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Hello, everyone. Today is March 4th, and
this is our session number nine of the

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Wyckoff Trading Course. We're still
working on the volume and price

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relationship, supply and demand.

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This is something that we're going to go
through today, next session, and most

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likely session number 11.

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And then we're going to switch gears,
and we're going to talk about relative

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comparative analysis.

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And then we'll talk about...

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trading tactics and Wyckoff trading
plan.

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Quite a few upcoming events that are
coming our way

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and your way.

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I will maybe inform you a little bit
more next week, but the

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main thing that we have going on this
week is going to be

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The webinar is with Linda Rashke.

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Linda Rashke is a well -known trader.

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She is so respected for her performance,

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for her sustainability of such
performance, and

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for the consistency of the performance.

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Linda and I, we've met at the
conferences multiple times,

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kind of developed.

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the relationship through Golden Gate,
through Hank as well.

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And I've asked her to come to our
students and give all this knowledge

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has. And also she just published the new
book, Trading Sardines. And this is a

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lot of anecdotal stories about her time
on the Wall Street.

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And I would highly recommend the book.
That's number one.

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Secondly, I would highly recommend to
register for this course, for this

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special. Now, usually I don't prefer
when beginners

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in our classes are taking specials, but
I always tell you

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guys which special you can take. So
there is always like one or two specials

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that you can take throughout the year,
even if you're taking the course.

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So this special is going to be more
about being in the presence of a great

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trader, listening to her, extracting
beliefs on the

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markets, on how she trades, how she
creates her routine, and so on and so

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And so, yeah, I would definitely highly
recommend that.

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Then what else do we have? I think
that's it for now. We'll talk about

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specials next time.

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So today we're continuing our exercise.

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Just go there.

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We're going to continue our group
exercise.

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We're going to talk about the volume
phase analysis, and today we're going to

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switch gears.

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We're going to discuss the demand
signature under the volume case studies.

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And the volume case studies were created

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out of the need to show the students

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different interpretations and variations
on the volume and price, how those

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interact, and specifically on the supply
and demand.

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This is just another way for me to show
you that interaction.

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And we're just trying to approach the
same topic, the same subject of the

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and price, just slightly from a
different angle.

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And sometimes what I kind of notice with
students is that you give them a little

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bit of a different angle, and it's going
to lend a little bit more.

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And so we're going to kind of attack
this volume -price relationship from

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different ways.

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Homework, as for the last two sessions,
is going to be a group exercise. This is

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where I'm giving you something to think
about.

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And obviously the biggest homework
related to this group

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exercise is just to watch the video
again and make notes and send those to

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Next week.

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We're continuing with the group
exercise, and oh, I didn't correct this.

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apologize. Well, we're going to see how
many volume case studies we're going to

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go through today, and there is one or
two left after that, so we'll see what

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we're going to do.

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But it's still kind of like we're on the
same topic.

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All right, great.

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Okay.

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We're going to start with the Q andA. This
question comes from Ronnie. And Ronnie

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has sent me this chart.

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Ronnie, is this a 60 -minute chart?

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Let me know really quick.

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I believe this is 60 minutes.

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So a stock for the viewer.

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This stock was shown to me right here.

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So then I'm receiving an email from
Ronnie today, yesterday, that

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the stock actually went down.

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And it had two down days. And we could
see that on the 60 -minute chart, how

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intraday move has happened, a lot of
sell -in, capitulation through the gap,

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then another sell -in, and then we're
not taking off.

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So what was my advice here?

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And hold on a second.

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Sorry guys, having a little bit of a
hectic day today.

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Okay, so at least you had a chance to
look at this.

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So the question was, first of all, what
is the structure?

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And then the second question is, how do
we trade this?

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And by the way, there could be already a
position established here, and I'm not

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sure. Rony, just let me know.

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I think this was a live trade, so we
could discuss it from that perspective

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well. And another question, Ronnie, that
I have for you is, was there an

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anticipation of some kind of event here?

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Was there like earnings report or
anything?

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Yes, what, earnings?

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Okay, so yeah, so that was obviously an
essential information.

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So we're going to kind of like look at
all of this here.

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The previous movement is good.

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We see that there is some kind of
leadership, even on an intraday basis,

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will have to look at the daily just to
figure it out a little bit more.

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Climactic action, first reaction as a
change of character.

