201 00:15:57,790 --> 00:15:58,810 and stay above. 202 00:15:59,210 --> 00:16:01,290 There is only one close. 203 00:16:02,480 --> 00:16:09,380 above the resistance level that is a progressive close that makes 204 00:16:09,380 --> 00:16:12,660 the new high on the close. 205 00:16:12,920 --> 00:16:19,540 Please note that this bar right here, which is also a big up bar, 206 00:16:19,700 --> 00:16:25,000 but it doesn't close above the high of that last bar. 207 00:16:25,220 --> 00:16:29,460 So it doesn't produce that commitment that we need. So there is only one close 208 00:16:29,460 --> 00:16:31,020 here in this yellow. 209 00:16:31,550 --> 00:16:37,510 small circle, that shows us a temporary commitment to the upside. 210 00:16:37,750 --> 00:16:43,250 And then the price falls back under the resistance instantly on the next day. 211 00:16:43,670 --> 00:16:48,810 So this looks more like a definition of the upthrust rather than 212 00:16:48,810 --> 00:16:51,610 a sign of stress. 213 00:16:51,930 --> 00:16:54,750 So therefore, right here, we would be questioning. 214 00:16:54,990 --> 00:16:59,050 We would be making that judgment as to maybe this is not... 215 00:17:00,189 --> 00:17:03,830 necessarily a reaccumulation and maybe this is a distribution. 216 00:17:04,150 --> 00:17:08,970 Under the distributional scenario, if we are in phase C of the distribution, 217 00:17:09,369 --> 00:17:14,670 that upthrust is going to start falling and failing back into the trading range. 218 00:17:14,770 --> 00:17:18,849 It's going to create different points of, less points of supply. 219 00:17:19,150 --> 00:17:24,290 It's going to create a major sign of weakness and less points of supply 220 00:17:24,550 --> 00:17:26,150 And that's exactly what is happening. 221 00:17:26,599 --> 00:17:30,480 As it happens, the characteristics of the major sign of weakness are going to 222 00:17:30,480 --> 00:17:34,380 of such where the spread to the downside is going to start increasing. 223 00:17:35,100 --> 00:17:38,860 And that's going to be on the increased supply signature. 224 00:17:39,260 --> 00:17:42,540 Why is this happening on the major sign of weakness? 225 00:17:42,880 --> 00:17:48,000 Well, that's because the trend to the downside is starting to emerge. 226 00:17:48,480 --> 00:17:53,760 And this is just another small capitulation within the trading range by 227 00:17:53,760 --> 00:17:54,760 institutions. 228 00:17:55,180 --> 00:18:00,820 They are recognizing that there is no absolute return over the last year or 229 00:18:01,100 --> 00:18:05,620 On the attempt to go out of the trading range, the price has failed, so they 230 00:18:05,620 --> 00:18:06,620 need to get out. 231 00:18:06,880 --> 00:18:12,020 There is no relative performance as well. If you would look at the history 232 00:18:12,020 --> 00:18:15,580 the market in 1997, the market was going up. 233 00:18:16,740 --> 00:18:23,660 So there is definite deterioration in their portfolio as to how they treat 234 00:18:23,660 --> 00:18:26,420 position. they will be capitulated. 235 00:18:26,720 --> 00:18:32,500 And this is just an initial capitulation here at the end of 1997, 236 00:18:32,980 --> 00:18:36,300 beginning of 1998, by institutions. 237 00:18:36,940 --> 00:18:39,400 And those are smarter institutions. 238 00:18:39,680 --> 00:18:44,840 Those are the ones that are recognizing that the trend has changed. 239 00:18:45,100 --> 00:18:48,040 And obviously, those are also trend -following institutions. 240 00:18:50,040 --> 00:18:54,480 as they are the ones that are going to recognize the spot as that emerging 241 00:18:54,480 --> 00:18:55,480 downtrend. 242 00:18:56,860 --> 00:19:01,220 So on the rally, this is where you should get a lot of confirmation. 243 00:19:02,720 --> 00:19:09,400 We see that the price commits, not commits, but at least retests the new 244 00:19:09,400 --> 00:19:13,080 after the minor lows, sign of weaknesses in phase B. 245 00:19:13,820 --> 00:19:19,160 We're assuming at that point that we are probably in phase D and we should be 246 00:19:19,160 --> 00:19:23,540 experiencing some kind of last point of supply type of rally. 247 00:19:24,120 --> 00:19:27,600 The first rally sometimes could be very aggressive. 248 00:19:28,120 --> 00:19:32,040 And we see it right here. It comes back into one half of the range. 249 00:19:32,400 --> 00:19:39,000 Well, it actually is a very logical thing because, 250 00:19:39,040 --> 00:19:45,200 you know, as there is this short -term capitulation, on the way down into the 251 00:19:45,200 --> 00:19:51,900 lows of the major sign of weakness, that creates two things. It 252 00:19:51,900 --> 00:19:57,680 creates a very short -term value proposition to weak hands. 253 00:20:00,500 --> 00:20:06,900 And again, by weak hands, I mean institutional hands and public, both, 254 00:20:07,060 --> 00:20:08,540 not just public. 255 00:20:10,160 --> 00:20:15,440 So we never want to position ourselves, you know, talking about composite men 256 00:20:15,440 --> 00:20:17,940 against the public. This is an incorrect statement. 257 00:20:18,520 --> 00:20:24,680 We always want to talk about composite men as a 258 00:20:24,680 --> 00:20:27,480 strong holder, so therefore strong hands. 259 00:20:27,740 --> 00:20:34,340 And then other institutions that participate 260 00:20:34,340 --> 00:20:35,640 but on the wrong side. 261 00:20:35,920 --> 00:20:41,860 of the trade and majority of the public will be majority of the time 262 00:20:41,860 --> 00:20:48,000 specifically you know at the majority of the spot is going to be on the wrong 263 00:20:48,000 --> 00:20:51,900 side of the trade as well so that's why public always has this kind of like 264 00:20:51,900 --> 00:20:58,780 negative view by the market experts okay so 265 00:20:58,780 --> 00:21:04,060 this is a short term value proposition and then it also creates a short term 266 00:21:04,060 --> 00:21:05,060 liquidity 267 00:21:06,860 --> 00:21:11,520 because some of the institutions are capitulating on this position with the 268 00:21:11,520 --> 00:21:13,880 profit. So that creates an opportunity. 269 00:21:14,620 --> 00:21:21,480 There is a short -term absorption of the supply, and 270 00:21:21,480 --> 00:21:28,180 that leads to this aggressive rally, because a lot of the trend followers are 271 00:21:28,180 --> 00:21:31,920 trying to pick up the spot as the reversal and the resumption of the 272 00:21:33,360 --> 00:21:34,660 And why wouldn't they? 273 00:21:34,920 --> 00:21:36,140 Look at the leadership. 274 00:21:36,780 --> 00:21:43,600 prior to the consolidation and then as we go through there is not a 275 00:21:43,600 --> 00:21:49,140 lot of deterioration uh to the downside i mean we're not giving up we're giving 276 00:21:49,140 --> 00:21:56,140 up probably what maybe like uh one -fifth of the last leg to the upside so 277 00:21:56,140 --> 00:22:01,520 a lot of them are going to see value right here and i think that the clue 278 00:22:01,520 --> 00:22:03,080 this you know 279 00:22:03,980 --> 00:22:10,760 of the uptrend was somewhere here on this gap with a lot of the 280 00:22:10,760 --> 00:22:15,540 volume signature, probably earnings catalyst right here. 281 00:22:15,760 --> 00:22:22,200 And as we had probably earnings, very favorable earnings, then the reaction on 282 00:22:22,200 --> 00:22:27,680 earnings event is unfavorable for the first time. And that's after the 283 00:22:27,680 --> 00:22:28,940 absorption that has happened. 284 00:22:29,200 --> 00:22:33,000 So who's selling? Some other institutions are selling. 285 00:22:35,880 --> 00:22:38,140 And they are selling a lot. 286 00:22:40,720 --> 00:22:45,220 This is the highest volume signature since the beginning of this chart. 287 00:22:45,740 --> 00:22:48,720 So something is wrong. Something is not going well. 288 00:22:48,920 --> 00:22:52,080 So it's listed at the minimum. The price is going to consolidate. 289 00:22:52,420 --> 00:22:55,380 And then we should assess as to how it's going to consolidate. 290 00:22:55,820 --> 00:22:58,800 Two rallies, very weak rallies. 291 00:22:59,000 --> 00:23:03,080 And as these two rallies develop, look at the demand signature. It diminishes. 292 00:23:03,870 --> 00:23:09,050 demand becomes poor and this is where we just basically say that the 293 00:23:09,050 --> 00:23:14,770 distributional scenario is unfolding it's confirmed and we could open the 294 00:23:14,770 --> 00:23:20,130 position and actually you know short the stock all right so that's the whole 295 00:23:20,130 --> 00:23:26,010 story here is my labeling for you and then couple of questions here 296 00:23:27,370 --> 00:23:32,990 In phase A, does automatic reaction have to be equal or lower than preliminary 297 00:23:32,990 --> 00:23:38,530 supply? Does the first secondary test have to be equal or lower than the 298 00:23:38,530 --> 00:23:43,590 climax? So we've talked about this a little bit, preliminary supply, and then 299 00:23:43,590 --> 00:23:48,550 look how we are connecting with this area later on in the trading range, 300 00:23:48,710 --> 00:23:50,070 multiple times. 301 00:23:50,430 --> 00:23:56,000 And by connecting, I mean that either we are testing with our short -term 302 00:23:56,000 --> 00:24:01,220 committing, testing, short -term committing below the area of the 303 00:24:02,520 --> 00:24:08,080 It's not necessary that it's going to happen this way. We might have multiple 304 00:24:08,080 --> 00:24:12,260 scenarios. We might have a preliminary supply that will be violated. 305 00:24:12,900 --> 00:24:17,380 Usually that would suggest that there is more supply that is coming in at this 306 00:24:17,380 --> 00:24:21,200 point of time, and it has this capacity to go. 307 00:24:21,610 --> 00:24:23,790 through the support area of the preliminary supply. 308 00:24:26,270 --> 00:24:32,410 We could have the situation like we have on our current chart, where 309 00:24:32,410 --> 00:24:36,050 that area is being respected. 310 00:24:36,470 --> 00:24:42,150 And in some instances, the price just would stop exactly around the lows of 311 00:24:42,150 --> 00:24:47,850 preliminary supply. So all of the three possibilities are there, and we should 312 00:24:47,850 --> 00:24:48,850 make a judgment. 313 00:24:50,140 --> 00:24:56,860 by how the price reacts towards that preliminary supply area as 314 00:24:56,860 --> 00:25:01,420 for the secondary test the same thing we could have different tests we could 315 00:25:01,420 --> 00:25:07,620 have very very low tests that suggest a lot of weakness we could have a higher 316 00:25:07,620 --> 00:25:14,420 test where we're going to say that this is a secondary test as an up thrust and 317 00:25:14,420 --> 00:25:19,600 then we could have a test more of what we see on this chart being in the same 318 00:25:19,600 --> 00:25:23,260 area approximately as the buying climax. 319 00:25:23,580 --> 00:25:26,860 And obviously, each test has its own implications. 320 00:25:27,600 --> 00:25:34,020 An up -thrust test would suggest that maybe this is a leadership and we might 321 00:25:34,020 --> 00:25:39,060 have, if this is a distribution, we might have a rising, up -sloping trading 322 00:25:39,060 --> 00:25:44,160 range. The weak performance of the secondary test might suggest 323 00:25:45,710 --> 00:25:50,390 Either a very poor demand and the price will have to consolidate before it's 324 00:25:50,390 --> 00:25:55,170 going to go up or just a continuation in the hypodermic type of manner. 325 00:25:55,470 --> 00:25:58,870 And we'll look into this on other slides as well. 326 00:25:59,710 --> 00:26:05,750 Next question. In real time, would this area be labeled as a reaccumulation with 327 00:26:05,750 --> 00:26:11,130 the upthrust being a sign of strength in Phase D on increasing spread and volume 328 00:26:11,130 --> 00:26:13,910 signature? So we've talked about this as well. 329 00:26:14,410 --> 00:26:18,110 there are some elements of a reaccumulation right here. 330 00:26:18,790 --> 00:26:23,630 Actually, not necessarily very favorable elements. 331 00:26:23,970 --> 00:26:29,270 I mean, if we would go into more details of this area, we would see that on 332 00:26:29,270 --> 00:26:33,810 average supply has increased and that produced some minor weaknesses. 333 00:26:34,170 --> 00:26:39,050 So that suggests that, you know, there might be a possibility of a bearish 334 00:26:39,050 --> 00:26:40,210 scenario at some point. 335 00:26:41,650 --> 00:26:43,150 So therefore... 336 00:26:43,760 --> 00:26:48,440 So it's not necessarily at that point that we would be thinking that the 337 00:26:48,440 --> 00:26:52,480 reaccumulation, but the first assumption will be that it is a reaccumulation. 338 00:26:53,180 --> 00:26:54,760 All right. Next question. 339 00:26:54,980 --> 00:27:00,240 Can we only confirm distribution on the break of the support with volume? 340 00:27:00,860 --> 00:27:07,580 So I think that I've shown you guys kind of like a gradual change of bias 341 00:27:07,580 --> 00:27:12,140 or perception by us as to how we analyze this whole trading range. 342 00:27:12,620 --> 00:27:17,140 we could see that here it's going to be extremely difficult for us not to give 343 00:27:17,140 --> 00:27:21,000 the beginning trading range a definition of a reaccumulation. 344 00:27:21,660 --> 00:27:27,520 Then only in phase B, we're going to have some kind of doubt that 345 00:27:27,520 --> 00:27:33,680 this is just a reaccumulation. Because even though it looks like a long -term 346 00:27:33,680 --> 00:27:38,720 picture is still a reaccumulation, we see on a short -term basis some kind 347 00:27:39,720 --> 00:27:44,780 a deterioration in the increased supply signature and result to the downside 348 00:27:44,780 --> 00:27:50,980 that is slightly increasing so that suggests short -term bearish picture 349 00:27:50,980 --> 00:27:57,460 and then as we go into phase c into the up thrust and we see the failure 350 00:27:57,460 --> 00:28:04,020 this is where we're saying the up thrust failure suggests at least a short -term 351 00:28:04,020 --> 00:28:05,020 bearish scenario 352 00:28:06,860 --> 00:28:12,960 And then once we go into a major sign of weakness and then the LPSY fails, this 353 00:28:12,960 --> 00:28:16,400 confirms a bearish bias. 354 00:28:19,360 --> 00:28:23,200 So this is extremely important, what I've done right now for you. 355 00:28:24,220 --> 00:28:30,380 It's another way of showing to you of how perception is 356 00:28:30,380 --> 00:28:34,460 going to change through the analysis, through all of the phases. 357 00:28:34,720 --> 00:28:36,420 And we might be coming in. 358 00:28:36,860 --> 00:28:43,340 into the trading range thinking that this is a big leadership stock and we 359 00:28:43,340 --> 00:28:45,260 be looking to buy this stock. 360 00:28:45,560 --> 00:28:51,920 And the timing of phases would not allow us to necessarily buy right away in 361 00:28:51,920 --> 00:28:56,660 phase B. We would be waiting maybe for the back and up action if we thought 362 00:28:56,660 --> 00:28:59,060 we missed a sign of strength here. 363 00:28:59,960 --> 00:29:05,020 And yet after that, the perception is going to change and we're going to 364 00:29:05,020 --> 00:29:06,020 our bias. 365 00:29:07,820 --> 00:29:14,820 So and that's why, you know, it's a nonlinear analysis that we 366 00:29:14,820 --> 00:29:18,920 are conducting here because everything changes. So it's kind of like ongoing. 367 00:29:19,500 --> 00:29:23,320 But at the same time, I understand that some of you, especially now those 368 00:29:23,320 --> 00:29:28,100 engineer types, you guys are going to be thinking about like, you know, a lot of 369 00:29:28,100 --> 00:29:32,540 data points here and how could you convert that into the bias decision. 370 00:29:33,260 --> 00:29:36,920 And I think that it's possible. It's just that you need to define. 371 00:29:37,390 --> 00:29:41,330 you know, the interaction between those data points and the deductions that you 372 00:29:41,330 --> 00:29:42,330 made. 373 00:29:42,690 --> 00:29:43,690 All right. 374 00:29:46,470 --> 00:29:49,550 Question, and then we're going to go away from this slide. 375 00:29:54,290 --> 00:29:56,370 Large volume spike in May. 376 00:29:57,090 --> 00:30:03,450 Can it be concluded as effort versus result based on volume and price 377 00:30:04,510 --> 00:30:06,410 So this one right here, yes. 378 00:30:09,790 --> 00:30:16,010 So this is more of what we would call a late institutional 379 00:30:16,010 --> 00:30:21,270 capitulation, right? So we had like an early institutional capitulation on this 380 00:30:21,270 --> 00:30:25,950 volume signature. This is a late institutional capitulation. Sometimes it 381 00:30:25,950 --> 00:30:32,330 on earnings as well. And it kind of moves the stock and the whole chart into 382 00:30:32,330 --> 00:30:33,330 different 383 00:30:33,700 --> 00:30:38,200 from a non -trending environment to the trending, which is the downtrending 384 00:30:38,200 --> 00:30:39,200 environment. 385 00:30:40,120 --> 00:30:44,820 And at this point, the institutions that are giving up their position, they are 386 00:30:44,820 --> 00:30:51,520 not necessarily unprofitable. They could have been holding on to this position 387 00:30:51,520 --> 00:30:54,180 for quite some time. 388 00:30:54,380 --> 00:30:56,400 So their profits are building. 389 00:30:56,620 --> 00:31:01,320 They could be scaling out at that point. But a lot of the trend followers, 390 00:31:02,030 --> 00:31:03,370 are going to capitulate here. 391 00:31:07,030 --> 00:31:10,850 And that's because the trend has been decisively broken. 392 00:31:11,150 --> 00:31:16,650 And not only that, the consolidation that they may have thought was a 393 00:31:16,650 --> 00:31:21,930 reaccumulation is actually resolving itself as a distribution. 394 00:31:22,370 --> 00:31:26,230 So this is where they're going to give up. They're also going to give up here. 395 00:31:26,860 --> 00:31:31,520 So these institutions are probably already going to have some kind of 396 00:31:31,520 --> 00:31:38,200 unfavorable profit picture or it's going to be, you know, even 397 00:31:38,200 --> 00:31:43,060 unprofitable proposition if they were buying on the way up. 398 00:31:44,180 --> 00:31:46,200 All right, so a couple of questions. 399 00:31:48,260 --> 00:31:52,340 From Nilesh, why was logarithmic chart used for this analysis? 400 00:31:53,340 --> 00:31:54,860 Was not relevant. 401 00:31:55,830 --> 00:32:01,790 at all for any type of the chart to use. 402 00:32:02,230 --> 00:32:07,590 The purpose of this exercise is to label, so that's what we're doing. 403 00:32:08,230 --> 00:32:09,290 Next question. 404 00:32:10,270 --> 00:32:16,670 About phase C, what is the difference to label it as an upthrust after 405 00:32:16,670 --> 00:32:18,670 distribution instead of the upthrust? 406 00:32:19,090 --> 00:32:21,590 Okay, so we're talking about this spot right here. 407 00:32:22,190 --> 00:32:24,370 So the whole idea... 408 00:32:24,640 --> 00:32:27,260 about the upthrust after distribution. 409 00:32:27,520 --> 00:32:32,020 And I think that I've discussed this in the last session, Eric. 410 00:32:33,080 --> 00:32:40,080 So why is it after distribution? Because the assumption was that distribution 411 00:32:40,080 --> 00:32:42,420 has already happened by this point. 412 00:32:43,100 --> 00:32:48,340 And again, this is a very erroneous statement that was thought to us before. 