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Everything that we've studied here in
the class defines the range by the

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and the resistance.

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Suggest that the price is going to move
up into a secondary test.

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Substructure right here as a secondary
test takes us down.

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After phase A, we go into phase B.

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In phase B, we have multiple tests.

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One, two, three, four, five.

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So at this point, we might be thinking
that our phase C could be here.

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So this is B.

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and that we could take a position here,
even though this is a 60 -minute, so we

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would have to look at the daily and so
on and so forth.

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Why am I saying this?

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You know, obviously, we see the drop, a
big drop to the support, you know, and

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that's kind of like the main question,
how, you know, what has happened. You

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know, there was a favorable, bullish
analysis.

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And look at this whole structure.

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in phase C around the January 28th, end
of January, there is nothing

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that tells us otherwise.

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And this is where you still will have to
come in and to establish this position.

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Our position here is going to have two
possible scenarios of how it's going to

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unfold. So let's say that we open the
position right here.

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So scenario number one, we are going
into a major sign of strength.

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And then we're going into a backing up
action.

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And then after this, the price either
consolidates and then, you know, or

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without the consolidation just goes up
and overcomes the point of the

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right here. So that would be the most
preferable scenario.

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Scenario number two.

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That's number one.

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Scenario number two, we are actually
going into an upthrust situation,

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and then we are failing.

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So that's how we usually would be
approaching any trade out of the

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consolidation. We should be always
remembering that there are two

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Scenario number one, when our bias is
going to be confirmed. Scenario number

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two, where...

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bias is not being confirmed, and usually
when you look into a bullish scenario

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that we have had here for quite some
time, and even this,

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and even this, when it looks bullish,

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why wouldn't we open this position?

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Indeed, we would.

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I mean, obviously, there should be a
little bit more analysis on the daily

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basis, on the daily time frame, on the
weekly time frame.

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combination of those and so on and so
forth.

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But we should, and then if it's gonna
work out, great, we're just gonna trade

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that. And if it doesn't, we're just
gonna close the position.

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And we're gonna close it by our risk
parameters, right? So what are our

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points of entry?

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So our points of entry are gonna be
somewhere here, that's number one,

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here.

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It was in a practicum actually last
week, but we had such a great campaign

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that we did on Apple.

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So here we are establishing first point
of entry.

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Here's our second point of entry.

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Our stop loss is most likely going to be
below this loss, so somewhere here,

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slightly lower.

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Here's our stop loss. And the way how we
establish in this position is we are

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scaling in.

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So let's assume that our assumption,
rather portfolio or position

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risk assumption,

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is going to be that we're going to

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spend 1 % per position.

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And obviously you could have 2%, 3%, 5%,
you know, whatever you guys want,

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whatever your risk aversion is.

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Let's say for me right now, it's 1%,
right? So I'm kind of like thinking more

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an institutional way.

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And obviously institutions are not
necessarily going to be extremely

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in the intraday, but imagine this is
daily.

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So 1%. So how would I scale in into this
position?

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And this is something that we'll go
through in the last portion of the

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but I'll give you a small preview.

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So I'm going to divide this position to
one -fourth.

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So one -fourth plus one -fourth plus one
-fourth plus one -fourth. Or you could

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say 25 basis points each time. So here

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we're opening 25 basis points. Here
we're opening 25 basis points.

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And we are halfway into our position.

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So if scenario number one unfolds, We're
going to add to this position

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either right here or right here, and
then on the breakout.

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So let's just assume our point of entry
number three, point of entry number

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four.

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That's how we would get in into the
position. Now, why do I do that?

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And please think this through of what
I'm going to say right now.

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Scaling in into this position, we, with
each entry, reconfirming

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our assumption on the bias and the
timing.

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And also on the character as well as a
part of the selection.

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And each time we have the progression in
the direction of the bias, it acts as a

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confirmation that we are correct.

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And if we are wrong, most likely our
loss with this type of strategy is not

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going to be even close to the regular
loss of, let's say, 1 % that I've

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identified here as an assumption for the
position risk.

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It usually is going to be lower.

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It usually is going to be either 75
basis points or 50 basis points or 25

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points. So we will not expose ourselves
too much until everything is confirmed.

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until the bias is confirmed, and bias is
being confirmed by the establishment of

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a trend.

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And obviously, here the trend has been

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violated. And here, you know, we have an
event, and that's why I was asking

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Ronnie, is there something that has
happened here?