413 00:32:49,560 --> 00:32:56,080 It doesn't mean that by the upthrust in phase C, all of the times 414 00:32:56,080 --> 00:32:58,340 that distribution would conclude. 415 00:32:58,720 --> 00:33:03,420 And this is a really great example of this because we don't see a lot of 416 00:33:03,420 --> 00:33:08,720 elements of the distribution until we actually come to the later phase D. 417 00:33:09,700 --> 00:33:16,240 So therefore, it doesn't necessarily make a lot of sense to me that we call 418 00:33:16,240 --> 00:33:22,480 the upthrust after distribution in this case. So therefore, I kind of consider 419 00:33:22,480 --> 00:33:23,520 this a legacy. 420 00:33:26,900 --> 00:33:30,700 legacy name or legacy semantic. 421 00:33:31,420 --> 00:33:37,320 And even though we're using it, we need to understand the proper usage of it, 422 00:33:37,420 --> 00:33:38,860 the functionality of it. 423 00:33:39,920 --> 00:33:41,860 All right, let's go to the next one. 424 00:33:42,380 --> 00:33:44,400 Oh, okay, let's talk about the upthrust. 425 00:33:44,700 --> 00:33:48,660 Okay, so upthrust and upthrust action. 426 00:33:50,200 --> 00:33:53,340 Those are two different things that we... 427 00:33:54,440 --> 00:33:55,600 want to distinguish. 428 00:33:55,920 --> 00:34:00,860 And the first thing that we're going to talk about is just upthrust itself. 429 00:34:01,260 --> 00:34:06,980 And the definition of the upthrust is a temporary commitment above a level of 430 00:34:06,980 --> 00:34:12,699 resistance and almost immediate comeback into the trading range. 431 00:34:13,239 --> 00:34:17,340 So we see how upthrust happens this way. 432 00:34:17,840 --> 00:34:21,820 So there is some kind of excitement the price commits. 433 00:34:23,480 --> 00:34:29,400 temporarily or at least tries to commit temporarily above the resistance level 434 00:34:29,400 --> 00:34:36,199 and then it fails almost instantly so in the first case right here 435 00:34:36,199 --> 00:34:42,620 we see a close above and again the way how i look at up thrust and sign of 436 00:34:42,620 --> 00:34:49,320 strength is i'm looking at the progressive closes 437 00:34:54,030 --> 00:34:55,030 to the upside. 438 00:34:56,949 --> 00:34:58,590 So what do I mean by that? 439 00:34:58,950 --> 00:35:05,250 I want to see how many closes are actually above the resistance and 440 00:35:05,250 --> 00:35:10,850 how many of those closes are going to follow up and continue to the upside. 441 00:35:11,090 --> 00:35:15,670 So for instance, let's look at this trading range. And we see that there is 442 00:35:15,670 --> 00:35:19,690 close number one that is above the resistance area. 443 00:35:20,490 --> 00:35:25,410 And then close number two, that is higher than the previous close. 444 00:35:25,690 --> 00:35:30,370 So we have two consecutive progressive closes to the upside. 445 00:35:30,830 --> 00:35:36,850 And then close number three, that also has the same characteristic. The price 446 00:35:36,850 --> 00:35:43,450 closes above the previous close or above the area of the resistance that defines 447 00:35:43,450 --> 00:35:44,450 this area. 448 00:35:45,190 --> 00:35:48,470 We don't see that necessarily with up thrust. 449 00:35:49,000 --> 00:35:55,440 So we see one close and then one bar that tries to close above but fails and 450 00:35:55,440 --> 00:35:58,140 creates the supply tail. 451 00:35:58,380 --> 00:36:00,880 So we only have one close at this level. 452 00:36:01,880 --> 00:36:02,960 The same here. 453 00:36:03,260 --> 00:36:09,400 This was even just an attempt to upthrust rather than the upthrust 454 00:36:09,760 --> 00:36:14,380 Why is this an attempt? Well, because the price opened with the gap up. 455 00:36:14,810 --> 00:36:20,130 It was a gap above the resistance, and then for the whole session, the price 456 00:36:20,130 --> 00:36:23,430 trending down, and it closed below the support area. 457 00:36:23,630 --> 00:36:28,410 So therefore, it was an attempt to upthrust. It was an attempt to 458 00:36:28,410 --> 00:36:33,550 commit above, but it was not necessarily the upthrust itself. 459 00:36:33,930 --> 00:36:40,010 And then in this example right here on the chart below, we see a close above, 460 00:36:40,190 --> 00:36:41,190 and then again. 461 00:36:41,610 --> 00:36:46,150 There are no commitments above the lost resistance that was created. 462 00:36:46,390 --> 00:36:53,310 So just one close above the resistance, and that's that temporary 463 00:36:53,310 --> 00:36:54,830 commitment of the upthrust. 464 00:36:56,630 --> 00:37:02,310 The upthrusts usually were discussed in two places. 465 00:37:03,610 --> 00:37:08,270 Actually, three places, but in the distribution were discussed by Wyckoff 466 00:37:08,270 --> 00:37:09,270 places. 467 00:37:10,800 --> 00:37:17,800 In phase B, and obviously phase analysis came later, so Weikers was 468 00:37:17,800 --> 00:37:22,920 talking about the upthrust itself, and then upthrust of the distribution. 469 00:37:23,300 --> 00:37:27,580 And we've discussed the upthrust of the distribution. The only thing that I want 470 00:37:27,580 --> 00:37:33,120 to add to that for the upthrust of the distribution, just because it is in 471 00:37:33,120 --> 00:37:34,120 C. 472 00:37:34,830 --> 00:37:40,010 we're going to have the equivalent of the second point of fear that we've 473 00:37:40,010 --> 00:37:43,510 discussed for an accumulation. 474 00:37:44,150 --> 00:37:51,050 So a second point of fear usually is going to occur into the lows of phase C 475 00:37:51,050 --> 00:37:56,870 just because supply has increased as the price approaches the support level and 476 00:37:56,870 --> 00:38:01,810 that triggers the worries of the weak hands and they start providing liquidity 477 00:38:01,810 --> 00:38:03,810 to the market by selling their positions. 478 00:38:04,570 --> 00:38:06,850 that could take the price lower. 479 00:38:07,210 --> 00:38:12,150 So with the increase of the supply signature, volume is going to increase 480 00:38:12,150 --> 00:38:13,150 well. 481 00:38:13,330 --> 00:38:19,470 And the result to the downside on the short -term basis is going to increase 482 00:38:19,470 --> 00:38:23,350 too. And that's what we call a second point of fear. 483 00:38:23,590 --> 00:38:28,570 It's going to be associated with the first point of fear, which is the 484 00:38:28,570 --> 00:38:31,530 run into the stop in action in phase A. 485 00:38:32,620 --> 00:38:34,720 Now think about this in the reverse. 486 00:38:35,240 --> 00:38:41,780 Think about this as a distribution right now. If we have had points of fear, 487 00:38:41,960 --> 00:38:47,760 then on the upside, we most likely are going to have points of excitement. 488 00:38:48,340 --> 00:38:54,560 First point of excitement is going to be a climactic run into the stopping 489 00:38:54,560 --> 00:38:56,520 action of the buying climax. 490 00:38:56,740 --> 00:38:59,580 It's going to be associated with some volume increase. 491 00:39:00,380 --> 00:39:05,500 and some spread increase, momentum, velocity increase to the upside. 492 00:39:06,240 --> 00:39:12,460 This second point of excitement is going to come into the highs of phase C. 493 00:39:13,280 --> 00:39:19,680 And usually that second point of excitement is going to be more evident 494 00:39:19,680 --> 00:39:24,800 on the upthrust rather than on the last point of supply rally. 495 00:39:25,100 --> 00:39:29,180 And we kind of see it from here, right? The rally before in phase B. 496 00:39:29,870 --> 00:39:31,930 looks somewhat more interesting. 497 00:39:32,130 --> 00:39:36,570 But there are some elements of excitement on this last rally. As you 498 00:39:36,590 --> 00:39:40,790 the volume signature increases, the spread to the upside increases as well. 499 00:39:41,070 --> 00:39:47,990 The true range of the gap action also happens on the increased spread and 500 00:39:47,990 --> 00:39:49,370 increased volume signature. 501 00:39:49,650 --> 00:39:54,390 Those are the elements of weak hands excitement. 502 00:39:57,100 --> 00:40:02,000 They are getting into this position because they are recognizing in their 503 00:40:02,000 --> 00:40:03,840 that the trend is emerging. 504 00:40:05,040 --> 00:40:09,580 Unfortunately, it's going to fail and it's going to act as an upthrust and the 505 00:40:09,580 --> 00:40:11,500 price is going to come back into the trading range. 506 00:40:11,740 --> 00:40:18,020 But this is the area and the rally that we want to recognize as a second point 507 00:40:18,020 --> 00:40:18,959 of excitement. 508 00:40:18,960 --> 00:40:23,460 What does it give us? Well, it gives us the timing. The timing of what? 509 00:40:23,860 --> 00:40:25,740 The timing of phase. 510 00:40:26,410 --> 00:40:33,150 And obviously phase C is one of the most crucial phases because in phase C, 511 00:40:33,270 --> 00:40:37,250 at the height of phase C, this is where the downtrend is going to start. 512 00:40:37,530 --> 00:40:41,810 And this is where we're going to start having the environment where the 513 00:40:41,810 --> 00:40:44,410 volatility is going to increase. 514 00:40:45,250 --> 00:40:51,530 And we're going to start seeing on that volatility diminishing result 515 00:40:51,530 --> 00:40:55,430 on the upside and increasing result on the downside. 516 00:40:56,160 --> 00:40:59,200 and we want to catch that emergence of the trend. 517 00:41:01,580 --> 00:41:08,020 All right, let's look at the next example. And this is an interesting one 518 00:41:08,020 --> 00:41:14,960 because usually there are some of the difficulties associated with 519 00:41:14,960 --> 00:41:19,420 this chart. So really quickly, a volunteer, say yes, and I have a couple 520 00:41:19,420 --> 00:41:20,420 questions for you here. 521 00:41:26,410 --> 00:41:27,410 A volunteer. 522 00:41:27,530 --> 00:41:29,330 Okay. Let's go to Rama. 523 00:41:30,150 --> 00:41:31,150 Hey, Rama. 524 00:41:31,630 --> 00:41:33,470 So this is going to be very quick. 525 00:41:36,270 --> 00:41:43,070 My question is, where do you see a consolidation here? 526 00:41:43,150 --> 00:41:45,730 Where is our trading range? How do we find it? 527 00:41:49,310 --> 00:41:52,170 I found... 528 00:41:52,890 --> 00:41:58,510 When I was doing this homework, the trading range starts sometime 529 00:41:58,510 --> 00:42:02,450 after February 7th. 530 00:42:05,010 --> 00:42:09,970 So what is this point then? If this is the beginning of the trading range, then 531 00:42:09,970 --> 00:42:10,970 how would we label this? 532 00:42:11,550 --> 00:42:15,270 I would label that as a buying climax because of the price signature. 533 00:42:16,010 --> 00:42:17,010 Okay, great. 534 00:42:17,070 --> 00:42:20,930 Okay, Rama, thank you. So I just wanted just that question. 535 00:42:22,560 --> 00:42:28,220 Okay, so yeah, this is a good definition of where 536 00:42:28,220 --> 00:42:31,500 the trading range would start. 537 00:42:31,800 --> 00:42:36,620 Now, the question here is how do we confirm that this is the beginning of 538 00:42:36,620 --> 00:42:37,620 trading range? 539 00:42:37,740 --> 00:42:42,940 Well, again, this is the historical chart, so there are quite a few points 540 00:42:42,940 --> 00:42:46,980 references for you. But imagine that we are just maybe somewhere here. 541 00:42:47,540 --> 00:42:51,260 We are still in the definition of the uptrend. 542 00:42:51,710 --> 00:42:54,530 Look at the higher highs, higher lows throughout. 543 00:42:56,230 --> 00:43:01,410 So there is no way that you will be thinking that this is a distribution and 544 00:43:01,410 --> 00:43:04,750 that we are in the trading range or anything of this sort. 545 00:43:05,110 --> 00:43:12,010 Now, the key here was identifying this buying climax was 546 00:43:12,010 --> 00:43:16,250 the characteristics of the climactic run and characteristics of the change of 547 00:43:16,250 --> 00:43:20,310 character. The characteristics of the climactic run included 548 00:43:21,020 --> 00:43:27,800 Acceleration to the upside, gaps, increased spread to the 549 00:43:27,800 --> 00:43:34,720 upside, and then stop in action, after which the 550 00:43:34,720 --> 00:43:40,920 price produces the largest reaction to the downside that we have seen or that 551 00:43:40,920 --> 00:43:41,920 see on this chart. 552 00:43:42,560 --> 00:43:47,380 That suggests at some point that we're going to have some kind of trading 553 00:43:50,360 --> 00:43:56,460 We see from the next action into a possible secondary test 554 00:43:56,460 --> 00:44:02,620 after the automatic reaction that the price does not want to go lower. 555 00:44:03,360 --> 00:44:08,120 So what does it mean? It means that there is still some strength around this 556 00:44:08,120 --> 00:44:09,120 spot. 557 00:44:09,160 --> 00:44:13,700 So what does it mean? That means that most likely we're going to continue with 558 00:44:13,700 --> 00:44:14,700 the upward movement. 559 00:44:15,940 --> 00:44:19,560 And if this is a trading range that we might possibly, 560 00:44:20,420 --> 00:44:22,540 have a downsloping trading range. 561 00:44:23,180 --> 00:44:29,960 Now at this point of time, if you're going to tell me right here that we are 562 00:44:29,960 --> 00:44:34,020 going through the distribution, most likely I'm going to say no. 563 00:44:34,840 --> 00:44:40,440 And I'm going to say that short -term picture at least is going to be to the 564 00:44:40,440 --> 00:44:46,640 upside. And there is no definition to the downside yet. At least 565 00:44:46,640 --> 00:44:49,540 everything what kind of came. 566 00:44:50,110 --> 00:44:51,910 is very short -term oriented. 567 00:44:52,210 --> 00:44:58,490 Even if we talk about this reaction rate here that had some kind of increase of 568 00:44:58,490 --> 00:45:04,010 the supply signature, but it still created a higher low, the price quickly 569 00:45:04,010 --> 00:45:08,870 rebounded to the same ground and did not want to go down afterwards. 570 00:45:09,330 --> 00:45:14,990 Those are bullish characteristics, not bearish. So therefore, our 571 00:45:14,990 --> 00:45:18,410 bias still will be bullish. 572 00:45:19,020 --> 00:45:24,900 And it will be bullish until we actually see this reaction right here. This 573 00:45:24,900 --> 00:45:30,860 becomes the largest reaction that we see on the chart. 574 00:45:31,940 --> 00:45:38,860 And it also breaks a couple of intermediate support levels. 575 00:45:43,360 --> 00:45:46,300 So it's either a potential phase C. 576 00:45:46,880 --> 00:45:51,580 Or it's a major sign of weakness in phase D. 577 00:46:00,040 --> 00:46:04,980 So now that we've seen the structure a little bit and we're saying, okay, bind 578 00:46:04,980 --> 00:46:10,160 climax, automatic reaction, secondary test, and we have some kind of upsloping 579 00:46:10,160 --> 00:46:13,620 structure, then we could connect this. 580 00:46:15,500 --> 00:46:16,780 like this. 581 00:46:18,720 --> 00:46:25,160 And then think about what happens at 582 00:46:25,160 --> 00:46:28,080 the edges of this trading range. 583 00:46:28,280 --> 00:46:34,740 What we are seeing is the price commitment into the overbought condition 584 00:46:34,740 --> 00:46:40,420 where the price again commits only once or maybe twice 585 00:46:40,420 --> 00:46:44,600 and then comes back into the trading range. 586 00:46:45,120 --> 00:46:50,160 This is more of a definition of an upthrust than a sign of strength. 587 00:46:50,980 --> 00:46:57,800 And then for the first time, a break of two support areas, and this is 588 00:46:57,800 --> 00:47:00,700 the largest reaction in this trading range. 589 00:47:01,940 --> 00:47:07,960 So it looks a lot like a sign of weakness that tries to commit below the 590 00:47:07,960 --> 00:47:13,840 support. We would be seeking the confirmation on the last point of supply 591 00:47:14,410 --> 00:47:17,910 And it does come. All of the rallies are extremely weak. 592 00:47:19,110 --> 00:47:25,910 And actually, the signature is almost identical to the colorway golf chart 593 00:47:25,910 --> 00:47:28,130 we have seen on the previous slide. 594 00:47:29,290 --> 00:47:30,850 Aggressive rally to the upside. 595 00:47:32,450 --> 00:47:33,810 Gap to the downside. 596 00:47:34,610 --> 00:47:39,190 Probably a pre -earnings gap and then earnings gap somewhere here. 597 00:47:39,530 --> 00:47:40,910 And then the rallies. 598 00:47:41,500 --> 00:47:43,060 that are very, very weak rallies. 599 00:47:43,340 --> 00:47:48,020 This was an actual trade. I traded the stock at that time. I shorted the stock 600 00:47:48,020 --> 00:47:49,420 right here in this area. 601 00:47:50,040 --> 00:47:55,000 And then instantly you're rewarded to the downside and we see how institutions 602 00:47:55,000 --> 00:48:00,040 are entering this capitulation zone and they just don't care. They want to sell, 603 00:48:00,120 --> 00:48:05,820 sell, sell. And that's why the price travels down so fast, so quick on such 604 00:48:05,820 --> 00:48:06,820 volume signatures. 605 00:48:07,040 --> 00:48:13,320 So it was a challenging chart because Again, we are looking at how the 606 00:48:13,320 --> 00:48:20,200 leadership stock, like Netflix, is being distributed on 607 00:48:20,200 --> 00:48:21,200 the way up. 608 00:48:21,520 --> 00:48:28,160 And we're seeing that initial elements of distribution happened here, here, 609 00:48:28,400 --> 00:48:35,100 here, here, and then just a capitulation, overall capitulation here. 610 00:48:35,320 --> 00:48:38,800 It was such a darling. Nobody wanted to get rid of it. 611 00:48:39,180 --> 00:48:43,180 So therefore, when people don't want to get rid of it and the conditions change 612 00:48:43,180 --> 00:48:48,660 and they want to get rid of it really fast, this is how quickly the price is 613 00:48:48,660 --> 00:48:50,200 going to go to the downside. 614 00:48:50,520 --> 00:48:56,460 And that's why the trades to the downside require less time than the 615 00:48:56,460 --> 00:48:57,218 the upside. 616 00:48:57,220 --> 00:49:03,040 But obviously, trades to the downside always have a limitation as you cannot 617 00:49:03,040 --> 00:49:04,040 below zero. 618 00:49:05,780 --> 00:49:06,780 All right. 619 00:49:07,300 --> 00:49:14,300 Let's look here at some of the questions. Subsloping trend can be 620 00:49:14,300 --> 00:49:19,920 a reaccumulation in real time. Is the low volume on the move higher a clue of 621 00:49:19,920 --> 00:49:21,500 demand of poor quality? 622 00:49:21,740 --> 00:49:25,680 I'm trying to detect where a subtle distribution is coming in. 623 00:49:26,480 --> 00:49:29,080 Yeah, you could definitely think of it this way. 624 00:49:29,580 --> 00:49:36,560 It's not necessary at this point of time of the uptrend, especially think about 625 00:49:36,560 --> 00:49:42,000 this uptrend in Netflix that has started at the lows of 2009. 626 00:49:42,440 --> 00:49:47,600 So this trend has been lasting for more than two years now. 627 00:49:48,400 --> 00:49:55,300 So it's not necessary to have an extreme volume signature on the demand side. 628 00:49:57,040 --> 00:49:59,860 And for the price to go up, we kind of see it here. 629 00:50:00,080 --> 00:50:06,960 Volume is low or demand is low, and yet the price is making a progress to 630 00:50:06,960 --> 00:50:07,960 the upside. 631 00:50:09,780 --> 00:50:16,460 And at the same time, if you remember the history of the market, 632 00:50:16,660 --> 00:50:19,140 we had a trading range in the market. 