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It's very important for us to understand
how we behave before the event.

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So before the event, just because we
might be so close and, you know, we

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not be sure, we don't have to
necessarily open the second position.

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But let's assume that we did.

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There is nothing wrong. I mean, maybe
our expectation is that the reaction to

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earnings is actually going to be
favorable.

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And instead of going down, we're
actually going to have, you know, move

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upside.

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By the way, a little bit of a bad timing
with the market in general, right?

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So the market is prone to the reaction.
I think I mentioned this to you guys

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last week. Those of you who are
attending Wyckoff Market discussion

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heard this from me last Wednesday.

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So we are expecting some kind of
reaction.

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So think about if the market is going to
give us some reaction.

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Could the market weakness influence
the...

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the stock, especially at the event, at
some kind of catalyst, what kind of

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reaction we could possibly have.

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So the question here is not even like
what's going to happen. It's more as to

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what kind of risk we want to have going
into that situation.

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So now that we've dealt with the risk,
now that we've dealt with the buys

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the trade, now let's look at the backing
up action. So a major sign of strength

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and everything is...

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Kind of classical here.

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Why? Well, because we have a commitment
above the resistance cluster that was

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created in phases A and B. And look how
the price commits.

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So overcomes the resistance quite
significantly.

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There is no reason for us to think
otherwise that this is not a major sign

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strength. And then the price comes down
and look at where it finds a point of

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support.

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Right here.

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Right at the previous resistance now,
it's acting as the support.

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This large bar has the increased volume
signature.

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That detail suggests the presence of the
demand.

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And the increase of the supply, which is
the local increase.

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And we would be thinking that, okay, we
could compare it to this.

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We could compare it to this.

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The reaction here suggests a couple of
things.

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So compared to this reaction, we're
definitely seeing that supply has

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So we would need to see some kind of
test.

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00:18:04,060 --> 00:18:05,100
Here's this test.

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00:18:05,440 --> 00:18:12,020
So out of the test, we're waiting for
some kind of reversal here to enter, to

234
00:18:12,020 --> 00:18:14,200
scale in more into this position.

235
00:18:14,640 --> 00:18:20,080
And then we're looking at this reaction
and we're seeing that Supply actually is

236
00:18:20,080 --> 00:18:26,000
lower on this smaller reaction, and the
result of it is smaller, right? The

237
00:18:26,000 --> 00:18:27,000
distance is smaller.

238
00:18:27,360 --> 00:18:32,700
The spread maybe is slightly smaller.
And more importantly, there's not a lot

239
00:18:32,700 --> 00:18:33,700
selling.

240
00:18:34,920 --> 00:18:41,040
So we still would be thinking that this
is probably the backing up action where

241
00:18:41,040 --> 00:18:43,740
supply is coming in and produces a
change of character.

242
00:18:44,510 --> 00:18:47,790
And this change of character is going to
lead to some kind of trading range. So

243
00:18:47,790 --> 00:18:50,410
again, some kind of testing that needs
to be done.

244
00:18:51,890 --> 00:18:53,310
So here's that test.

245
00:18:53,850 --> 00:18:55,990
But here's the question.

246
00:18:59,150 --> 00:19:01,090
Has this test been confirmed?

247
00:19:02,650 --> 00:19:07,890
And obviously by the confirmation, we
always talk about a reversal, right? So

248
00:19:07,890 --> 00:19:09,310
confirmation.

249
00:19:12,720 --> 00:19:16,720
In our case, equals a swing reversal.

250
00:19:18,360 --> 00:19:23,900
So do we have a swing reversal here? No,
we don't. So therefore, we can't open

251
00:19:23,900 --> 00:19:28,640
additional position here. So we're just
kind of stuck with these two points of

252
00:19:28,640 --> 00:19:29,640
entry.

253
00:19:30,140 --> 00:19:31,860
And that's what we're dealing with.

254
00:19:32,380 --> 00:19:37,500
You know, that's our risk. So it's half
of the position risk at this point, and

255
00:19:37,500 --> 00:19:39,260
then the price drops on earnings.

256
00:19:40,220 --> 00:19:41,520
What can we do here?

257
00:19:42,090 --> 00:19:45,870
Well, obviously, our stop losses are
going to be somewhere here. If we're

258
00:19:45,870 --> 00:19:49,690
aggressive and we're using the intraday,
the stop loss is going to be somewhere

259
00:19:49,690 --> 00:19:54,750
here already, right? If not earlier,
that we would be getting out.