633 00:50:19,700 --> 00:50:24,660 And the trading range was more horizontal, whereas here in Netflix, we 634 00:50:24,660 --> 00:50:25,660 of the... 635 00:50:25,960 --> 00:50:27,700 up -sloping trading range. 636 00:50:28,420 --> 00:50:33,580 So we're definitely outperforming the market at this point. 637 00:50:33,840 --> 00:50:37,100 So there is no reason for institutions to give up this position. 638 00:50:37,440 --> 00:50:39,760 They're still receiving an absolute return. 639 00:50:40,000 --> 00:50:43,060 They're receiving a relative return. 640 00:50:43,460 --> 00:50:47,840 And they're really happy with this position until this quarter comes. 641 00:50:48,560 --> 00:50:50,640 And this is where they capitulate. 642 00:50:51,900 --> 00:50:54,700 So this analysis 643 00:50:56,250 --> 00:51:03,150 kind of like a rollover analysis on the buyers, especially with the stocks that 644 00:51:03,150 --> 00:51:05,970 are going to be extremely winning stocks, the leadership stocks. 645 00:51:06,290 --> 00:51:12,930 So you have to be extremely akin to this area right here where the change of 646 00:51:12,930 --> 00:51:14,390 character takes place. 647 00:51:16,850 --> 00:51:19,490 All right, let's talk about the next 648 00:51:24,579 --> 00:51:29,060 on the next possible way of how we could address upthrust. 649 00:51:29,560 --> 00:51:35,200 One of the ways that Weikert talked about upthrust is a 650 00:51:35,200 --> 00:51:37,680 measure of momentum. 651 00:51:37,940 --> 00:51:43,840 He used the upward thrust in the uptrend as a 652 00:51:43,840 --> 00:51:50,760 distance between the significant highs that are being reached and 653 00:51:50,760 --> 00:51:54,770 where the price stopped for a significant period of time. 654 00:51:55,830 --> 00:52:02,710 And he looked at the progression of those highs, and he would determine 655 00:52:02,710 --> 00:52:05,630 momentum was increasing or decreasing. 656 00:52:05,930 --> 00:52:12,730 And in this case, we see how the upthrust or upward thrust is 657 00:52:12,730 --> 00:52:18,970 momentum is going down. So that was another way of looking at the upthrust. 658 00:52:20,030 --> 00:52:26,170 uh measurement of the momentum by the way look into this distribution how this 659 00:52:26,170 --> 00:52:31,970 happens right so what do we see here where the institutions are selling the 660 00:52:31,970 --> 00:52:38,730 stocks first so probably somewhere here right so this looks like that climactic 661 00:52:38,730 --> 00:52:44,530 run um somebody might argue with me that this could be a climactic run and you 662 00:52:44,530 --> 00:52:49,380 know you could be absolutely correct about that, and we could label it in two 663 00:52:49,380 --> 00:52:50,380 different ways. 664 00:52:50,440 --> 00:52:54,440 The climactic characteristics are present in both cases. 665 00:52:55,080 --> 00:53:00,820 So I would probably go for it like this, with the horizontal range, define phase 666 00:53:00,820 --> 00:53:06,200 A here, and then phase C somewhere here. 667 00:53:07,220 --> 00:53:13,560 So B is almost the same size as A, so not necessarily the preferable scenario, 668 00:53:13,600 --> 00:53:14,600 but still possible. 669 00:53:15,320 --> 00:53:19,760 Major sign of weakness and then LPSY area. 670 00:53:19,980 --> 00:53:21,940 And LPSY has its own range. 671 00:53:22,380 --> 00:53:27,720 So look into this smaller range right here and look at this upthrust action. 672 00:53:28,840 --> 00:53:30,700 And look at this upthrust. 673 00:53:31,060 --> 00:53:36,700 What does it look like? It looks like somebody is coming in and demand is 674 00:53:36,700 --> 00:53:43,540 increasing, but result to the upside is decreasing, right? 675 00:53:44,140 --> 00:53:50,140 So this means that there is a lot of effort to the upside, and yet result to 676 00:53:50,140 --> 00:53:54,580 downside is diminishing. So that's a bearish sign. 677 00:53:55,060 --> 00:54:01,900 And this upthrust becomes a second point of excitement for 678 00:54:01,900 --> 00:54:05,860 weak hands. They're trying to play the reversal here. 679 00:54:07,100 --> 00:54:13,140 Okay, well, we've talked about the upthrust. We've talked about the upward. 680 00:54:13,550 --> 00:54:15,190 thrust in the uptrend. 681 00:54:16,450 --> 00:54:19,390 Let's now talk about the upthrust action. 682 00:54:20,050 --> 00:54:21,830 What is the upthrust action? 683 00:54:22,770 --> 00:54:29,530 So one of the things that we recognize is that the 684 00:54:29,530 --> 00:54:35,310 upthrust could happen in the accumulation or reaccumulation as well. 685 00:54:35,810 --> 00:54:40,190 How is it possible? Because we were usually taught that the upthrust is 686 00:54:40,190 --> 00:54:42,670 be defined only in the areas of the distribution. 687 00:54:43,530 --> 00:54:50,030 Well, the swings above the resistance level in the 688 00:54:50,030 --> 00:54:56,990 reaccumulation or accumulation could act in the same way as an upthrust itself. 689 00:54:58,150 --> 00:55:03,290 Those swings could temporarily commit above the area of the resistance, and 690 00:55:03,290 --> 00:55:07,270 the price can come back really quickly back into the trading range. 691 00:55:07,930 --> 00:55:11,330 That's what we've seen here in both of these scenarios. 692 00:55:11,870 --> 00:55:16,790 our first upthrust action is actually a secondary test to the bind climax that 693 00:55:16,790 --> 00:55:18,530 we experienced in prior to that. 694 00:55:21,450 --> 00:55:28,350 Look into the, a change of character that defines that the 695 00:55:28,350 --> 00:55:31,110 uptrend is done. This is the largest reaction here. 696 00:55:31,650 --> 00:55:36,450 And then going into the secondary test, just because we upthrust, we could say 697 00:55:36,450 --> 00:55:42,210 that this is a secondary test as an upthrust action. So it acts, like an 698 00:55:42,210 --> 00:55:47,770 upthrust, but because this is a reaccumulation, we can't say that this 699 00:55:47,770 --> 00:55:52,450 upthrust. It's an upthrust -like action in the accumulation -reaccumulation. 700 00:55:52,790 --> 00:55:58,530 The same happens in phase B here for the small trend rate, for the small 701 00:55:58,530 --> 00:56:02,770 consolidation. We're committing to the upside actually quite significantly. 702 00:56:03,390 --> 00:56:07,290 That shows an element of strength, so we could call this 703 00:56:08,640 --> 00:56:12,760 actually a minor sign of strength here, but it acts as an upthrust, commits 704 00:56:12,760 --> 00:56:17,920 temporarily, comes back into the trade range. So that type of action in 705 00:56:17,920 --> 00:56:22,460 accumulation or reaccumulation, we would call an upthrust action. 706 00:56:25,460 --> 00:56:31,060 All right, questions. But in real -time analysis, we can't know it's an upthrust 707 00:56:31,060 --> 00:56:33,100 or upthrust action, or can we? 708 00:56:33,440 --> 00:56:37,080 Okay, again, we're coming back to this kind of like our... 709 00:56:37,360 --> 00:56:43,360 rolling over analysis right so my point again and i see how 710 00:56:43,360 --> 00:56:48,480 some of you are kind of like you know thinking about the real time and you 711 00:56:48,480 --> 00:56:55,380 are getting stuck there with with that type of thinking don't think of 712 00:56:55,380 --> 00:57:02,060 this analysis as something that you need to 713 00:57:02,060 --> 00:57:05,180 define in the moment right away 714 00:57:05,960 --> 00:57:11,700 that analysis could develop and become a more complete picture as you're getting 715 00:57:11,700 --> 00:57:12,700 more data points. 716 00:57:13,420 --> 00:57:19,480 So therefore, when we are thinking about this upthrust right here, we might be 717 00:57:19,480 --> 00:57:22,940 saying, okay, yeah, we definitely know this is a secondary test. 718 00:57:23,220 --> 00:57:28,080 Fine climax, automatic reaction, secondary test. We know that. And then 719 00:57:28,080 --> 00:57:33,700 somewhere we're going to know that there is an upthrust action here. So that 720 00:57:33,700 --> 00:57:35,320 suggests some... 721 00:57:35,680 --> 00:57:39,740 And that suggests some reaccumulation. 722 00:57:40,060 --> 00:57:43,240 But we yet have to confirm it. 723 00:57:44,000 --> 00:57:45,660 That's our first assumption. 724 00:57:46,140 --> 00:57:50,440 So you see what I'm doing here? I'm not necessarily saying that this is an 725 00:57:50,440 --> 00:57:53,380 upthrust or it's an upthrust action. 726 00:57:53,740 --> 00:57:57,140 I'm just seeing this action as an upthrust. 727 00:57:57,440 --> 00:58:03,160 And that gives me some kind of suggestion on the buys that I still need 728 00:58:03,160 --> 00:58:04,160 confirm. 729 00:58:04,780 --> 00:58:09,620 So therefore, going through this whole range, again, somewhere here, we might 730 00:58:09,620 --> 00:58:13,800 thinking that there is some elements of strength and so on and so forth. Here, 731 00:58:13,920 --> 00:58:17,500 we might be thinking, okay, is this an upthrust or a major sign of strength? 732 00:58:17,820 --> 00:58:23,180 So we would be actually thinking that this is an upthrust as the price goes 733 00:58:23,180 --> 00:58:27,720 here, but it's going to be a major sign of strength to this area right here. 734 00:58:28,850 --> 00:58:34,650 So analysis unfolds. Analysis is not linear, and definitely I want you to 735 00:58:34,650 --> 00:58:39,010 recognize this. If there is one point from today's class, that would be it. 736 00:58:39,910 --> 00:58:42,090 That's a very, very important point. 737 00:58:43,450 --> 00:58:45,630 So let's kind of get it. 738 00:58:46,810 --> 00:58:52,890 Okay, next chart. And this one I'm going to discuss right away with the 739 00:58:52,890 --> 00:58:53,890 labeling. 740 00:58:54,850 --> 00:58:56,310 So this is Apple. 741 00:58:58,640 --> 00:59:00,740 Actually, why did I do this? 742 00:59:01,660 --> 00:59:02,660 Okay. 743 00:59:02,960 --> 00:59:05,840 All right. Well, we'll see how you're going to handle this with the next 744 00:59:05,840 --> 00:59:11,580 homework. So a leadership uprun into the stop in climactic action. 745 00:59:11,820 --> 00:59:17,140 A change of character is well defined with the increased volume signature 746 00:59:17,140 --> 00:59:22,120 we say that supply has come in. This is early institutional distribution into 747 00:59:22,120 --> 00:59:23,038 the weak hands. 748 00:59:23,040 --> 00:59:25,820 Weak hands are seeing some kind of value. 749 00:59:26,590 --> 00:59:30,370 short -term value at this point, and they are buyers. 750 00:59:32,010 --> 00:59:36,090 And rightfully so, because on a short -term basis, you are going to have some 751 00:59:36,090 --> 00:59:41,890 kind of rebound out of what now seems to be an extreme oversold condition right 752 00:59:41,890 --> 00:59:42,890 away. 753 00:59:43,470 --> 00:59:49,890 A minor sign of weakness, that's the first suggestion that there might be 754 00:59:49,890 --> 00:59:53,750 kind of short -term bearish bias if 755 00:59:54,620 --> 00:59:57,680 both price and volume fails. 756 00:59:59,920 --> 01:00:04,880 But instead, we're having elements of a reaccumulation, suggesting a short -term 757 01:00:04,880 --> 01:00:09,640 run. So we're still thinking that, you know, the continuation to the upside. 758 01:00:10,800 --> 01:00:16,740 And then just again, minus signs where we see some kind of selling, some kind 759 01:00:16,740 --> 01:00:22,860 selling, but still it's not the pronounced reactions that we see with 760 01:00:22,860 --> 01:00:23,860 of selling. 761 01:00:23,880 --> 01:00:30,380 Therefore, our first concern about the bias here is only after the upthrust 762 01:00:30,380 --> 01:00:34,240 has been reached and then it fails. 763 01:00:34,620 --> 01:00:40,480 Somewhere here, this is where our perception is going to start changing. 764 01:00:40,820 --> 01:00:43,540 Again, look at what I'm doing. 765 01:00:44,020 --> 01:00:47,980 I'm not suggesting a distribution here. 766 01:00:49,710 --> 01:00:54,330 Look at this volume signature, diminution volume signature, diminution 767 01:00:54,330 --> 01:00:57,830 signature on a higher highs, higher lows. 768 01:00:59,310 --> 01:01:03,170 So what are you going to do here? If you're a long -term investor, you're 769 01:01:03,170 --> 01:01:06,850 in this position, you're holding on to this position until this failure. 770 01:01:08,490 --> 01:01:13,010 If you're a swing trader, you're initiating a position to the upside and 771 01:01:13,010 --> 01:01:16,390 exit is going to be on this bar right here, on this change of character bar. 772 01:01:17,200 --> 01:01:22,760 And in both cases, it's still worthwhile to either be in this position or to 773 01:01:22,760 --> 01:01:24,000 hold on to this position. 774 01:01:24,600 --> 01:01:29,260 And then some of us are going to be thinking that this is too much supply. 775 01:01:29,260 --> 01:01:35,960 maybe in the future, if there is some kind of failure, the bias is going to 776 01:01:35,960 --> 01:01:42,080 change to a downtrend rather than an uptrend or a consolidation. 777 01:01:42,500 --> 01:01:48,030 That's exactly what happens. On the major sign of weakness, we see and the 778 01:01:48,030 --> 01:01:51,530 reaction that is the largest reaction in this trading range. 779 01:01:52,030 --> 01:01:57,670 And that defines institutional selling on the way down 780 01:01:57,670 --> 01:02:01,870 and suggests that we are in the distribution. 781 01:02:02,230 --> 01:02:04,330 So after that, it's only tactics. 782 01:02:04,610 --> 01:02:08,670 We want to open the position after the last point of supply, the first rally 783 01:02:08,670 --> 01:02:13,610 again out of the short -term oversold value. 784 01:02:15,070 --> 01:02:21,370 proposition for some of the institutions and that's why the rally is so so quick 785 01:02:21,370 --> 01:02:28,350 then look at this whole trading range and look into this rally right here 786 01:02:28,350 --> 01:02:33,190 what can you say about that this rally what are the characteristics of this 787 01:02:33,190 --> 01:02:39,930 rally some small increase of the demand more local than global 788 01:02:42,440 --> 01:02:45,320 And the result to the upside is diminishing. 789 01:02:46,680 --> 01:02:50,740 Those are going to be, and it looks like, a second point of excitement. 790 01:02:56,000 --> 01:03:00,200 And then a failure right away. And then a failure again on the gap. 791 01:03:00,400 --> 01:03:02,560 And then a failure again on the rally. 792 01:03:03,460 --> 01:03:05,460 Those are all bearish characteristics. 793 01:03:06,360 --> 01:03:11,600 And therefore, we would label this as a redistribution to the main. 794 01:03:12,120 --> 01:03:13,140 distribution range. 795 01:03:15,160 --> 01:03:16,760 All right, questions. 796 01:03:17,900 --> 01:03:22,580 The swing buy is because of diminishing volume with uptrend. I would be afraid 797 01:03:22,580 --> 01:03:23,580 of the gap down. 798 01:03:24,240 --> 01:03:25,340 Yeah, exactly. 799 01:03:26,220 --> 01:03:31,320 So diminishing volume signature, higher highs, higher lows. 800 01:03:32,180 --> 01:03:37,860 You could label this, this trading range. Here's the range that you're 801 01:03:37,860 --> 01:03:40,920 at. So your phase A is probably somewhere here. 802 01:03:41,520 --> 01:03:48,460 phase B low, and then you could probably squeeze in phase C right 803 01:03:48,460 --> 01:03:51,080 here, or you could have a phase C here. 804 01:03:51,680 --> 01:03:55,360 Now, Philip is talking about this gap. 805 01:03:55,660 --> 01:04:00,100 All right, well, if we would look at this gap, look at how effort has 806 01:04:00,100 --> 01:04:04,620 tremendously, yet what was the intention behind this reaction? 807 01:04:05,200 --> 01:04:08,300 It's to commit below the support level. Have we done so? 808 01:04:08,540 --> 01:04:09,980 No, we haven't. 809 01:04:10,300 --> 01:04:15,620 Therefore, diminishing results to the downside on extreme volume signatures 810 01:04:15,620 --> 01:04:17,640 suggest a presence of demand. 811 01:04:17,980 --> 01:04:21,620 The presence of demand or increase in demand suggests absorption. 812 01:04:22,140 --> 01:04:29,100 We only need a confirmation of price that after such 813 01:04:29,100 --> 01:04:35,280 absorption, the price could go up. We see that exact thing on the next three 814 01:04:35,280 --> 01:04:36,280 bars or so. 815 01:04:36,420 --> 01:04:41,070 As it happens, we definitely want to get into this position. 816 01:04:41,310 --> 01:04:47,070 If we miss this point of entry, and by that I mean one and two, 817 01:04:47,230 --> 01:04:53,510 then we could definitely come in after the backing 818 01:04:53,510 --> 01:04:56,750 up action, especially on the breakout. 819 01:04:56,990 --> 01:04:59,010 So here is our point of entry number three. 820 01:04:59,250 --> 01:05:02,050 Those are the only points of entry that we see here. 821 01:05:02,850 --> 01:05:05,690 And then our exit is going to be here. 822 01:05:08,000 --> 01:05:12,400 here, and then on the failures, on all of the failures to the downside. So it's 823 01:05:12,400 --> 01:05:14,180 just basically down, down, down. 824 01:05:14,580 --> 01:05:19,040 This is not necessarily going to be a winning trade, but it's going to be like 825 01:05:19,040 --> 01:05:22,280 break -even, small win, small loss type of trade. 826 01:05:23,560 --> 01:05:29,500 This is the trade that usually is going to be either in the correct direction in 827 01:05:29,500 --> 01:05:34,260 phase B, or it's going to be on the failure of the continuation of the 828 01:05:34,260 --> 01:05:40,280 trend. In this case, a failure to continue with the uptrend after the 829 01:05:40,280 --> 01:05:47,180 and on what seemed to be the emergence of the continuation of the uptrend 830 01:05:47,180 --> 01:05:48,240 and then the failure of that. 831 01:05:50,200 --> 01:05:51,220 All right. 832 01:05:51,900 --> 01:05:53,160 Let's see what else. 833 01:05:55,020 --> 01:06:00,220 Why automatic rally or automatic reaction is there instead of the 834 01:06:00,220 --> 01:06:03,120 actually is occupying the minor sign of weakness? 835 01:06:03,660 --> 01:06:10,440 Okay, so we're talking about this spot, automatic reaction instead of this. So 836 01:06:10,440 --> 01:06:13,000 the suggestion from Eric is to go all the way. 837 01:06:14,080 --> 01:06:20,960 Well, we usually would be thinking about swings in the trading 838 01:06:20,960 --> 01:06:21,960 range, right? 839 01:06:22,140 --> 01:06:23,140 Look at this. 840 01:06:23,640 --> 01:06:29,120 So each swing is going to be defined by a reversal at the beginning of the 841 01:06:29,120 --> 01:06:31,440 swing. And each swing has an end. 842 01:06:31,840 --> 01:06:36,480 of the swing is going to be defined by the opposite reversal those are going to 843 01:06:36,480 --> 01:06:42,960 be points of confirmation those are going to be the last points where we 844 01:06:42,960 --> 01:06:49,400 know that the swing has reversed so therefore we would define our labeling 845 01:06:49,400 --> 01:06:54,600 on the swing analysis right so here we could see that um 846 01:06:54,600 --> 01:07:00,600 a swing goes down there is no reversal on this bar 847 01:07:01,610 --> 01:07:03,130 No reversal on this bar. 848 01:07:03,850 --> 01:07:08,830 Then it goes down again, and then there is a big bar to the upside. This is the 849 01:07:08,830 --> 01:07:15,510 true range of that bar. It closes right here. It closes above the closes of 850 01:07:15,510 --> 01:07:20,190 1, 2, 3, 4, 5 bars to the downside. 851 01:07:20,590 --> 01:07:23,390 So we see that this was a swing to the upside. 