260
00:19:55,070 --> 00:19:59,590
But let's assume that we're swing
traders and we are weak, and for that,

261
00:19:59,590 --> 00:20:04,570
know, pick up the momentum to the upside
and continuation of the uptrend.

262
00:20:06,390 --> 00:20:07,670
So what do we do here?

263
00:20:08,230 --> 00:20:09,230
Nothing.

264
00:20:10,150 --> 00:20:11,310
We are...

265
00:20:11,580 --> 00:20:17,080
going to close this position and be done
with it we're going to close it on this

266
00:20:17,080 --> 00:20:21,500
bar you know it doesn't really matter
where you could close it on the open

267
00:20:21,500 --> 00:20:26,060
because the gap has happened and that
suggests by itself that we have to close

268
00:20:26,060 --> 00:20:31,880
this position as not necessarily the
bias has changed but the timing

269
00:20:31,880 --> 00:20:38,640
has changed for sure so now we know that
this price is not going out of the

270
00:20:38,640 --> 00:20:39,640
consolidation

271
00:20:39,850 --> 00:20:43,830
And more importantly, the selling is of
institutional quality.

272
00:20:44,110 --> 00:20:50,550
So that suggests that there should be
some kind of buying absorption

273
00:20:50,550 --> 00:20:56,430
that should happen now. And therefore,
the structure could develop more and we

274
00:20:56,430 --> 00:20:58,570
could have a much larger trading range.

275
00:20:59,770 --> 00:21:06,610
So obviously, we just don't want to
participate in something like this.

276
00:21:06,610 --> 00:21:07,609
It's inefficient.

277
00:21:07,610 --> 00:21:11,930
We're going to be in this trade for
quite some time, you know, if the

278
00:21:11,930 --> 00:21:14,210
range is going to develop for some time.

279
00:21:14,950 --> 00:21:18,470
So, therefore, there is nothing really
that you can do here.

280
00:21:20,190 --> 00:21:26,490
This reminds me more of a situation, and
for those of you who don't know,

281
00:21:26,650 --> 00:21:29,110
I actually love playing poker.

282
00:21:29,310 --> 00:21:35,850
I think poker has the same strategy, you
know, gaming strategy as trading.

283
00:21:36,520 --> 00:21:43,160
I always recommend, especially for day
traders, to play poker because there is

284
00:21:43,160 --> 00:21:44,540
lot of money management rules.

285
00:21:44,920 --> 00:21:47,180
There is a lot of pattern recognition
rules.

286
00:21:47,880 --> 00:21:54,480
You have to train your mind to think,
not just act or react, but to think.

287
00:21:54,900 --> 00:22:00,220
And in some cases, you might have the
best hand, but going to the last

288
00:22:00,220 --> 00:22:03,260
card on the board, you might still lose.

289
00:22:03,920 --> 00:22:09,540
So that kind of reminds me of this type
of scenario where everything before that

290
00:22:09,540 --> 00:22:10,540
was okay.

291
00:22:10,860 --> 00:22:14,480
I mean, we could argue, of course, about
this area right here.

292
00:22:15,100 --> 00:22:20,340
But everything prior to that looks
extremely bullish and looks like a

293
00:22:20,340 --> 00:22:23,080
continuation of the upside potential.

294
00:22:24,720 --> 00:22:29,480
The only thing that we didn't take into
this account is this upcoming event.

295
00:22:30,340 --> 00:22:32,280
So, and obviously...

296
00:22:32,520 --> 00:22:38,340
A portion of that relates to the market
as well, how the market has been so

297
00:22:38,340 --> 00:22:40,620
overextended was due to the reaction.

298
00:22:40,920 --> 00:22:46,280
We've talked last week that here we go.
We've seen some slight increase of

299
00:22:46,280 --> 00:22:50,940
volatility, so we're expecting that the
reaction is going to come.

300
00:22:52,040 --> 00:22:54,100
Nothing you can do about this.

301
00:22:56,300 --> 00:22:57,300
That's it.

302
00:22:57,420 --> 00:22:58,440
Just get out.

303
00:22:59,260 --> 00:23:00,300
Take your loss.

304
00:23:00,800 --> 00:23:03,720
and go and find something else, and
obviously post -analyze.