852 01:07:23,890 --> 01:07:26,190 Swing to the downside, swing to the upside. 853 01:07:26,610 --> 01:07:28,910 Automatic reaction, secondary test. 854 01:07:29,410 --> 01:07:30,650 Swing to the downside. 855 01:07:32,520 --> 01:07:34,700 Minor sign of weakness in phase B. 856 01:07:35,320 --> 01:07:37,120 All right, next question. 857 01:07:44,900 --> 01:07:46,680 Okay, more like a comment. 858 01:07:49,500 --> 01:07:51,000 Okay, from Roman. 859 01:07:55,160 --> 01:08:00,400 Two most important and vital thinking skills essential for mastering 860 01:08:01,310 --> 01:08:04,130 This course, flexible thinking and nonlinear thinking. 861 01:08:04,930 --> 01:08:06,430 Yeah, I would agree with this. 862 01:08:06,630 --> 01:08:10,170 But, you know, I would say it's just not necessarily just for Wyckoff. 863 01:08:10,390 --> 01:08:16,310 I think that we kind of used to, in life, 864 01:08:16,590 --> 01:08:21,790 to create systems for ourselves, right? So there is a system of how we drink tea 865 01:08:21,790 --> 01:08:25,930 in the morning. There is a system of how we take care of our children. 866 01:08:26,850 --> 01:08:29,410 And it's all systematic in our... 867 01:08:30,250 --> 01:08:34,310 We just don't even sometimes think that this is a system, but you have rules, 868 01:08:34,450 --> 01:08:39,050 you have steps, and everything happens in some kind of sequence, and then you 869 01:08:39,050 --> 01:08:40,430 just have deviation from that. 870 01:08:41,189 --> 01:08:47,710 Well, with the markets, unfortunately, we have to be systematic, 871 01:08:47,770 --> 01:08:53,670 but we are functioning in the environment where there are so many 872 01:08:53,670 --> 01:08:56,350 many data points, and it's uncertain. 873 01:08:57,500 --> 01:09:02,240 in the way of how these data points are going to be presented to us on each 874 01:09:02,240 --> 01:09:03,240 particular day. 875 01:09:03,859 --> 01:09:10,540 So therefore, we can't really have simplistic steps 876 01:09:10,540 --> 01:09:16,020 when we judge the market. We have to have a much deeper understanding and 877 01:09:16,020 --> 01:09:18,080 therefore we have to have more data points. 878 01:09:18,319 --> 01:09:23,540 With more data points, you know, with the analysis of that, we just naturally 879 01:09:23,540 --> 01:09:24,540 get lost. 880 01:09:25,100 --> 01:09:29,620 And there is a tendency to go and just to say, okay, well, I want the rules. So 881 01:09:29,620 --> 01:09:30,620 give me the rules. 882 01:09:30,840 --> 01:09:34,779 And then, you know, I'm going to just go by the rules. 883 01:09:35,120 --> 01:09:39,819 And usually I see that with students. They just kind of like take the rules 884 01:09:39,819 --> 01:09:44,760 then strictly want to follow those rules. But there are quite a few 885 01:09:45,600 --> 01:09:52,399 And you have to either remember all of those exceptions and have the 886 01:09:52,399 --> 01:09:58,000 very much clearly defined rules Or you have to be a little bit more flexible 887 01:09:58,000 --> 01:10:04,980 allow the analysis to unfold, allow the picture to kind of like this puzzle to 888 01:10:04,980 --> 01:10:08,380 be connected, you know, all of the spots to be connected to each other. 889 01:10:08,780 --> 01:10:11,680 So it's a rollover analysis, so to say. 890 01:10:13,580 --> 01:10:15,640 All right, let's go to the next one. 891 01:10:18,240 --> 01:10:20,820 All right, we're doing great on time. I like that. 892 01:10:21,460 --> 01:10:23,740 Okay, so composite. 893 01:10:25,240 --> 01:10:29,040 And again, I'm just gonna go right away into the labeling here. 894 01:10:29,360 --> 01:10:34,700 So three small, three trading ranges. The first one is very small at the top. 895 01:10:34,960 --> 01:10:40,780 So we're looking at just probably even intraday picture right here that we need 896 01:10:40,780 --> 01:10:41,780 to figure out. 897 01:10:42,640 --> 01:10:48,900 And this is a very quick trading range. Well, 898 01:10:49,060 --> 01:10:55,690 another reason why this happens so quick is because it's a tippy formation so we 899 01:10:55,690 --> 01:10:59,850 have speculation on the way up and this has been happening in the beginning of 900 01:10:59,850 --> 01:11:05,890 2000 and then urgent distribution on the way down we see that from the volume 901 01:11:05,890 --> 01:11:12,010 signature increase and how the price reacted to the downside after this 902 01:11:12,010 --> 01:11:16,990 there is no way we don't see the bias 903 01:11:16,990 --> 01:11:23,890 why well because it did not developed like this, 904 01:11:24,070 --> 01:11:30,810 where there is no progression to the downside by the price. 905 01:11:31,430 --> 01:11:34,930 It did not develop as a horizontal trading range. 906 01:11:35,390 --> 01:11:41,550 It developed as an urgent sell -in by institutions on two legs to the 907 01:11:41,590 --> 01:11:44,690 actually three legs to the downside. 908 01:11:46,860 --> 01:11:51,860 At this point of time, you already should be thinking that this is a 909 01:11:51,860 --> 01:11:54,800 deterioration to the secular trend. 910 01:11:58,620 --> 01:12:04,820 And therefore, most likely, long -term bias is going to be down. 911 01:12:05,680 --> 01:12:11,500 Now, short -term bias, because of this reaction right here that has elements of 912 01:12:11,500 --> 01:12:15,740 diminishing downspread, diminishing supply signature. 913 01:12:16,590 --> 01:12:21,410 That suggests that the short -term bias is going to be to the upside. 914 01:12:23,590 --> 01:12:28,990 That's another difficulty in students' analysis that I see. 915 01:12:29,730 --> 01:12:34,930 Thinking about two biases at the same time for different time frames. 916 01:12:35,730 --> 01:12:40,110 Thinking that the long -term bias here is to the downside, but that the short 917 01:12:40,110 --> 01:12:44,790 -term picture most likely is going to be technical picture, is going to be some 918 01:12:44,790 --> 01:12:45,790 kind of rally. 919 01:12:46,250 --> 01:12:51,270 and most likely out of this always -sold condition, which is extreme at this 920 01:12:51,270 --> 01:12:57,890 point. Think about for the whole time that the trend was up, especially in 921 01:12:58,110 --> 01:13:04,610 when the price was going up, up, up, without stopping, kind of like a 2017 922 01:13:04,610 --> 01:13:06,710 of market that we have had just recently. 923 01:13:08,510 --> 01:13:12,390 Going down so fast, so quick is going to... 924 01:13:12,650 --> 01:13:16,790 define an oversold condition for us and that's going to be an extreme oversold 925 01:13:16,790 --> 01:13:21,630 condition just because we've never seen this before in the last year or so. 926 01:13:22,750 --> 01:13:28,070 So that suggested a rally. A rally suggested that we might have some kind 927 01:13:28,070 --> 01:13:29,070 upthrust situation. 928 01:13:29,330 --> 01:13:32,490 So we're looking for the upthrust, we're looking for the test. 929 01:13:33,110 --> 01:13:35,930 That usually would define phase C for us. 930 01:13:36,250 --> 01:13:41,450 And then we're also looking at the upsloping structure of this whole 931 01:13:42,240 --> 01:13:49,140 And we're seeing, you know, we could connect the highs and then from the lows 932 01:13:49,140 --> 01:13:54,100 the selling climax, extract the next parallel line. And then from the lows of 933 01:13:54,100 --> 01:13:58,120 the secondary test of the sign of weakness in phase B, extract the next 934 01:13:58,300 --> 01:14:05,060 And look how perfectly the major sign of weakness, I don't know 935 01:14:05,060 --> 01:14:08,400 why I don't have this label in here, major sign of weakness. 936 01:14:09,210 --> 01:14:15,570 is being defined by the commitment below on multiple closes down, four closes 937 01:14:15,570 --> 01:14:19,190 down, rather than just an attempt to go down. 938 01:14:19,510 --> 01:14:26,390 And then a last point of supply rally has some aggression to the upside, but 939 01:14:26,390 --> 01:14:29,110 finds the resistance at the level of support. 940 01:14:29,470 --> 01:14:34,850 And then the second rally shows that demand is starting to deteriorate and 941 01:14:34,850 --> 01:14:39,660 that... The result to the upside is also deteriorating, suggesting that this is 942 01:14:39,660 --> 01:14:41,700 the time right now for the price to go down. 943 01:14:42,200 --> 01:14:46,880 As the price goes down, another trading range. This one is a peculiar trading 944 01:14:46,880 --> 01:14:49,080 range because it unfolds so quick. 945 01:14:49,820 --> 01:14:55,400 So you have to think, because we're looking at the historical chart as to 946 01:14:55,400 --> 01:15:00,900 is my last point of supply. 947 01:15:02,190 --> 01:15:07,050 where the downtrend is going to start. And we know that the trend has started 948 01:15:07,050 --> 01:15:09,970 this point. So most likely this is going to be phase C. 949 01:15:10,210 --> 01:15:16,970 And then a selling climax, automatic rally, secondary test, and then 950 01:15:16,970 --> 01:15:18,690 in between is phase B. 951 01:15:20,250 --> 01:15:21,750 Okay, questions here. 952 01:15:22,970 --> 01:15:26,310 Can a distribution occur without phase B? 953 01:15:26,950 --> 01:15:28,690 This is a really good question. 954 01:15:29,120 --> 01:15:35,740 Some distributions with fewer bars to my eyes appear to not have phase B, but 955 01:15:35,740 --> 01:15:40,460 proceed from A to C. And we obviously are talking about this trading range 956 01:15:40,460 --> 01:15:46,580 here. So the way how we would be looking at this trading range is there could be 957 01:15:46,580 --> 01:15:47,559 multiple ways. 958 01:15:47,560 --> 01:15:52,120 We definitely recognize that this is a major sign of weakness. This is a change 959 01:15:52,120 --> 01:15:53,120 of character. 960 01:15:53,930 --> 01:15:59,050 We also recognize that this level of support is probably crucial because the 961 01:15:59,050 --> 01:16:04,250 rally comes exactly to this level. So we're most likely talking about just 962 01:16:04,250 --> 01:16:05,250 picture right here. 963 01:16:05,350 --> 01:16:07,950 Again, I have mentioned a TP formation. 964 01:16:08,510 --> 01:16:15,050 In a TP formation, we're going to have two types of charts. 965 01:16:15,450 --> 01:16:19,410 We're going to have what we're going to call a hypodermic TP formation. 966 01:16:21,480 --> 01:16:25,300 where there is a speculation on the way up and speculation on the way down, 967 01:16:25,400 --> 01:16:26,620 something like this. 968 01:16:27,020 --> 01:16:31,060 And then we're going to talk about the TP formation, where there is an urgent 969 01:16:31,060 --> 01:16:37,260 selling in phase A, and then we are residing in the lower part 970 01:16:37,260 --> 01:16:43,240 of the trading range, and we never touch the buying climax high. 971 01:16:45,220 --> 01:16:47,060 And then the price fails. 972 01:16:47,950 --> 01:16:52,390 So in both of these cases, the 973 01:16:52,390 --> 01:16:57,870 distribution at the top is going to be very fast. 974 01:16:58,090 --> 01:17:01,630 So therefore, your phases are going to be all collapsed. 975 01:17:02,410 --> 01:17:09,110 And the rule here where we say that phase B is going to be the longest phase 976 01:17:09,110 --> 01:17:15,810 not going to be applicable just because there is an urgency to sell. 977 01:17:20,630 --> 01:17:27,030 So that's the key to the collapse of the phases in 978 01:17:27,030 --> 01:17:33,970 either a hypodermic scenario or on the accumulation, we're going 979 01:17:33,970 --> 01:17:40,030 to see that collapse in the shakeout type of situation that we recently have 980 01:17:40,030 --> 01:17:41,030 had. 981 01:17:41,770 --> 01:17:43,550 Okay, next one. 982 01:17:44,020 --> 01:17:50,880 Can a secondary test in phase B be lower than the saline climax level? 983 01:17:56,800 --> 01:18:02,940 Secondary test in phase A, so somewhere here, be lower than the saline climax? 984 01:18:03,080 --> 01:18:03,999 Yeah, of course. 985 01:18:04,000 --> 01:18:08,160 We could have this. Look at this, right? So this is why this question is here, 986 01:18:08,280 --> 01:18:09,280 yeah. 987 01:18:09,320 --> 01:18:10,860 So look at these two scenarios. 988 01:18:11,470 --> 01:18:15,230 In the first scenario, we see that the secondary test is a high or low. 989 01:18:15,530 --> 01:18:18,050 In the second scenario, we see it as a low or low. 990 01:18:18,790 --> 01:18:21,510 And in both cases, there are suggestions. 991 01:18:22,550 --> 01:18:26,070 What are the suggestions? A high or low suggests some kind of strength. 992 01:18:26,770 --> 01:18:31,390 And think about this. I'm saying strength. I don't want you to think 993 01:18:31,390 --> 01:18:38,290 about this statement because we defined that the long -term bias after this 994 01:18:38,290 --> 01:18:40,170 move to the downside was... 995 01:18:41,089 --> 01:18:46,630 down, and then a short -term bias was defined by us out of the oversold 996 01:18:46,630 --> 01:18:48,650 condition here as up. 997 01:18:49,010 --> 01:18:55,050 So therefore, a high -low and this strength that secondary test shows at 998 01:18:55,050 --> 01:19:00,270 point of time suggests that and confirms the short -term bias to the upside. 999 01:19:00,570 --> 01:19:06,310 It doesn't confirm a long -term bias to the downside. It just suggests that 1000 01:19:06,310 --> 01:19:08,670 short -term we might have some kind of reaction. 1001 01:19:09,630 --> 01:19:13,850 In this case, a low, a low on the secondary test suggests what? Suggests 1002 01:19:13,850 --> 01:19:17,730 presence of the supply and suggests that demand is poor. 1003 01:19:19,290 --> 01:19:26,190 So therefore, we would be thinking that the next 1004 01:19:26,190 --> 01:19:32,910 rally that we still have to have into phase B and phase C could be of weaker 1005 01:19:32,910 --> 01:19:33,910 quality. 1006 01:19:34,990 --> 01:19:37,790 And therefore, we're definitely interested. 1007 01:19:38,390 --> 01:19:39,550 in the trade to the downside. 1008 01:19:43,030 --> 01:19:46,390 Shouldn't redistribution start with the buying climax? 1009 01:19:48,170 --> 01:19:49,490 No, why would it? 1010 01:19:49,970 --> 01:19:53,830 Right? So how does redistribution happen? 1011 01:19:54,770 --> 01:19:57,970 Okay, so maybe we didn't go through this material. 1012 01:19:58,570 --> 01:20:01,950 But we did go through the reaccumulation. 1013 01:20:02,190 --> 01:20:07,650 So I'm kind of, you know, in my mind thinking that you guys are... 1014 01:20:08,030 --> 01:20:10,090 converting that into the redistribution. 1015 01:20:10,570 --> 01:20:15,850 So reaccumulation is going to start with what? With the stopping action. 1016 01:20:16,110 --> 01:20:19,750 It's going to be an intermediate buying climax. 1017 01:20:21,450 --> 01:20:27,490 And then after that, we're going to have an automatic reaction, secondary test, 1018 01:20:27,890 --> 01:20:31,810 and so on and so forth. But it's going to start with the buying climax. 1019 01:20:32,290 --> 01:20:34,850 Why? Because the price was going up. 1020 01:20:36,360 --> 01:20:40,560 We were in the buying mode here, specifically with weekends. 1021 01:20:42,040 --> 01:20:48,800 On the way down, we cannot have a buying climax because there is selling going 1022 01:20:48,800 --> 01:20:55,540 on. And in some instances, I know that, there is some references 1023 01:20:55,540 --> 01:21:00,240 to labeling this as a buying climax rather than a selling climax. 1024 01:21:00,560 --> 01:21:03,460 And the logic is that institutions are buying here. 1025 01:21:03,820 --> 01:21:04,940 Okay, well... 1026 01:21:06,110 --> 01:21:08,190 Let's talk about this really quickly. 1027 01:21:09,510 --> 01:21:12,590 Didn't want to go into this, but I think that's necessary. 1028 01:21:13,350 --> 01:21:17,950 So why sell in Climax and 1029 01:21:17,950 --> 01:21:21,810 not buy in Climax? 1030 01:21:24,130 --> 01:21:30,270 The pros for buying Climax identification here in the 1031 01:21:30,270 --> 01:21:35,730 redistribution. The suggestion here is that institutions are buying 1032 01:21:35,730 --> 01:21:38,610 at this point. 1033 01:21:40,230 --> 01:21:44,310 And therefore, this is a buying climax and not a selling climax. Okay. 1034 01:21:44,730 --> 01:21:47,850 So think about just the semantics of this. 1035 01:21:51,250 --> 01:21:57,830 Climactic action suggests that there is a 1036 01:21:57,830 --> 01:22:03,630 stopping, a conclusion of some action. 1037 01:22:04,040 --> 01:22:05,140 What action is that? 1038 01:22:06,320 --> 01:22:07,740 It's the price going down. 1039 01:22:08,960 --> 01:22:11,600 Why is it going down? Well, because there is a lot of selling. 1040 01:22:12,180 --> 01:22:16,180 So it's a conclusion or a stopping action of selling. 1041 01:22:17,840 --> 01:22:23,540 So therefore, it doesn't make sense to say a buying climax at this spot. 1042 01:22:26,840 --> 01:22:29,180 Then also think about, you know, 1043 01:22:31,720 --> 01:22:34,960 A buying climax at this spot in the redistribution. 1044 01:22:36,540 --> 01:22:40,380 Who is buying? Okay, well, some institutions are buying, but what hands 1045 01:22:40,380 --> 01:22:41,380 those institutions? 1046 01:22:41,620 --> 01:22:42,620 They are weak hands. 1047 01:22:42,680 --> 01:22:48,260 We know this because the price went up short -term and then it went down. 1048 01:22:48,520 --> 01:22:51,860 So they were on the wrong side of the long -term trade. 1049 01:22:52,140 --> 01:22:53,640 So therefore, weak hands. 1050 01:22:55,500 --> 01:22:58,060 So whatever they are buying here is going to be temporary. 1051 01:22:58,810 --> 01:23:02,470 And it's going to be only temporary to a long -term trend that is developing 1052 01:23:02,470 --> 01:23:08,870 here. So therefore, we don't want to call the stopping actions buying 1053 01:23:08,870 --> 01:23:14,910 climaxes. We want to call them selling climaxes. And they're going to be 1054 01:23:14,910 --> 01:23:17,910 the same way as a rate accumulation, only mirror image. 1055 01:23:18,890 --> 01:23:23,290 Selling climax, automatic rally, secondary test, 1056 01:23:23,750 --> 01:23:27,810 phase B, phase C, phase D. 1057 01:23:29,049 --> 01:23:33,550 everything is the same. So only phase A might have some kind of issues for us 1058 01:23:33,550 --> 01:23:34,550 here. 1059 01:23:34,590 --> 01:23:36,830 Okay, let's go to the next one. 1060 01:23:40,050 --> 01:23:47,050 Okay, so multiple trading ranges here. One of the examples 1061 01:23:47,050 --> 01:23:49,690 that I like for the hypodermic action. 1062 01:23:49,890 --> 01:23:55,950 So we've talked about the hypodermic distribution patterns where we said that 1063 01:23:55,950 --> 01:23:57,310 there's going to be a collapse. 1064 01:23:58,249 --> 01:24:00,770 of duration of phases. 1065 01:24:01,450 --> 01:24:04,870 Why? Well, because there is an urgency to sell. 1066 01:24:05,290 --> 01:24:09,290 When there is an urgency to sell, phases are gonna be collapsed. 1067 01:24:14,170 --> 01:24:15,930 And this is what we see there. 1068 01:24:16,170 --> 01:24:19,150 There are quite a few ways of how we could label this. 1069 01:24:19,370 --> 01:24:22,690 We could label buying climax at the top right here. 1070 01:24:23,120 --> 01:24:29,180 and then just say that we have automatic reaction secondary test, sign of 1071 01:24:29,180 --> 01:24:35,840 weakness in B, phase C, either here or here, and 1072 01:24:35,840 --> 01:24:38,380 this whole thing is our distribution. 1073 01:24:38,720 --> 01:24:45,300 So that's one way. Another way is just to recognize this as a potential 1074 01:24:45,300 --> 01:24:50,540 change of character and as a first stop in action after the climactic run. 1075 01:24:51,760 --> 01:24:56,380 And then recognize this as an upthrust of the distribution. 1076 01:24:56,700 --> 01:25:01,100 And then a major sign of weakness and an LPS. 1077 01:25:01,480 --> 01:25:03,000 Either labeling is fine. 1078 01:25:03,780 --> 01:25:09,720 I doubt that a lot of us will be able to catch this trade to the downside. 1079 01:25:10,200 --> 01:25:13,740 But I want a lot of us to catch this trade to the upside. 1080 01:25:14,100 --> 01:25:18,460 The money here is to the upside. It's not necessarily to the downside. 1081 01:25:19,290 --> 01:25:23,850 you're kind of running into the problem of, well, what if this is a trading 1082 01:25:23,850 --> 01:25:29,390 range? And if it collapses like this, you might be far away from the ideal 1083 01:25:29,390 --> 01:25:30,209 of entry. 1084 01:25:30,210 --> 01:25:34,970 So sometimes it's not even worth it to think about the trade to the downside, 1085 01:25:35,290 --> 01:25:39,290 but it's definitely very profitable to think about the trade to the upside. 1086 01:25:41,390 --> 01:25:44,330 All right, accumulation, you can go through this yourself. 1087 01:25:44,550 --> 01:25:48,190 The only comment that I have here is kind of like this apex formation. 1088 01:25:48,920 --> 01:25:54,400 with the sign of strength still committing above and holding on there 1089 01:25:54,400 --> 01:25:56,740 support area. So it just works really beautifully. 1090 01:25:58,000 --> 01:26:01,920 All of this, you know, test number one, test number two, test number three 1091 01:26:01,920 --> 01:26:07,820 works. In the apex formation, the second point of fear is not going to work. 1092 01:26:08,240 --> 01:26:15,200 It's not going to look as a point of fear just because there is a 1093 01:26:15,200 --> 01:26:17,600 diminishing volume characteristics. 1094 01:26:24,200 --> 01:26:26,240 Next trading range. 1095 01:26:28,220 --> 01:26:33,660 Relative to this rally, we see a reaction that suggests a change of 1096 01:26:33,660 --> 01:26:35,960 and suggests a trading range. 1097 01:26:37,300 --> 01:26:42,660 Lost attempt to go up before a major sign of weakness. Major sign of weakness 1098 01:26:42,660 --> 01:26:43,619 well -defined. 1099 01:26:43,620 --> 01:26:45,620 Increased spread to the downside. 1100 01:26:46,640 --> 01:26:49,200 Commitment to the downside multiple times. 1101 01:26:50,049 --> 01:26:52,490 and increase in the volume signature. 1102 01:26:52,890 --> 01:26:59,670 So before the major sign of weakness, we are probably experiencing phase C. 1103 01:26:59,770 --> 01:27:05,430 Because this is a lower high, we are going to label it as a last point of 1104 01:27:05,430 --> 01:27:06,430 supply. 1105 01:27:06,630 --> 01:27:12,730 After that, after the major sign of weakness, a rally that has multiple 1106 01:27:12,730 --> 01:27:17,930 to go up, but it can't overcome the point of the resistance that was defined 1107 01:27:17,930 --> 01:27:18,970 the automatic reaction. 1108 01:27:19,580 --> 01:27:24,560 in phase a and therefore suggest more weakness and this is the point where we 1109 01:27:24,560 --> 01:27:30,980 could open the position to the downside the next trading range is uh 1110 01:27:30,980 --> 01:27:37,700 weird because it um has a very short duration and high 1111 01:27:37,700 --> 01:27:44,280 volatility so think about think about this trade in general 1112 01:27:44,280 --> 01:27:49,610 so we have a lot of speculation on the way up then institutions are selling. 1113 01:27:49,770 --> 01:27:54,950 Then somebody is seeing short -term value coming in and buying at this 1114 01:27:55,230 --> 01:27:59,570 As they buy, they produce a really good rally that comes to the previous point 1115 01:27:59,570 --> 01:28:02,430 of selling, and then it's being sold again. 1116 01:28:02,670 --> 01:28:06,310 We see this from the increase in the volume signature here. 1117 01:28:06,570 --> 01:28:11,430 There's a lot of selling behind that volume signature and the way how the 1118 01:28:11,430 --> 01:28:14,170 starts to create lower highs and lower lows. 1119 01:28:15,020 --> 01:28:18,680 Increased volatility suggests distributional pattern as well. 1120 01:28:20,000 --> 01:28:26,300 So then this is extremely volatile, very short duration, and 1121 01:28:26,300 --> 01:28:32,860 we probably identify this bar as kind of both a selling climax and an automatic 1122 01:28:32,860 --> 01:28:34,740 rally at the same time. 1123 01:28:35,300 --> 01:28:40,420 Secondary test as a sign of weakness, as a low low suggests more weakness, and 1124 01:28:40,420 --> 01:28:43,220 we just need to wait for the rally to open the position. 1125 01:28:44,780 --> 01:28:49,980 As the price goes into the up thrust, reversal acts as a perfect point of 1126 01:28:49,980 --> 01:28:55,420 in this case. And you could be thinking that you could still be in phase B at 1127 01:28:55,420 --> 01:28:56,299 this point. 1128 01:28:56,300 --> 01:29:01,640 So your goal is just to create some kind of lower low below the previous low, 1129 01:29:01,820 --> 01:29:06,000 just because of the weakness that we've seen. And it goes exactly to this point. 1130 01:29:06,120 --> 01:29:11,560 At this point, you might actually reassess and just say, okay, well, maybe 1131 01:29:11,560 --> 01:29:15,000 the rally is weak, I'm going to... continue holding on to this position. 1132 01:29:16,400 --> 01:29:21,660 Three times the rally tries to go up, fails, and you could add to the position 1133 01:29:21,660 --> 01:29:26,060 somewhere here into the climactic action right here. 1134 01:29:26,960 --> 01:29:28,320 That would be the trait. 1135 01:29:28,560 --> 01:29:29,560 Questions here? 1136 01:29:31,240 --> 01:29:32,880 Okay, so we've covered this. 1137 01:29:35,900 --> 01:29:41,200 Can we have a situation where the secondary test is a sign of weakness? 1138 01:29:42,240 --> 01:29:48,740 in phase B is so extreme that it causes the formation of a newer and lower 1139 01:29:48,740 --> 01:29:49,740 trading range. 1140 01:29:51,340 --> 01:29:53,120 Okay, well, interesting suggestion. 1141 01:29:57,000 --> 01:29:59,560 I'm just trying to identify where this is. 1142 01:30:00,780 --> 01:30:03,320 Yeah, I don't see it here. 1143 01:30:09,380 --> 01:30:13,410 Okay. Yeah, probably these two questions should not be on the slide. 1144 01:30:14,910 --> 01:30:21,870 Okay. In a third trading range, I identified secondary test in your chart 1145 01:30:21,870 --> 01:30:22,870 a buy -in climax. 1146 01:30:23,350 --> 01:30:29,790 So third trading range. Okay. Identified secondary test as a buy -in climax and 1147 01:30:29,790 --> 01:30:33,310 secondary test as a sign of weakness. Okay. 1148 01:30:33,810 --> 01:30:37,510 As an automatic reaction, could you please go over how we identify the 1149 01:30:38,190 --> 01:30:42,450 for this range from the wish. Yeah, so I think I mentioned this, right? 1150 01:30:42,490 --> 01:30:45,650 Climactic run relative to this rally. 1151 01:30:47,610 --> 01:30:50,030 This reaction, is this the largest reaction? 1152 01:30:50,370 --> 01:30:52,030 Yes, it's the largest reaction. 1153 01:30:53,530 --> 01:30:57,730 So this could be either a preliminary supply or a buying climax. 1154 01:30:58,190 --> 01:31:05,050 So the way how I confirmed this automatic reaction was more by the 1155 01:31:05,050 --> 01:31:06,230 the last point of supply. 1156 01:31:06,969 --> 01:31:12,330 So they come into the resistance that acted before as the support. 1157 01:31:13,110 --> 01:31:18,190 So support based on what? Well, based on the definition of the automatic 1158 01:31:18,190 --> 01:31:22,410 reaction. And that's how it kind of is being confirmed. 1159 01:31:22,730 --> 01:31:28,450 But you could definitely do exactly what you said and then put here preliminary 1160 01:31:28,450 --> 01:31:30,710 supply and then buy in climax here. 1161 01:31:31,150 --> 01:31:34,610 Now, the problem with this is going to be... 1162 01:31:34,860 --> 01:31:38,980 all in the characteristics of the climactic run. You kind of could see how 1163 01:31:38,980 --> 01:31:40,400 two are so different. 1164 01:31:40,940 --> 01:31:46,440 And even if you overlook that, then let's say from the bind climax into the 1165 01:31:46,440 --> 01:31:51,140 automatic reaction, secondary test, this is going to be phase A. 1166 01:31:52,420 --> 01:31:57,520 And then going into B, we're probably going to define a sign of weakness right 1167 01:31:57,520 --> 01:31:59,160 here in B. 1168 01:32:00,640 --> 01:32:03,120 So test at the high, test at the low. 1169 01:32:04,450 --> 01:32:09,330 Maybe phase C here, major sign of weakness, LPSY. 1170 01:32:10,030 --> 01:32:15,510 You probably could label it like that, but then it seems like a trading range. 1171 01:32:17,730 --> 01:32:20,970 I'm sorry, it seems like a downtrend rather than a range. 1172 01:32:21,570 --> 01:32:26,130 So I would probably just be thinking that this is the range right here, this 1173 01:32:26,130 --> 01:32:28,230 the range right here, this is the range right here. 1174 01:32:28,550 --> 01:32:33,130 So this smaller range belongs to this one more as... 1175 01:32:34,800 --> 01:32:40,620 a major sign of weakness, and then LPSY, and this range stands on its own. 1176 01:32:41,900 --> 01:32:48,640 Okay, yeah, so I don't think that there is, well, okay, so down sloping range, 1177 01:32:48,820 --> 01:32:55,560 yes, you could probably, you know, try and do it like this, but I think it's 1178 01:32:55,560 --> 01:32:59,300 well defined. I mean, like in this case, there is no need for that. 1179 01:32:59,800 --> 01:33:04,620 Look at how LPSY rally comes exactly to the point of the support, and that's 1180 01:33:04,620 --> 01:33:05,820 exactly what we want to see. 1181 01:33:06,020 --> 01:33:10,040 If anything, this is not down sloping range. 1182 01:33:10,320 --> 01:33:17,240 This is more of the expanding formation where we see that the 1183 01:33:17,240 --> 01:33:24,040 support starts to expand to the downside, and then we see deterioration 1184 01:33:24,040 --> 01:33:25,560 the other side. 1185 01:33:27,840 --> 01:33:30,020 probably would look at this like that. 1186 01:33:30,820 --> 01:33:36,980 But again, the major trading point is gonna be somewhere here, here, 1187 01:33:37,100 --> 01:33:41,840 here. All of those are great points of entry, also here. 1188 01:33:42,320 --> 01:33:44,280 So all on the way down. 1189 01:33:46,640 --> 01:33:47,640 All right. 1190 01:33:48,620 --> 01:33:50,340 Okay, next one. 1191 01:33:50,620 --> 01:33:56,040 Okay, so this was probably like, The most challenging. 1192 01:33:56,320 --> 01:33:58,760 I have it in reverse. Okay, it doesn't matter. 1193 01:33:59,800 --> 01:34:04,240 Yeah, let's just do it on the one without labeling here. 1194 01:34:04,560 --> 01:34:09,060 So, yeah, this by far was the most challenging 1195 01:34:09,060 --> 01:34:12,280 chart. 1196 01:34:13,540 --> 01:34:14,900 It's a chart of Yahoo. 1197 01:34:16,420 --> 01:34:18,980 There are multiple trading ranges right here. 1198 01:34:21,849 --> 01:34:27,390 The key here was to define 1199 01:34:27,390 --> 01:34:30,510 the ranges themselves. 1200 01:34:31,550 --> 01:34:36,790 So let's maybe have a volunteer. Let's have a discussion here because this is 1201 01:34:36,790 --> 01:34:39,010 going to be a good learning point. 1202 01:34:39,870 --> 01:34:41,830 So say yes and I'll unmute you. 1203 01:34:43,530 --> 01:34:44,610 Okay, let's go. 1204 01:34:46,930 --> 01:34:48,190 Nilesh, how are you doing? 1205 01:34:48,650 --> 01:34:50,630 I'm doing good. How are you? Good. 1206 01:34:51,759 --> 01:34:56,040 Okay. So what are the trading ranges that we are looking at? 1207 01:34:57,560 --> 01:35:02,760 Sure. So the first trading range, which I identified as a, 1208 01:35:02,900 --> 01:35:09,780 it's like a preliminary supply where we have the highest volume 1209 01:35:09,780 --> 01:35:12,000 signature on the map. 1210 01:35:12,380 --> 01:35:15,120 That I identified as a preliminary supply. 1211 01:35:15,460 --> 01:35:16,460 Okay. 1212 01:35:16,740 --> 01:35:19,380 And then at the top, there was, 1213 01:35:20,780 --> 01:35:27,660 the trading range, which was like kind of very condensed and that would have 1214 01:35:27,660 --> 01:35:33,220 been my upthrust after distribution in that trading range. So it's very small. 1215 01:35:33,520 --> 01:35:35,920 Okay, hold on a second. I lost you. I lost you. 1216 01:35:36,500 --> 01:35:38,280 Let's just address the question first. 1217 01:35:38,580 --> 01:35:43,020 So what are the trading ranges that we'll look at? So give me the timestamp 1218 01:35:43,020 --> 01:35:47,060 where the trading range starts and where it ends. 1219 01:35:48,240 --> 01:35:51,340 Or maybe just approximately, like with the timestamp. 1220 01:35:53,080 --> 01:35:54,160 The timestamp? 1221 01:35:54,500 --> 01:35:59,500 Yeah. Like, for instance, I see that there is a trading range right here. 1222 01:36:00,120 --> 01:36:02,640 Okay. So where is the next trading range? 1223 01:36:04,080 --> 01:36:10,440 The next one would be 2000, 1224 01:36:11,540 --> 01:36:12,740 I think. Is that 00? 1225 01:36:13,840 --> 01:36:15,280 That's the, yeah. 1226 01:36:16,059 --> 01:36:22,580 So that's where I have the second trading range at the top. 1227 01:36:22,980 --> 01:36:24,800 I'm sorry, what is that? 1228 01:36:26,180 --> 01:36:29,580 The peak before that, where you have highlighted, right? 1229 01:36:30,180 --> 01:36:35,020 Okay, I'm right here. I'm at the top. So is this where the trading range starts? 1230 01:36:35,740 --> 01:36:37,960 No, the high before that. 1231 01:36:38,400 --> 01:36:39,740 Okay, this one right here? 1232 01:36:40,080 --> 01:36:43,940 That would be my buying climax of that range. 1233 01:36:45,950 --> 01:36:48,210 That would be after distribution. 1234 01:36:48,610 --> 01:36:53,310 Okay, got it. So what is the trading range? Is it this trading range right 1235 01:36:53,790 --> 01:36:57,630 Right, right. I see. Got it. All right. So what is the next trading range? 1236 01:36:58,170 --> 01:37:05,170 The next one is the next biggest reaction that we see to the 1237 01:37:05,170 --> 01:37:06,730 upside, right? 1238 01:37:07,170 --> 01:37:08,170 Okay, this one? 1239 01:37:08,530 --> 01:37:10,590 No, the high before that. 1240 01:37:11,810 --> 01:37:12,810 Yeah. 1241 01:37:13,530 --> 01:37:17,950 Okay. Okay, can you go to the lowest point in that? 1242 01:37:18,550 --> 01:37:21,550 Yeah, that would be my trading range. 1243 01:37:21,870 --> 01:37:26,990 Sorry, timestamps, there is not much timestamps or dates that I can do. 1244 01:37:27,230 --> 01:37:28,650 Okay, that's fine, that's fine. 1245 01:37:29,010 --> 01:37:30,990 So can the next trading range? 1246 01:37:31,490 --> 01:37:38,170 The next trading range is the one that we just marked, right? So the 1247 01:37:38,170 --> 01:37:39,830 end of that trend. 1248 01:37:41,420 --> 01:37:43,260 That would be my selling climax. 1249 01:37:43,880 --> 01:37:49,280 And then we have a very narrow trading range which starts from there. Yeah, 1250 01:37:49,280 --> 01:37:50,300 there and there. 1251 01:37:50,600 --> 01:37:52,380 Okay. All right, got it. 1252 01:37:53,380 --> 01:37:54,380 Okay. 1253 01:37:59,300 --> 01:38:03,160 So... Okay. 1254 01:38:09,280 --> 01:38:10,520 Let's think about this. 1255 01:38:10,890 --> 01:38:15,450 this way so i'm going to direct you with the questions and i want you to listen 1256 01:38:15,450 --> 01:38:21,490 to the question do not deviate in your answer from the uh from the question 1257 01:38:21,490 --> 01:38:27,510 kind of like stay on it stay aware and just be present with me and then we're 1258 01:38:27,510 --> 01:38:33,830 going to go through the logic of this and this is going to be guys an example 1259 01:38:33,830 --> 01:38:37,530 how we should be thinking about labeling especially 1260 01:38:38,300 --> 01:38:43,880 labeling of the historical charts that we go through. This is our first task on 1261 01:38:43,880 --> 01:38:48,980 the historical chart to be able to recognize specific elements of 1262 01:38:48,980 --> 01:38:55,280 and distribution to recognize what elements belong to which phase and 1263 01:38:55,280 --> 01:39:01,480 to understand where is the final capitulation before the trend starts or 1264 01:39:01,480 --> 01:39:02,960 is the emergence of the trend. 1265 01:39:03,420 --> 01:39:09,700 So what I would suggest, Naresh, is to look into this area right here 1266 01:39:09,700 --> 01:39:16,700 is this a distribution or a uh is this a distribution 1267 01:39:16,700 --> 01:39:22,340 or a reaccumulation distribution distribution why is this a distribution 1268 01:39:22,340 --> 01:39:28,360 by looking at the chart uh 1269 01:39:28,360 --> 01:39:35,360 because the price went down after yeah i think in the most 1270 01:39:35,360 --> 01:39:41,060 simplistic terms that you could possibly think of, right? The price was going 1271 01:39:41,060 --> 01:39:46,460 up, then it had some kind of distribution, and then the price went 1272 01:39:47,280 --> 01:39:49,840 On the way down, it had what? 1273 01:39:50,560 --> 01:39:56,040 Another distribution, or is it a redistribution? 1274 01:39:57,700 --> 01:40:01,760 Redistribution. Redistribution. The reason why it's a redistribution, 1275 01:40:01,760 --> 01:40:03,580 the price was going down before. 1276 01:40:04,250 --> 01:40:08,070 Then it went to the consolidation, and then it went down. 1277 01:40:08,350 --> 01:40:13,230 All right, so our attention is on this area of the distribution. 1278 01:40:15,030 --> 01:40:20,750 Okay, so on the way up, how would you characterize this rally? 1279 01:40:21,030 --> 01:40:22,690 What do you see on this rally? 1280 01:40:23,170 --> 01:40:27,430 Is there a lot of speculation that's going on in this rally? 1281 01:40:28,690 --> 01:40:33,390 I mean, think about the way how it went up, right? So we have... 1282 01:40:33,710 --> 01:40:34,710 Two quarters here. 1283 01:40:37,050 --> 01:40:39,910 And price went up from 40 to 120. 1284 01:40:42,670 --> 01:40:48,830 What do you think institutions are going to do when the price goes up so fast? 1285 01:40:50,690 --> 01:40:55,430 They're going to at least at the minimum take some profit. 1286 01:40:55,930 --> 01:41:00,710 So I'm working with one of the institutional clients right now. And one 1287 01:41:00,710 --> 01:41:06,560 requirements for the system is to be able to take the profit at the areas 1288 01:41:06,560 --> 01:41:10,820 the position is in the extreme overbought condition. 1289 01:41:11,520 --> 01:41:16,320 Because they know that there's going to be a reversion to the mean. 1290 01:41:17,060 --> 01:41:23,320 If the price went up so fast, it has to revert to the mean at some point. 1291 01:41:23,640 --> 01:41:27,720 So it's a very logical place for them to do a couple of things. 1292 01:41:28,350 --> 01:41:32,450 to scale out of the position, to close the position, or to hedge the position. 1293 01:41:33,510 --> 01:41:37,590 So therefore, we know that whatever selling is going to come is going to be 1294 01:41:37,590 --> 01:41:38,590 institutional type. 1295 01:41:39,050 --> 01:41:41,110 Look at the selling that comes. 1296 01:41:42,030 --> 01:41:47,550 This is a significant volume signature over anything that we've seen before on 1297 01:41:47,550 --> 01:41:48,550 the downside. 1298 01:41:49,330 --> 01:41:54,730 Okay, well now, let's kind of like visualize this a little bit. So there is 1299 01:41:54,730 --> 01:41:55,730 speculation. 1300 01:41:56,970 --> 01:42:03,710 on the way up, which leads to some kind 1301 01:42:03,710 --> 01:42:09,990 of urgent selling by institutions. 1302 01:42:16,550 --> 01:42:20,390 When do we have that type of price behavior? 1303 01:42:21,200 --> 01:42:26,620 where there is a speculation on the way up and then there is an urgency to sell 1304 01:42:26,620 --> 01:42:28,260 by institutions on the way down. 1305 01:42:28,860 --> 01:42:31,460 How do we call this type of distributional pattern? 1306 01:42:33,060 --> 01:42:34,720 Parabolic trends? 1307 01:42:36,720 --> 01:42:37,720 I'm sorry? 1308 01:42:38,880 --> 01:42:43,120 I don't remember the exact name, but it's like whenever we have like a 1309 01:42:43,120 --> 01:42:44,300 moves to upside. 1310 01:42:46,420 --> 01:42:47,860 Hyperdermic formation, right? 1311 01:42:48,190 --> 01:42:49,910 So we would say hypodermic formation. 1312 01:42:50,450 --> 01:42:54,250 And by the way, guys, I really would like you to study those. I mean, like I 1313 01:42:54,250 --> 01:42:57,950 gave you all of the schematics, all of the characteristics are there. 1314 01:42:58,230 --> 01:43:02,270 We also talk about teepee formation, right? So teepee family. 1315 01:43:02,510 --> 01:43:09,270 So hypodermic is going to look like a hut, Indian hut, right? 1316 01:43:09,390 --> 01:43:14,190 So it's going to have a speculation on the way up and then urgent selling on 1317 01:43:14,190 --> 01:43:15,190 way down. 1318 01:43:16,010 --> 01:43:21,570 We don't have it here. We only have speculation on the way up. And then we 1319 01:43:21,570 --> 01:43:24,230 like the first leg where we see some urgent selling. 1320 01:43:25,870 --> 01:43:28,990 But then it goes into a trading range. 1321 01:43:29,630 --> 01:43:35,130 So the TP formation of the same kind of like qualities is going to be something 1322 01:43:35,130 --> 01:43:37,870 where we have a speculation on the way up. 1323 01:43:38,630 --> 01:43:42,770 And then we have phase A, phase B. 1324 01:43:43,870 --> 01:43:50,530 With urgent selling, and usually it's going to be labeled like this. 1325 01:43:50,990 --> 01:43:57,090 Phase A, secondary test is going to be very weak into one half of the whole 1326 01:43:57,090 --> 01:44:00,530 to the downside. Then we're going to experience a sign of weakness in phase 1327 01:44:01,790 --> 01:44:05,190 And then after that, the price is just going to create an apex. 1328 01:44:05,790 --> 01:44:07,290 And then it's going to go down. 1329 01:44:08,680 --> 01:44:10,220 It might have different variations. 1330 01:44:10,460 --> 01:44:16,800 It might have an apex. It might have some kind of upthrust attempt and then 1331 01:44:16,800 --> 01:44:17,800 down. 1332 01:44:17,900 --> 01:44:22,340 All right. So these two I gave you last week. So you should be aware of this 1333 01:44:22,340 --> 01:44:27,200 schematic and the way how characteristically the price and the 1334 01:44:27,200 --> 01:44:31,060 behave. So does this remind you of anything here on the chart? 1335 01:44:33,980 --> 01:44:35,480 Yes, it looks exactly. 1336 01:44:37,000 --> 01:44:38,220 What we just referred to. 1337 01:44:38,800 --> 01:44:40,060 Which one? 1338 01:44:40,900 --> 01:44:44,240 The hypodermic, I think that is the one, right? 1339 01:44:44,960 --> 01:44:48,960 Well, hypodermic is this. Do we have this type of structure up and down? 1340 01:44:49,500 --> 01:44:50,500 Yeah, then TP. 1341 01:44:51,140 --> 01:44:52,140 Yeah, TP. 1342 01:44:52,740 --> 01:44:58,620 We have up, speculation on the way up, and then we have an urgent sell -in, 1343 01:44:58,680 --> 01:45:03,920 but it doesn't really negate all of the profits. It doesn't go lower. 1344 01:45:04,330 --> 01:45:08,250 Like the Alexian. Remember, Alexian went down much more significantly. 1345 01:45:10,530 --> 01:45:12,870 So this one is more of a tippy formation. 1346 01:45:13,350 --> 01:45:15,950 Okay, Nilesh, I'm going to take over here. Thank you. 1347 01:45:16,710 --> 01:45:17,710 Thank you. 1348 01:45:19,330 --> 01:45:22,770 All right, guys. So study, study, study, study. 1349 01:45:23,370 --> 01:45:28,570 You know, this is, you know, the patterns that we need to know by heart. 1350 01:45:29,090 --> 01:45:32,130 So when we look into the formation, it should come. 1351 01:45:32,650 --> 01:45:38,110 visually to you all of those elements, and then you just visually confirm those 1352 01:45:38,110 --> 01:45:43,170 elements. You're thinking, okay, well, I see this speculation on the way up. 1353 01:45:43,210 --> 01:45:45,350 This could happen in both of the scenarios. 1354 01:45:45,750 --> 01:45:48,210 I see that speculation on the way up. 1355 01:45:48,850 --> 01:45:55,310 Then I see that on the way down, there is a lot of urgent selling. 1356 01:45:57,170 --> 01:46:00,710 We see this from the volume signature. This is the largest. 1357 01:46:01,100 --> 01:46:04,220 selling signature that we've experienced. 1358 01:46:04,520 --> 01:46:10,440 Prior to that was actually on this bar. Some selling came there, but supply was 1359 01:46:10,440 --> 01:46:13,980 observed really quickly and the price continued to the upside. 1360 01:46:14,260 --> 01:46:19,840 As we look into this picture and we're thinking about this whole trading range, 1361 01:46:20,020 --> 01:46:24,180 obviously it starts with the buying climax here. This is the stop in action. 1362 01:46:24,840 --> 01:46:29,840 And then the first leg to the downside is an automatic reaction. 1363 01:46:30,480 --> 01:46:35,040 The next swing to the upside is a secondary test. That's our phase A. 1364 01:46:36,120 --> 01:46:38,640 So we're here and here. 1365 01:46:39,240 --> 01:46:42,440 And look at this attempt to go up. 1366 01:46:44,880 --> 01:46:49,220 At this point of time, we would be thinking this is a very weak secondary 1367 01:46:49,580 --> 01:46:55,740 And right away, it falls down. It falls into phase B 1368 01:46:55,740 --> 01:46:57,740 on a lower low. 1369 01:46:58,160 --> 01:46:59,720 which suggests sign of weakness. 1370 01:47:01,640 --> 01:47:06,520 This point right here. So at this point, we would be thinking, well, they 1371 01:47:06,520 --> 01:47:07,520 urgently sold. 1372 01:47:08,580 --> 01:47:12,300 There is something that's going on and they want to get rid of this position. 1373 01:47:12,960 --> 01:47:17,020 And therefore, there's going to be an urgent selling and then there's going to 1374 01:47:17,020 --> 01:47:18,880 be a period of inactivity. 1375 01:47:21,140 --> 01:47:26,160 So the whole pattern, the sentiment of this pattern develops as extreme 1376 01:47:26,160 --> 01:47:27,740 speculation on the way up. 1377 01:47:28,120 --> 01:47:29,120 That's number one. 1378 01:47:29,900 --> 01:47:35,220 Urgent sell -in into the loads of phase A and phase B. 1379 01:47:35,500 --> 01:47:42,160 Number two. Those are done by the composite mass. So this urgent 1380 01:47:42,160 --> 01:47:47,900 sell -in suggests that their positions are closed. 1381 01:47:50,260 --> 01:47:54,860 Institutional positions, and specifically CO, are closed. 1382 01:47:55,680 --> 01:47:57,240 So who's left? 1383 01:47:58,350 --> 01:48:00,030 in this position. 1384 01:48:00,370 --> 01:48:06,270 While institutional trend followers are still in this position, the trend is not 1385 01:48:06,270 --> 01:48:12,050 broken, right? So we have a higher high and we have a higher low at this point 1386 01:48:12,050 --> 01:48:13,050 of time. 1387 01:48:13,770 --> 01:48:19,970 And because this is the period where CO is inactive. 1388 01:48:25,200 --> 01:48:27,940 we're going to see the diminishing volume signature. 1389 01:48:30,020 --> 01:48:33,920 And therefore, from this diminishing volume signature, we're concluding that 1390 01:48:33,920 --> 01:48:37,200 both supply is diminishing and demand is diminishing. 1391 01:48:37,440 --> 01:48:39,060 So what is happening here? 1392 01:48:39,580 --> 01:48:44,080 Somewhere here on the short -term oversold, 1393 01:48:44,260 --> 01:48:49,740 there are some buyers, weak -hand buyers. 1394 01:48:52,810 --> 01:48:56,670 And they bought in into this position. So they're fully invested. 1395 01:48:59,690 --> 01:49:00,690 Fully in. 1396 01:49:01,350 --> 01:49:05,670 The composite is fully out. 1397 01:49:09,470 --> 01:49:15,710 And then trend followers are still in this position and they are doing 1398 01:49:16,750 --> 01:49:21,410 ITF are holding this position. 1399 01:49:24,200 --> 01:49:27,060 So it's a period of time when everybody is inactive. 1400 01:49:28,020 --> 01:49:33,700 The COO has sold, and there is no reason for the COO to come in and to establish 1401 01:49:33,700 --> 01:49:35,980 the position either to the upside or to the downside. 1402 01:49:38,000 --> 01:49:43,380 It's too late for the upside. There is no potential for the upside in their 1403 01:49:43,380 --> 01:49:44,380 and their evaluation. 1404 01:49:44,920 --> 01:49:50,520 And then it's definitely not the time to open the position to the downside 1405 01:49:50,520 --> 01:49:51,520 either. 1406 01:49:52,170 --> 01:49:55,730 So they are standing on the side for this stock. 1407 01:49:56,090 --> 01:50:02,930 The weak hands, having identified the value at the lows of phase B, they are 1408 01:50:02,930 --> 01:50:06,510 into this position, and now they're just holding their position. They're doing 1409 01:50:06,510 --> 01:50:08,810 nothing as well. They're just waiting. 1410 01:50:11,230 --> 01:50:18,170 And then institutional trend followers are in this position. They did not scale 1411 01:50:18,170 --> 01:50:19,170 out. 1412 01:50:19,360 --> 01:50:23,260 Maybe it scaled out, but they did not exit this position, so they're also 1413 01:50:23,260 --> 01:50:28,480 waiting. And this waiting period is going to be like this on the lower 1414 01:50:28,480 --> 01:50:31,600 signature where both supply and demand goes down. 1415 01:50:33,000 --> 01:50:39,460 The weak hands are going to be excited if that picture is that Apex is 1416 01:50:39,460 --> 01:50:42,560 resolving into a fake move to the upside. 1417 01:50:42,940 --> 01:50:45,020 They are getting into this position. 1418 01:50:46,250 --> 01:50:48,630 So that creates a second point of excitement. 1419 01:50:50,230 --> 01:50:53,770 And we know that this is a characteristic of the upthrust. 1420 01:50:54,190 --> 01:51:00,690 And we confirm that by one close and then almost immediate pushback into the 1421 01:51:00,690 --> 01:51:01,529 trading range. 1422 01:51:01,530 --> 01:51:07,590 So an upthrust. An upthrust and a second point of fear could happen only in 1423 01:51:07,590 --> 01:51:08,590 phase C. 1424 01:51:08,750 --> 01:51:12,850 So this seems to be our phase C. 1425 01:51:15,980 --> 01:51:22,220 This is phase C. We know by the TPU schematic that a bind climax is going to 1426 01:51:22,220 --> 01:51:28,100 followed by the automatic reaction, secondary test, phase A, sign of 1427 01:51:28,100 --> 01:51:32,240 B, and then phase C. 1428 01:51:32,740 --> 01:51:39,520 And then it's on the break of that apex formation or TPU 1429 01:51:39,520 --> 01:51:44,740 formation here where ITFs are going to give up. 1430 01:51:45,440 --> 01:51:46,580 they're going to capitulate. 1431 01:51:48,100 --> 01:51:54,600 And with this capitulation, the volume signature is going to increase and the 1432 01:51:54,600 --> 01:51:59,520 price is going to go down. So the result to the downside is going to increase. 1433 01:51:59,660 --> 01:52:01,980 And that's going to create a sign of weakness. 1434 01:52:02,460 --> 01:52:08,300 And then the price is going to come back into the area of the support that acted 1435 01:52:08,300 --> 01:52:12,100 before as the resistance. And that's going to create the last point of 1436 01:52:13,480 --> 01:52:15,060 And that's the whole formation. 1437 01:52:15,380 --> 01:52:20,780 I'd like you to think and to consider the story behind 1438 01:52:20,780 --> 01:52:23,200 the price formation. 1439 01:52:23,620 --> 01:52:26,200 What does it mean for institutions? 1440 01:52:26,460 --> 01:52:27,660 How do they behave there? 1441 01:52:27,980 --> 01:52:31,860 It's a very important knowledge that we have to have. 1442 01:52:33,220 --> 01:52:39,960 Now, as we continue with our story here, right, so some 1443 01:52:39,960 --> 01:52:40,960 volume increase. 1444 01:52:41,450 --> 01:52:48,110 on institutional trend following capitulation and then co 1445 01:52:48,110 --> 01:52:54,630 has sold itfs gave up on this position 1446 01:52:54,630 --> 01:53:01,270 and then also the weak hands 1447 01:53:01,270 --> 01:53:03,770 which are public hands got in here 1448 01:53:09,840 --> 01:53:11,840 And then they sold on the way down. 1449 01:53:16,340 --> 01:53:19,780 So what do you think is the sentiment at this point of time? 1450 01:53:21,720 --> 01:53:23,900 Does CO want the stock here? 1451 01:53:24,300 --> 01:53:28,280 Well, we don't see a big bounce here, so CO is out. 1452 01:53:28,600 --> 01:53:30,720 There is no value here for the CO. 1453 01:53:30,960 --> 01:53:37,030 We know that if CO does not have any value for this stock, then most likely 1454 01:53:37,030 --> 01:53:39,650 are going to go down even after this reaccumulation. 1455 01:53:42,030 --> 01:53:46,810 The weak hands, which are public institutional hands, they are not 1456 01:53:46,810 --> 01:53:49,790 because there is too much emotional pain. 1457 01:53:50,430 --> 01:53:56,410 So they just stay away from the stock. They forget about it. So they're not 1458 01:53:56,410 --> 01:53:57,490 selling nor buying. 1459 01:53:57,850 --> 01:54:00,150 And that's why the rally is not that big. 1460 01:54:00,350 --> 01:54:03,010 And that's why the selling does not continue right away. 1461 01:54:04,520 --> 01:54:09,340 And then institutional trend followers are predominantly, you know, long -term 1462 01:54:09,340 --> 01:54:12,440 players. So they are completely out of the stock either. 1463 01:54:13,860 --> 01:54:19,140 And because there is no emergence of the trend at this low, they are not 1464 01:54:19,140 --> 01:54:21,980 participating. So what the stock will do? 1465 01:54:22,540 --> 01:54:24,940 Kind of do nothing. 1466 01:54:29,820 --> 01:54:33,220 And look how that nothing looks on the volume signature. 1467 01:54:38,070 --> 01:54:41,710 inactivity. And look how it looks on the price signature. 1468 01:54:43,630 --> 01:54:50,630 So you've got to think in these charts in terms of how 1469 01:54:50,630 --> 01:54:55,990 the sentiment changes for all market participants and how the price structure 1470 01:54:55,990 --> 01:55:02,890 basically a reflection of behaviors that we all exhibit in the 1471 01:55:02,890 --> 01:55:05,230 market belonging to a specific group. 1472 01:55:05,740 --> 01:55:07,460 either strong hands or weak hands. 1473 01:55:08,860 --> 01:55:14,520 Now imagine yourself and you are given, 1474 01:55:14,560 --> 01:55:21,360 let's say, $100 million to manage at the level of the 1475 01:55:21,360 --> 01:55:23,180 knowledge of the market that you have. 1476 01:55:24,120 --> 01:55:26,520 Think about what kind of trades you're going to have. 1477 01:55:27,240 --> 01:55:32,740 And if you have some mistakes losing trades, how are you going to get out of 1478 01:55:32,740 --> 01:55:34,060 this position and capitulate? 1479 01:55:34,720 --> 01:55:40,200 And that's what's going to produce those big gaps, big spread increases, big 1480 01:55:40,200 --> 01:55:42,000 increases in the volume signature. 1481 01:55:44,160 --> 01:55:46,520 Institutions are people. 1482 01:55:46,920 --> 01:55:51,860 And people are skin and bones. They are like us. There is nothing different. 1483 01:55:52,400 --> 01:55:56,900 The only difference between them and us is that it's their profession. 1484 01:55:57,100 --> 01:56:00,980 So they have to spend a lot of time studying this material, developing the 1485 01:56:00,980 --> 01:56:03,960 skill, and then applying it in the most successful way. 1486 01:56:04,940 --> 01:56:10,060 And they're getting paid for that, getting compensated. Us, it's our money, 1487 01:56:10,220 --> 01:56:13,580 right? So we invest, and if we miss, okay, it's on us. 1488 01:56:14,560 --> 01:56:20,280 So we're not necessarily dependent on the income, you know, from trading. And 1489 01:56:20,280 --> 01:56:22,720 I'm talking about retail traders, obviously, here. 1490 01:56:25,440 --> 01:56:31,480 So all is being driven by the behaviors of different market participants. 1491 01:56:33,550 --> 01:56:37,450 This chart is just like such a case study of how it all happens. 1492 01:56:37,990 --> 01:56:42,310 All right, well, let's go through the labeling here. 1493 01:56:42,650 --> 01:56:49,630 So we've labeled the first trading range right here. The 1494 01:56:49,630 --> 01:56:56,210 second one is easy once you put the slope and 1495 01:56:56,210 --> 01:57:01,490 you kind of right away see the emergence of the major sign of weakness. 1496 01:57:03,340 --> 01:57:09,280 a really strong momentum rally back into the trading range on the increased 1497 01:57:09,280 --> 01:57:10,279 demand signature. 1498 01:57:10,280 --> 01:57:17,140 So this demand signature suggests that the duration of this redistribution 1499 01:57:17,140 --> 01:57:21,000 is going to increase and we're going to have another trading range. 1500 01:57:21,600 --> 01:57:27,020 At the end of this trading range, there is a very, very good rally to the upside 1501 01:57:27,020 --> 01:57:31,430 on... increase in volume signature. 1502 01:57:31,670 --> 01:57:33,830 So that's our second point of excitement. 1503 01:57:36,950 --> 01:57:40,550 And therefore phase C for that small range. 1504 01:57:41,830 --> 01:57:43,790 And off we go to the downside. 1505 01:57:44,170 --> 01:57:46,010 Again here, look at this bar. 1506 01:57:46,990 --> 01:57:50,690 Second point of excitement, phase C. 1507 01:57:52,290 --> 01:57:57,630 Second point of excitement, phase C. 1508 01:57:58,640 --> 01:58:02,360 Second point of excitement, phase C. 1509 01:58:05,940 --> 01:58:12,940 So even by that, you could just quickly define phases and the timing. 1510 01:58:14,120 --> 01:58:19,840 Another thing that we could mention here is, and this was, and Elisha started 1511 01:58:19,840 --> 01:58:21,920 with, is this trading range. 1512 01:58:25,280 --> 01:58:27,540 Someone could label it. 1513 01:58:27,800 --> 01:58:28,800 this way. 1514 01:58:29,420 --> 01:58:34,140 Buying climax on the climactic run on the extreme volume signature. 1515 01:58:34,620 --> 01:58:37,940 Automatic reaction, secondary test, phase A. 1516 01:58:39,220 --> 01:58:44,220 Phase B, phase B, and then the upthrust into phase C. 1517 01:58:45,620 --> 01:58:52,280 And then the first big reaction, sign of weakness, and LPSY comes exactly 1518 01:58:52,280 --> 01:58:56,740 to the point of resistance which acted before as the support. 1519 01:58:57,740 --> 01:59:01,980 that's a possible interpretation of this area right here. But once you are in 1520 01:59:01,980 --> 01:59:06,720 this range, you've got to do it the way how we did it because it's a TP 1521 01:59:06,720 --> 01:59:11,580 formation. So it's going to have a very specific label in which I want you to 1522 01:59:11,580 --> 01:59:12,580 remember. 1523 01:59:13,340 --> 01:59:14,340 All right, great. 1524 01:59:20,700 --> 01:59:25,420 All right, so now that we have, oh, hold on a second. Is this distribution? 1525 01:59:27,550 --> 01:59:30,050 Oh, I'm sorry. I have to correct this. 1526 01:59:31,610 --> 01:59:36,010 Yeah, this is not the distributional label, and this is Apple. 1527 01:59:36,590 --> 01:59:39,470 So we're going to look into the history of Apple. 1528 01:59:42,150 --> 01:59:48,210 And I'm giving you all of the slides. So just as usual, they're going to be 1529 01:59:48,210 --> 01:59:50,990 uploaded below all of the slides, homework slides. 1530 01:59:51,650 --> 01:59:53,570 Print those out, label those. 1531 01:59:54,350 --> 01:59:59,030 send those to me. So on some of the charts, I don't define the trading 1532 01:59:59,030 --> 02:00:00,650 want you to kind of think about this. 1533 02:00:01,190 --> 02:00:02,850 This is the next step for us. 1534 02:00:03,330 --> 02:00:08,310 On some of the charts, I do define the trading ranges. I want you to, you know, 1535 02:00:08,310 --> 02:00:10,490 go through all of those and label those. 1536 02:00:11,090 --> 02:00:14,110 Again, now trading ranges, trading ranges. 1537 02:00:14,610 --> 02:00:18,250 Okay. So you kind of could see where we're going with this. 1538 02:00:19,710 --> 02:00:23,630 Now, these charts, have volume signatures. 1539 02:00:24,190 --> 02:00:30,030 So it's going to be interesting to see if you could come up also with some 1540 02:00:30,030 --> 02:00:31,350 volume comments on that. 1541 02:00:31,870 --> 02:00:37,270 And this is very intentional because the next class we're going to start on our 1542 02:00:37,270 --> 02:00:38,270 volume definitions. 1543 02:00:41,650 --> 02:00:45,870 All right. So quite a few trading ranges, quite a few slides. 1544 02:00:46,250 --> 02:00:51,610 So I would like you to maybe start earlier a little bit. 1545 02:00:52,329 --> 02:00:57,770 And again, you know, it all depends on how you're doing with this course, you 1546 02:00:57,770 --> 02:01:02,810 know, what kind of commitment you have for this course. You could definitely go 1547 02:01:02,810 --> 02:01:03,810 at your own pace. 1548 02:01:04,350 --> 02:01:10,390 You could, you know, do the whole homework or just a partial. 1549 02:01:10,730 --> 02:01:16,890 I'm fine with any way as long as you're improving even marginally from one class 1550 02:01:16,890 --> 02:01:17,890 to another. 1551 02:01:18,110 --> 02:01:24,290 Okay. We do have some time, so we have like around 30 minutes here. 1552 02:01:24,530 --> 02:01:29,470 So let's go through the Microsoft homework and let's see what we could 1553 02:01:29,650 --> 02:01:35,790 And I'm just going to go through some of the probably most common mistakes or 1554 02:01:35,790 --> 02:01:42,150 most common questions and comments that you could possibly have about this 1555 02:01:42,150 --> 02:01:43,450 labeling. So the first chart. 1556 02:01:44,270 --> 02:01:45,430 And right away. 1557 02:01:46,259 --> 02:01:52,280 When I ask you this question, guys, as to what catches your eye 1558 02:01:52,280 --> 02:01:57,620 on this chart, I always want you to think in terms of extremes and in terms 1559 02:01:57,620 --> 02:01:58,620 concepts. 1560 02:02:04,540 --> 02:02:07,220 So let's think in these terms. 1561 02:02:08,500 --> 02:02:13,560 And to me, this is kind of like the way of the nonlinear thinking, right? 1562 02:02:14,570 --> 02:02:20,490 We are not going to start at one point and then going to go strictly from that 1563 02:02:20,490 --> 02:02:25,250 point on. We're going to try to identify some of the things that are going to be 1564 02:02:25,250 --> 02:02:29,130 catching our eye in a lot of ways. 1565 02:02:29,770 --> 02:02:36,670 Well, right away, right here, I'm thinking, hmm, very interesting increase 1566 02:02:36,670 --> 02:02:37,810 the downspread. 1567 02:02:41,720 --> 02:02:45,060 Usually that's going to be associated with the increased volume signature. 1568 02:02:46,000 --> 02:02:49,800 And then after that, the price went up and had some kind of test. 1569 02:02:52,240 --> 02:02:55,760 So increase of the supply and then the test. 1570 02:02:56,380 --> 02:03:03,300 And that happens after we first defined the low and then we 1571 02:03:03,300 --> 02:03:10,120 tested it. So we have the first test, second test, and possibly a third test 1572 02:03:10,120 --> 02:03:11,120 as an area. 1573 02:03:11,370 --> 02:03:16,910 So that suggests the behavior that's going to be congruent with the price 1574 02:03:16,910 --> 02:03:18,450 behavior in phase C. 1575 02:03:19,330 --> 02:03:25,890 So if this is phase C, we are probably in the second point of fear. We see that 1576 02:03:25,890 --> 02:03:30,890 the previous reaction has other characteristics or slightly more bullish 1577 02:03:30,890 --> 02:03:34,890 characteristics than the one that we think phase C is. 1578 02:03:36,200 --> 02:03:40,820 So if this is an attempt to spring, then the next low is the test of that 1579 02:03:40,820 --> 02:03:44,560 spring. Right away, we could start thinking this is phase C. 1580 02:03:45,920 --> 02:03:49,380 Even without thinking what has happened prior to that. 1581 02:03:49,620 --> 02:03:55,680 If we define phase C, then we could define phase D easily. 1582 02:03:55,980 --> 02:04:02,880 How? Well, we know that in phase D, we're going to experience a major sign 1583 02:04:02,880 --> 02:04:07,990 strength. That is going to be followed by a backing up action, which is going 1584 02:04:07,990 --> 02:04:13,010 be a reaction that's going to come to the support level, which acted before as 1585 02:04:13,010 --> 02:04:17,730 resistance. We know that the definition of the major sign of strength is going 1586 02:04:17,730 --> 02:04:22,650 to state that from the lows in phase C, the price is going to go through the 1587 02:04:22,650 --> 02:04:27,930 whole trading range, and it's going to overcome the points of the resistance 1588 02:04:27,930 --> 02:04:30,010 that were created in phases A and B. 1589 02:04:30,430 --> 02:04:31,610 It's going to commit. 1590 02:04:32,320 --> 02:04:38,320 And we see that the commitment is multiple progressive closes to the 1591 02:04:38,320 --> 02:04:44,880 spend some time above that resistance and then react exactly to the point of 1592 02:04:44,880 --> 02:04:48,440 support that was defined by phases A and B. 1593 02:04:48,760 --> 02:04:55,340 And that happens exactly that way. So in a lot of your 1594 02:04:55,340 --> 02:05:00,660 homeworks and in a lot of my remarks to your homeworks, I mentioned phase D 1595 02:05:00,660 --> 02:05:01,660 boundary. 1596 02:05:02,220 --> 02:05:06,520 So a lot of you are very comfortable now with phase C boundary. 1597 02:05:07,620 --> 02:05:13,480 Some of you put maybe like this type of boundary for phase C. I would include 1598 02:05:13,480 --> 02:05:20,060 the test because it's a local test to what? To the action that is phase C type 1599 02:05:20,060 --> 02:05:20,719 of action. 1600 02:05:20,720 --> 02:05:22,500 So you have to include it together. 1601 02:05:22,880 --> 02:05:28,500 But then I have seen also where the boundary was put maybe somewhere here. 1602 02:05:28,720 --> 02:05:32,220 Maybe it was an assumption that... There is a small commitment and then a 1603 02:05:32,220 --> 02:05:37,700 reaction. Well, you have to look at the swings, right? Like we're going through 1604 02:05:37,700 --> 02:05:43,320 the swings on the Apple chart, right, where we had this type of picture, 1605 02:05:43,700 --> 02:05:48,580 automatic reaction, secondary test, and this was not a full swing. 1606 02:05:48,900 --> 02:05:55,620 The swings were well -defined there. So there is no reversal here, and 1607 02:05:55,620 --> 02:05:58,720 the reversal only comes on this bar. So here is a swing. 1608 02:05:59,180 --> 02:06:02,000 a swing to the upside, and then swing to the downside. 1609 02:06:02,280 --> 02:06:06,960 So we don't want to put the boundary in the middle of the swing. We want the 1610 02:06:06,960 --> 02:06:11,860 conclusion of the swing to the upside, and then we want the conclusion of the 1611 02:06:11,860 --> 02:06:12,860 swing to the downside. 1612 02:06:13,120 --> 02:06:18,240 And then the reversal out of that position will define the boundary for 1613 02:06:18,240 --> 02:06:23,000 phase. So now phase C and phase D are defined. 1614 02:06:23,920 --> 02:06:27,480 The problem is usually somewhere here in this labeling. 1615 02:06:29,280 --> 02:06:34,800 in the labeling of this area. Why? Well, because in some instances you might say 1616 02:06:34,800 --> 02:06:39,120 that, okay, well, what about this trading range, horizontal range? 1617 02:06:39,740 --> 02:06:42,840 Just because this looks as a change of character. 1618 02:06:43,740 --> 02:06:48,180 And this looks like a climactic run. So we're buying climax here. 1619 02:06:48,720 --> 02:06:51,800 So you would be right. It is indeed a change of character. 1620 02:06:52,540 --> 02:06:57,240 The only problem with this change of character is that it probably belongs to 1621 02:06:57,240 --> 02:06:58,240 this trading range. 1622 02:06:58,620 --> 02:07:04,160 It's a distributional pattern before the shakeout happens. 1623 02:07:04,500 --> 02:07:07,720 So you could label this as a selling climax and a shakeout. 1624 02:07:08,660 --> 02:07:13,320 Please note that you could also label this as a preliminary supply and then a 1625 02:07:13,320 --> 02:07:14,320 buying climax. 1626 02:07:14,380 --> 02:07:17,920 And then you could have a selling climax or a shakeout. 1627 02:07:18,500 --> 02:07:23,620 And that would be fine as well. I actually like this type of labeling. 1628 02:07:24,549 --> 02:07:29,510 But the climactic run at the end kind of suggests that this is more of a buying 1629 02:07:29,510 --> 02:07:35,390 climax. And if this is a buying climax, it stops the uptrend, defines the new 1630 02:07:35,390 --> 02:07:42,130 environment on the change of character, and then upthrusts as 1631 02:07:42,130 --> 02:07:46,450 a part of the distributional pattern, and then a downtrend. 1632 02:07:47,550 --> 02:07:51,570 After that, the next hardest part is... 1633 02:07:51,960 --> 02:07:54,740 a couple of automatic reactions that we have. 1634 02:07:55,000 --> 02:07:57,340 So in some instances, we could have that. 1635 02:07:57,600 --> 02:08:03,240 A big, quick move as an oversold move, and then a rally that is short. 1636 02:08:04,060 --> 02:08:06,380 It still acts as a change of character. 1637 02:08:06,720 --> 02:08:10,320 Change of character to what? To this move to the downside. It's the largest 1638 02:08:10,320 --> 02:08:11,660 rally on the way up. 1639 02:08:12,860 --> 02:08:18,260 But because of how supply is so available, it cannot be big. 1640 02:08:18,600 --> 02:08:19,740 So therefore... 1641 02:08:20,490 --> 02:08:25,510 you know, it's small, and then only on the next absorption, after the next 1642 02:08:25,510 --> 02:08:30,990 absorption point at secondary test, that's when we have this capacity to 1643 02:08:30,990 --> 02:08:34,010 in a much more meaningful manner. 1644 02:08:35,170 --> 02:08:38,570 All right. Well, everything else could be... 1645 02:08:38,890 --> 02:08:39,890 Self -explanatory. 1646 02:08:40,070 --> 02:08:45,730 So let me see if there are some comments. Can be lunch swing on 1647 02:08:45,730 --> 02:08:49,970 be interpreted as a buying climax and shakeout? Okay, well, we went through 1648 02:08:49,970 --> 02:08:52,490 this, so yes, it can. 1649 02:08:53,230 --> 02:08:57,730 Could you go over buying climax and Utah in 87? 1650 02:08:58,590 --> 02:09:05,110 Okay, well, again, climactic run, buying climax, change of character, 1651 02:09:05,370 --> 02:09:07,770 attempts to go up, secondary test. 1652 02:09:08,520 --> 02:09:15,380 sign of weakness in phase B, and then the upthrust action, and then a major 1653 02:09:15,380 --> 02:09:16,179 of weakness. 1654 02:09:16,180 --> 02:09:21,620 And this is just a small distributional pattern that happens often before we go 1655 02:09:21,620 --> 02:09:23,880 into some kind of reaccumulation structure. 1656 02:09:24,640 --> 02:09:28,940 But please don't think that this is extremely important. 1657 02:09:29,340 --> 02:09:34,040 I mean, it is important for us to understand how to label this. That's 1658 02:09:34,760 --> 02:09:40,920 But if we are mistaken and if we label this in a different way, let's say I 1659 02:09:40,920 --> 02:09:41,960 label it like this. 1660 02:09:42,980 --> 02:09:49,140 Did anything change to our trading strategy at this on the right of the 1661 02:09:49,760 --> 02:09:53,460 No. I will label it like this now. 1662 02:09:57,480 --> 02:10:03,520 I was buying Climax and let's say automatic reaction secondary test. 1663 02:10:04,160 --> 02:10:05,160 And this is the range. 1664 02:10:05,500 --> 02:10:10,080 Did anything change on the right side of the chart? 1665 02:10:10,540 --> 02:10:11,540 Nothing. 1666 02:10:12,080 --> 02:10:18,760 We still would be seeing phase C as it is here and phase D as it is here. 1667 02:10:18,940 --> 02:10:25,680 And therefore, our points of entry are going to be 1, 2, 3, and then 1668 02:10:25,680 --> 02:10:26,680 4. 1669 02:10:27,680 --> 02:10:33,600 Nothing would change no matter how we label phase A or what comes prior to 1670 02:10:34,760 --> 02:10:36,500 All right, next one. 1671 02:10:37,300 --> 02:10:44,160 So one of the things here for the lower trading range, it was to define the 1672 02:10:44,160 --> 02:10:45,160 slope. 1673 02:10:45,680 --> 02:10:49,760 And that slope gives you the definition, a more correct definition of the major 1674 02:10:49,760 --> 02:10:50,619 sign of strength. 1675 02:10:50,620 --> 02:10:54,960 And it gives you a much correct definition of the backing up action. 1676 02:10:54,960 --> 02:10:58,840 how the character of the move to the upside changes after that. 1677 02:10:59,160 --> 02:11:03,480 That's because the supply has been observed at the level of the support. 1678 02:11:04,090 --> 02:11:08,790 and then at the level of the resistance where it has been sold before. 1679 02:11:09,830 --> 02:11:15,030 So, and that's what we are expecting from the backing up action. A backing up 1680 02:11:15,030 --> 02:11:21,650 action is a test of supply at the level of the 1681 02:11:21,650 --> 02:11:22,650 resistance. 1682 02:11:22,910 --> 02:11:27,610 And usually this level of the resistance is going to be defined by the price 1683 02:11:27,610 --> 02:11:32,170 selling. We see how the volume supply has increased here in this area. 1684 02:11:32,600 --> 02:11:38,020 So we are naturally going to produce some kind of stopping action and see 1685 02:11:38,020 --> 02:11:42,580 kind of supply comes there. And it doesn't. So that suggests that the 1686 02:11:42,580 --> 02:11:43,920 is going to be very favorable. 1687 02:11:45,720 --> 02:11:47,220 Second point of fear. 1688 02:11:47,520 --> 02:11:49,060 First point of fear. 1689 02:11:50,840 --> 02:11:52,420 First point of excitement. 1690 02:11:54,800 --> 02:11:56,480 Second point of excitement. 1691 02:11:57,380 --> 02:12:01,440 Phase C could be defined in both biases. 1692 02:12:02,280 --> 02:12:03,280 Pretty easily. 1693 02:12:05,020 --> 02:12:09,000 And everything else, I think, was okay here. 1694 02:12:09,320 --> 02:12:11,900 All right, let's go to the next one. 1695 02:12:12,940 --> 02:12:19,400 Okay, so one of the things that I kind of was looking for, and now I see that 1696 02:12:19,400 --> 02:12:24,340 even I'm not doing this, is putting the boundary of phase C somewhere here. 1697 02:12:24,640 --> 02:12:27,020 And the reason why is because this is a test. 1698 02:12:35,150 --> 02:12:39,990 definitely something that I would correct here on my slide. 1699 02:12:40,290 --> 02:12:45,730 And then a lot of you, not a lot of you, but some of you define this as a sign 1700 02:12:45,730 --> 02:12:48,770 of strength and then phase D as just this. 1701 02:12:49,350 --> 02:12:55,190 So again, we need a reversal, right? So we need a continuation of this swing to 1702 02:12:55,190 --> 02:12:59,650 the upside until it actually reverses. And then we would... 1703 02:12:59,870 --> 02:13:03,410 say the major sign of strength has happened and the backing of action has 1704 02:13:03,410 --> 02:13:09,150 happened in this case this is uh one two three abc formation so the boundary is 1705 02:13:09,150 --> 02:13:16,090 going to be here um okay so what else oh look into 1706 02:13:16,090 --> 02:13:22,770 this move to the upside stop in action a trading range and then again 1707 02:13:22,770 --> 02:13:28,180 a small distributional range within buying climax and up for us That should 1708 02:13:28,180 --> 02:13:34,400 remind you of the chart before, right? And then that defines the causality for 1709 02:13:34,400 --> 02:13:36,900 the change of character reaction. 1710 02:13:38,800 --> 02:13:43,240 And then after that, it's all the same kind of, the same structure. 1711 02:13:43,580 --> 02:13:47,600 So again, could we have this as a trading range? 1712 02:13:47,940 --> 02:13:49,000 Probably not. 1713 02:13:49,280 --> 02:13:51,980 Probably this is more of the distributional character. 1714 02:13:52,280 --> 02:13:56,240 And then you start your trading range with big swings like this. 1715 02:13:56,840 --> 02:13:58,940 and then everything could be defined. 1716 02:13:59,240 --> 02:14:00,240 All right. 1717 02:14:06,760 --> 02:14:08,160 Okay, fill it. 1718 02:14:11,080 --> 02:14:12,380 Let me unmute you. 1719 02:14:15,160 --> 02:14:16,160 Are you there? 1720 02:14:16,640 --> 02:14:17,660 Yeah, sorry. 1721 02:14:17,920 --> 02:14:20,640 Yeah, so what's the question about the upvote? 1722 02:14:21,420 --> 02:14:25,560 Yeah, it was regarding the chart number two. 1723 02:14:26,220 --> 02:14:32,900 There was an upthrust in the accumulation range, and I thought if it 1724 02:14:32,900 --> 02:14:35,100 labeled as upthrust action. 1725 02:14:35,680 --> 02:14:37,920 Okay, yeah, all right. Thank you. Great. 1726 02:14:38,300 --> 02:14:42,640 Yeah, I was looking at this and couldn't understand it. All right, that sounds 1727 02:14:42,640 --> 02:14:44,640 good. All right, next one. 1728 02:14:45,020 --> 02:14:47,080 We have about 15 minutes here. 1729 02:14:48,180 --> 02:14:54,840 So a downsloping range, this is a very interesting spot because 1730 02:14:54,840 --> 02:14:59,930 that, a spot suggests that we might be in phase C. So how would we be dealing 1731 02:14:59,930 --> 02:15:00,789 with this? 1732 02:15:00,790 --> 02:15:04,590 Obviously, we would be trading it if we're thinking that this is a 1733 02:15:04,590 --> 02:15:05,590 reaccumulation. 1734 02:15:06,710 --> 02:15:10,470 So our points of entry are going to be around this area right here. 1735 02:15:10,970 --> 02:15:15,730 We would be looking actually at the very favorable gap, favorable continuation, 1736 02:15:15,890 --> 02:15:17,730 and then a failure. 1737 02:15:19,950 --> 02:15:21,770 Failure to overcome this resistance. 1738 02:15:22,680 --> 02:15:26,460 And then after this failure, we would be out in this area. 1739 02:15:26,860 --> 02:15:31,440 So that's going to be our first trade here. Again, this is not a bad trade. 1740 02:15:32,880 --> 02:15:36,080 It's almost like a probe trade that we have to put on. 1741 02:15:37,140 --> 02:15:41,140 And it doesn't necessarily get us in into the position fully. 1742 02:15:41,400 --> 02:15:45,040 I mean, like if you think about the points of entry, which we will study 1743 02:15:45,040 --> 02:15:46,740 on, guys, so don't worry about this. 1744 02:15:48,080 --> 02:15:52,500 Here is our first point of entry. This could be a second point of entry. So 1745 02:15:52,500 --> 02:15:54,760 let's just say that we have two points of entry. 1746 02:15:55,060 --> 02:16:00,180 We can't really add to the position here or here. This is too far away. This is 1747 02:16:00,180 --> 02:16:01,440 in the resistance cluster. 1748 02:16:02,100 --> 02:16:08,760 So let's say that if our position risk is going to be, 1749 02:16:08,840 --> 02:16:13,460 let's say, 2 % of our portfolio. 1750 02:16:14,540 --> 02:16:16,540 So we would define... 1751 02:16:17,320 --> 02:16:23,280 our point of entry number one and two risk 1752 02:16:23,280 --> 02:16:30,020 as one -fourth and one -fourth 1753 02:16:30,020 --> 02:16:31,380 of the full risk. 1754 02:16:32,040 --> 02:16:36,680 So this means that we've opened half of this position. This means that we've 1755 02:16:36,680 --> 02:16:43,379 invested 50 basis point and then another 50 basis point for a 1 % 1756 02:16:43,379 --> 02:16:44,480 risk of the portfolio. 1757 02:16:44,719 --> 02:16:46,559 So how would you think about this risk? 1758 02:16:47,129 --> 02:16:54,030 If you have, let's say, 10 ,000 as your portfolio, then 1 % risk is going to be 1759 02:16:54,030 --> 02:16:57,469 1 ,000. 1760 02:16:58,969 --> 02:17:05,610 So 1 ,000, that should be the difference between the price of 1761 02:17:05,610 --> 02:17:08,770 entry and your stop loss. 1762 02:17:10,129 --> 02:17:14,629 So let's just kind of like play around with this. So let's just say that we're 1763 02:17:14,629 --> 02:17:16,270 entering here at $5. 1764 02:17:16,870 --> 02:17:23,490 and that our stop loss is going to be somewhere here at 475 1765 02:17:23,490 --> 02:17:29,590 so uh 25 cents and this is obviously a low price stock 1766 02:17:29,590 --> 02:17:35,730 microsoft oh well this is after the split so uh definitely going to be 1767 02:17:35,730 --> 02:17:40,049 different but you know the calculations here are going to be the same so you 1768 02:17:40,049 --> 02:17:43,590 could define the number of shares as 1000 1769 02:17:45,430 --> 02:17:52,070 of risk divided by the actual risk, which is $0 .25. 1770 02:17:53,049 --> 02:17:55,850 Actually, let's do it in a different way. Let's do it $0 .50. 1771 02:17:56,250 --> 02:17:59,309 So let's just support that our stop loss was here. 1772 02:18:01,969 --> 02:18:03,030 Divided by $0 .50. 1773 02:18:03,629 --> 02:18:05,090 So that's going to be what? 1774 02:18:09,410 --> 02:18:10,969 That's going to be 2 ,000 shares. 1775 02:18:15,889 --> 02:18:22,430 That's our position size for each point of entry 1776 02:18:22,430 --> 02:18:28,750 here. And let's just even imagine that we enter in just once, maybe like on the 1777 02:18:28,750 --> 02:18:33,110 breakout. Well, actually, let's just go with this example. So two points of 1778 02:18:33,110 --> 02:18:37,809 entry. So that's our 1 % risk, 1 ,000 we are risking. 1779 02:18:39,590 --> 02:18:42,910 It's actually for both of the positions, right? So 1 ,000. 1780 02:18:43,920 --> 02:18:50,760 So we are opening, let's say, 1 ,000 shares at one spot, 1781 02:18:51,080 --> 02:18:53,200 1 ,000 shares at another spot. 1782 02:18:53,520 --> 02:18:58,860 And then we are exiting this position either on this bar right here or on this 1783 02:18:58,860 --> 02:19:03,680 one right here. So our average exit price is going to be maybe like around 1784 02:19:03,680 --> 02:19:10,320 535, about. 1785 02:19:11,040 --> 02:19:14,620 So we actually have even a slight profit here. 1786 02:19:15,740 --> 02:19:22,719 So 5, maybe 5 .10, 5 .15, something like this. So we have 1787 02:19:22,719 --> 02:19:24,379 maybe like 20 cents of profit. 1788 02:19:27,340 --> 02:19:33,780 But what this example, what I'm trying to show to you guys is that we only had 1789 02:19:33,780 --> 02:19:38,000 two points of entry as we're scaling in into the position. 1790 02:19:38,780 --> 02:19:40,379 We have not opened. 1791 02:19:40,940 --> 02:19:42,340 Position fully yet. 1792 02:19:43,260 --> 02:19:49,880 And that protects us from any type of moves like this that we have. 1793 02:19:50,160 --> 02:19:55,000 Obviously, we are being protected by the exit criteria itself. 1794 02:19:55,420 --> 02:19:57,800 A backing up action fails. 1795 02:19:58,960 --> 02:20:03,040 So this means that we can't open positions anymore 1796 02:20:03,040 --> 02:20:10,000 at backup reversal because it didn't come. 1797 02:20:10,790 --> 02:20:17,190 and then also at the breakout of a backing up action. So these two 1798 02:20:17,190 --> 02:20:21,130 add -ons are not going to be in the play. 1799 02:20:21,690 --> 02:20:28,270 And even if we gave up somewhere here or even lower, we're only risking 1800 02:20:28,270 --> 02:20:34,390 half of the position, and also we 1801 02:20:34,390 --> 02:20:40,130 technically could be much faster and close in this position much faster. 1802 02:20:41,270 --> 02:20:47,950 How would it work in the example where we actually would produce some profit? 1803 02:20:48,230 --> 02:20:53,170 So here is our first point of entry. Here is our second point of entry. 1804 02:20:53,390 --> 02:20:56,930 Then we're going into major sign of strength and we're waiting for the 1805 02:20:56,930 --> 02:20:57,609 up action. 1806 02:20:57,610 --> 02:21:02,650 The backing up action happens, the test, and then we are entering the position 1807 02:21:02,650 --> 02:21:03,650 somewhere here. 1808 02:21:04,090 --> 02:21:07,090 The next point of entry is going to be somewhere here. 1809 02:21:09,020 --> 02:21:15,800 shows us the breakout out of the apex formation on the backing up action. 1810 02:21:16,620 --> 02:21:22,360 So all of the positions are going to be profitable, and look at how gradually 1811 02:21:22,360 --> 02:21:27,980 we're coming in into this position and establishing all of the four trenches. 1812 02:21:28,780 --> 02:21:35,320 That limits our risk. That allows us to only risk half of the position. 1813 02:21:35,340 --> 02:21:38,420 On average, our, you know, 1814 02:21:39,690 --> 02:21:44,250 average price is going to be somewhere in the middle of the range, and then 1815 02:21:44,250 --> 02:21:47,430 we're still going to have the same size that we wanted. 1816 02:21:49,630 --> 02:21:55,830 So these are very simplistic tactical mechanics, and we'll study this a little 1817 02:21:55,830 --> 02:21:58,230 bit more, of the spots like this. 1818 02:21:58,860 --> 02:22:03,640 One is going to be a failure and we have to be ready to recognize that this 1819 02:22:03,640 --> 02:22:06,500 failure will come and we will have those type of trades. 1820 02:22:06,700 --> 02:22:08,260 And one is going to be a success. 1821 02:22:08,680 --> 02:22:14,640 And when we have a success, that's when we want to be pigs, right? So we want to 1822 02:22:14,640 --> 02:22:19,740 create a sizable position, especially if we're long -term investors. 1823 02:22:21,320 --> 02:22:22,320 All right. 1824 02:22:23,140 --> 02:22:24,140 All right, next. 1825 02:22:24,800 --> 02:22:27,360 So this was interesting because... 1826 02:22:28,490 --> 02:22:29,490 of phase C. 1827 02:22:30,070 --> 02:22:35,370 You could, and I've seen some of you do this, you know, increase this phase C 1828 02:22:35,370 --> 02:22:37,070 into this testing action. 1829 02:22:37,310 --> 02:22:40,690 And I think that's appropriate. That's totally fine. 1830 02:22:40,970 --> 02:22:45,910 It comes at the same level as testing of the support in phase B. 1831 02:22:46,230 --> 02:22:50,590 So that makes a lot of sense. It's also a test of the screen itself. 1832 02:22:52,470 --> 02:22:54,150 So that makes sense too. 1833 02:22:54,890 --> 02:22:56,350 Major sign of strength. 1834 02:22:57,050 --> 02:23:02,690 overcomes the resistance, which I put here as an upsloping resistance in the 1835 02:23:02,690 --> 02:23:07,450 support, and then comes back into the area of the support, which acted before 1836 02:23:07,450 --> 02:23:08,249 the resistance. 1837 02:23:08,250 --> 02:23:14,070 There were some interpretations where people would put buying climax here. 1838 02:23:14,870 --> 02:23:17,070 Well, then think about this reaction. 1839 02:23:17,350 --> 02:23:18,350 What is that? 1840 02:23:19,030 --> 02:23:23,410 It seems like there was a climactic run, which is well defined by the volume 1841 02:23:23,410 --> 02:23:24,750 signature and the price signature. 1842 02:23:25,530 --> 02:23:29,270 It seems like there was a very meaningful change of character that 1843 02:23:29,270 --> 02:23:34,050 trading range. So it's probably we are at the beginning of the trading range. 1844 02:23:34,190 --> 02:23:40,450 And this whole rally, you know, which doesn't have, it has a climactic run, 1845 02:23:40,450 --> 02:23:43,370 not as good as the prior one. 1846 02:23:44,210 --> 02:23:50,490 So this rally right here probably suggests that we are. 1847 02:23:52,330 --> 02:23:55,890 in a secondary test rally, and then we go into phase B. 1848 02:23:57,030 --> 02:23:58,030 All right. 1849 02:23:58,910 --> 02:24:04,710 What else here? Five minutes. All right. So this one had the same type of 1850 02:24:04,710 --> 02:24:09,470 trading dynamic as the couple of slides before this. 1851 02:24:10,090 --> 02:24:15,730 So a well -defined climactic action on the climactic run, a well -defined 1852 02:24:15,730 --> 02:24:17,690 of character with the secondary test. 1853 02:24:19,039 --> 02:24:20,340 Could be labeled different. 1854 02:24:20,560 --> 02:24:23,140 It could be labeled automatic reaction secondary test. 1855 02:24:24,320 --> 02:24:29,000 The reason why I wanted to shake out is because it didn't go below the previous 1856 02:24:29,000 --> 02:24:30,000 low here. 1857 02:24:30,300 --> 02:24:34,880 But then in this area right here, we could be thinking phase C, point of 1858 02:24:35,080 --> 02:24:37,800 point of entry, and then a failure here. 1859 02:24:38,260 --> 02:24:41,900 So this would be more of the break -even loss. 1860 02:24:42,640 --> 02:24:46,100 And then after that, and I think that the... 1861 02:24:46,430 --> 02:24:48,150 Again, the boundary should be here. 1862 02:24:49,090 --> 02:24:54,730 I know why. I can't really... This is painted, so I can't remove that anymore. 1863 02:24:55,130 --> 02:24:56,990 I just need to redo all of this. 1864 02:24:58,590 --> 02:25:05,290 So there is a test, a definitive test of the local action, of the local 1865 02:25:05,290 --> 02:25:06,189 quality here. 1866 02:25:06,190 --> 02:25:08,150 So this would be our phase C. 1867 02:25:08,730 --> 02:25:15,290 And then after that, a major sign of strength committing above the... 1868 02:25:15,520 --> 02:25:20,560 resistance that was created by the buying climax and then a reaction into 1869 02:25:20,560 --> 02:25:23,760 support as a backing up action so here's our phase d 1870 02:25:23,760 --> 02:25:33,680 all 1871 02:25:33,680 --> 02:25:40,500 right uh this this uh distributional um top produced you know some kind 1872 02:25:40,500 --> 02:25:47,220 of issues for us as a group um We definitely want to define the 1873 02:25:47,220 --> 02:25:48,220 slope. 1874 02:25:49,300 --> 02:25:51,540 Up thrust in phase C. 1875 02:25:52,360 --> 02:25:54,480 Second point of excitement. 1876 02:25:59,000 --> 02:26:02,600 First point of excitement on the climactic run. 1877 02:26:03,740 --> 02:26:05,620 Secondary test is an up thrust. 1878 02:26:05,860 --> 02:26:08,160 Everything else in between is phase B. 1879 02:26:09,400 --> 02:26:11,860 A very strong rally here. 1880 02:26:12,400 --> 02:26:15,600 not very characteristic in the distribution. 1881 02:26:15,880 --> 02:26:22,120 But think about what Microsoft was for this market going into the height of the 1882 02:26:22,120 --> 02:26:23,720 2000. It was a leadership stock. 1883 02:26:23,940 --> 02:26:27,900 So leadership stocks are going to be distributed with the characteristics of 1884 02:26:27,900 --> 02:26:33,220 reaccumulation, which we see in this area right here in phase B. And that's 1885 02:26:33,220 --> 02:26:38,200 this rally is just so strong. Plus, think about what the market is doing at 1886 02:26:38,200 --> 02:26:40,240 point of time. The market is extremely strong. 1887 02:26:40,460 --> 02:26:41,460 The market has... 1888 02:26:41,840 --> 02:26:44,780 a huge breadth going up. 1889 02:26:45,180 --> 02:26:49,700 So a lot of the stocks, at least short term, are being pushed up. Some of them 1890 02:26:49,700 --> 02:26:55,080 stay behind and don't participate in the first quarter of the run of the market. 1891 02:26:55,300 --> 02:26:56,620 Microsoft is one of them. 1892 02:26:58,460 --> 02:26:59,460 All right. 1893 02:27:01,060 --> 02:27:02,059 What else? 1894 02:27:02,060 --> 02:27:05,060 Okay, so this is a very long -term chart here. 1895 02:27:05,340 --> 02:27:09,040 This comes after this distributional top that we've just seen. 1896 02:27:10,040 --> 02:27:11,040 Look how... 1897 02:27:11,470 --> 02:27:14,570 The distribution has happened into the lows of 2000. 1898 02:27:14,970 --> 02:27:21,510 And then Microsoft actually exhibiting some strength into 2000 to 2003 low, 1899 02:27:21,690 --> 02:27:26,150 creating a slightly higher low relative to the low in 2000. 1900 02:27:26,730 --> 02:27:29,550 So that suggests some point of selection. 1901 02:27:29,870 --> 02:27:33,190 But there is a lot of volatility in this trade range. 1902 02:27:33,510 --> 02:27:39,290 And then also there are some managerial problems at that point of time with... 1903 02:27:41,960 --> 02:27:44,960 What's the guy's name? Steve Boulder, I think. 1904 02:27:45,940 --> 02:27:47,780 The owner of Clippers right now. 1905 02:27:48,240 --> 02:27:51,120 The former Microsoft CEO. 1906 02:27:51,360 --> 02:27:53,240 So he's the CEO during this time. 1907 02:27:53,480 --> 02:27:58,860 So look how uninterested institutions in the products here. 1908 02:27:59,120 --> 02:28:00,580 Okay, so thank you. 1909 02:28:00,980 --> 02:28:07,940 So nothing is really happening here. Only in the last phases of the market 1910 02:28:07,940 --> 02:28:11,280 in 2006 -2007, There is some kind of activity. 1911 02:28:11,780 --> 02:28:17,040 And then what defines this long -term pattern is the second point of fear 1912 02:28:18,620 --> 02:28:24,620 So this leads us to the conclusion that this is phase C. A lot of you had phase 1913 02:28:24,620 --> 02:28:26,740 C as if this was a distribution. 1914 02:28:27,520 --> 02:28:31,200 But then if this is a distribution, then why are we not traveling down? 1915 02:28:31,600 --> 02:28:34,860 Why are we not in the downtrend? Instead, we're actually going up. 1916 02:28:35,580 --> 02:28:38,400 So that was an incorrect labeling. 1917 02:28:39,599 --> 02:28:44,480 So second point of fear, after the first point of fear, defined phase C. 1918 02:28:45,080 --> 02:28:50,200 And from there, we have a minor sign of strength, a bunch of LPSs, by the way, 1919 02:28:50,220 --> 02:28:53,200 lots of trade here that we've done with our students. 1920 02:28:53,700 --> 02:28:58,560 And then a major sign of strength defined by the highs, the long -term 1921 02:28:58,840 --> 02:29:04,140 reaccumulation, still shows a lot of strength, suggesting a continuation in a 1922 02:29:04,140 --> 02:29:05,300 very favorable way. 1923 02:29:05,560 --> 02:29:07,320 And that's exactly what's happening. 1924 02:29:07,770 --> 02:29:13,070 A very interesting pattern where the volume signature is going down and the 1925 02:29:13,070 --> 02:29:17,670 price is going up. I want you to think about this for a week, and then when we 1926 02:29:17,670 --> 02:29:23,310 meet next time, we may have a chance to discuss this. If not next time, then in 1927 02:29:23,310 --> 02:29:24,710 two weeks we will discuss this. 1928 02:29:24,950 --> 02:29:26,990 But I want you to ask yourself a question. 1929 02:29:27,410 --> 02:29:33,590 Why would the price go up so significantly without any of the 1930 02:29:33,590 --> 02:29:36,290 signs of the demand being? 1931 02:29:36,840 --> 02:29:38,240 and increasing. 1932 02:29:39,540 --> 02:29:42,080 All right. Last one, I believe. 1933 02:29:42,400 --> 02:29:43,720 A down slope. 1934 02:29:45,560 --> 02:29:52,440 And nothing really of big interest here. Maybe 1935 02:29:52,440 --> 02:29:59,100 a small climactic run into the backing up action before 1936 02:29:59,100 --> 02:30:04,400 the backing up action. So I'll just suggest that we're going to have some 1937 02:30:04,400 --> 02:30:06,400 of consolidation as a backing up action. 1938 02:30:06,660 --> 02:30:11,440 So these are small nuances that we need to catch in order for us to think how 1939 02:30:11,440 --> 02:30:15,380 the structure would develop. And obviously here in this small structure, 1940 02:30:15,380 --> 02:30:21,380 would be thinking, okay, well, here is a trading range, phase A, B, B, phase C, 1941 02:30:21,580 --> 02:30:25,320 sign of trend, and a backing up action. 1942 02:30:27,560 --> 02:30:32,360 So our points of entry are all going to be after phase C, on the way up. 1943 02:30:34,790 --> 02:30:40,570 And then here we're going to be entering on these two wires. 1944 02:30:40,850 --> 02:30:47,650 So again, our tactics are going to be very logical, very sequential in the 1945 02:30:47,650 --> 02:30:52,870 way how we enter in this position. The logic behind our points of entry is 1946 02:30:52,870 --> 02:30:58,130 to be such that each entry has to confirm the previous entry. 1947 02:31:00,259 --> 02:31:03,280 And that way we are controlling our risk. 1948 02:31:04,380 --> 02:31:10,620 Obviously, you know, we should have also tactical rules and 1949 02:31:10,620 --> 02:31:17,240 decision -making in place when our patterns fail, because they will. We 1950 02:31:17,240 --> 02:31:18,740 be always correct. 1951 02:31:19,240 --> 02:31:23,000 And short -term, we could be correct, and then long -term, we could be 1952 02:31:23,000 --> 02:31:26,800 incorrect, and that's what... could produce potential loss. So we need to 1953 02:31:26,800 --> 02:31:30,840 mitigate that risk both on the technical level and from the money management 1954 02:31:30,840 --> 02:31:31,840 point of view. 1955 02:31:32,180 --> 02:31:35,800 Again, something that we will be discussing later on in the course and 1956 02:31:35,800 --> 02:31:40,140 specifically in practicum, there's going to be a lot of discussions about that. 1957 02:31:40,660 --> 02:31:41,660 All right, guys. 1958 02:31:42,260 --> 02:31:48,080 That's it for today, all of the slides. So again, the homework. 1959 02:31:48,460 --> 02:31:50,260 Let me just go to that slide. 1960 02:31:51,370 --> 02:31:55,350 The homework is our Apple labeling. 1961 02:31:56,750 --> 02:32:03,450 And then next time, we're going to start our discussion of volume and price 1962 02:32:03,450 --> 02:32:04,450 analysis. 1963 02:32:05,190 --> 02:32:12,190 So it's exciting because this is probably one of my favorite topics, not 1964 02:32:12,190 --> 02:32:14,430 in the method, but in trading itself and the analysis. 1965 02:32:16,610 --> 02:32:18,590 So I'm looking forward to that. 1966 02:32:19,340 --> 02:32:21,500 All right, guys, that's it for today. 1967 02:32:21,740 --> 02:32:27,180 I'll see you in a week, and I'm looking forward to receiving all of your 1968 02:32:27,180 --> 02:32:29,200 homework. Thank you, guys. 1969 02:32:29,600 --> 02:32:30,600 Bye -bye.