305
00:23:04,520 --> 00:23:10,560
But here's this whole post -analysis,
and I still would prefer you to find

306
00:23:10,560 --> 00:23:16,860
candidates like this, right, where we
have a lot of bullishness, and

307
00:23:16,860 --> 00:23:19,640
it's being confirmed by the move to the
upside.

308
00:23:20,080 --> 00:23:24,480
Imagine if the reaction would be
positive. What would we be talking

309
00:23:24,480 --> 00:23:27,780
probably would be talking about the gap
to the upside like this, and then a

310
00:23:27,780 --> 00:23:29,600
continuation. So it just...

311
00:23:30,490 --> 00:23:31,690
really differs.

312
00:23:32,030 --> 00:23:38,550
It really kind of like depends on

313
00:23:38,550 --> 00:23:40,010
that uncertainty.

314
00:23:40,210 --> 00:23:42,110
We say market is uncertain.

315
00:23:42,850 --> 00:23:44,170
How is it uncertain?

316
00:23:44,570 --> 00:23:51,430
Well, because we don't necessarily know
how institutions

317
00:23:51,430 --> 00:23:53,850
are going to react to a specific event.

318
00:23:54,130 --> 00:23:57,690
And this capitulation here, the way how
it

319
00:23:58,460 --> 00:24:05,220
went down so fast was more of this
institutional capitulation where on

320
00:24:05,220 --> 00:24:11,240
bad news they're just basically saying
like we need to get out and that's it

321
00:24:11,240 --> 00:24:14,760
they're capitulated which brings me to
the next question that Ronnie is asking

322
00:24:14,760 --> 00:24:20,580
is this an extension of phase B then yes
this could be and again we're going to

323
00:24:20,580 --> 00:24:24,800
discuss two scenarios scenario number
one we are still bullish

324
00:24:25,580 --> 00:24:28,020
So what do you need to do with this
scenario?

325
00:24:28,320 --> 00:24:32,180
Confirmation. You need to find some kind
of confirmation that we're still

326
00:24:32,180 --> 00:24:38,200
bullish. In this scenario, we are
definitely in phase B.

327
00:24:39,340 --> 00:24:43,820
Second scenario, maybe we see here
distribution.

328
00:24:44,640 --> 00:24:49,640
And again, I'm not saying that the
distribution has taken part prior.

329
00:24:50,680 --> 00:24:53,120
it's taking part on the way down.

330
00:24:53,380 --> 00:24:55,560
So there are a lot of distributional
qualities here.

331
00:24:56,120 --> 00:25:00,040
So if this is a distribution, then we
probably already into phase D.

332
00:25:00,900 --> 00:25:04,920
And that's how I would approach this.
And this whole group exercise is just

333
00:25:04,920 --> 00:25:05,920
based on that.

334
00:25:06,060 --> 00:25:10,740
We look at the chart, we are trying to
define where we are in the structure,

335
00:25:10,980 --> 00:25:16,140
what is the bias and what is the timing
for us for any type of positions.

336
00:25:17,080 --> 00:25:21,860
So I thought, Ronnie, this was a really
good example, and thank you for telling

337
00:25:21,860 --> 00:25:26,820
me that that position did not work out
because it's a really good lesson for

338
00:25:26,820 --> 00:25:27,820
everyone.

339
00:25:28,580 --> 00:25:34,660
You study this material, and sometimes I
feel like the feeling is, wow, this is

340
00:25:34,660 --> 00:25:35,660
so great.

341
00:25:35,800 --> 00:25:40,520
I have a feeling that now my trading is
going to take off. You will be in these

342
00:25:40,520 --> 00:25:41,520
situations.

343
00:25:42,940 --> 00:25:45,120
I get into these situations too.

344
00:25:46,800 --> 00:25:51,820
And the key is to understand first that
with uncertainty in the market, it can

345
00:25:51,820 --> 00:25:52,820
happen.

346
00:25:53,240 --> 00:26:00,080
Secondly, obviously, to post -analyze
this a lot and not to create

347
00:26:00,080 --> 00:26:03,220
false emotional assumptions for the
future.

348
00:26:03,540 --> 00:26:08,480
Because sometimes what happens with
people, they look at this trade and they

349
00:26:08,480 --> 00:26:13,820
think like, huh, this turned out to be a
bad trade. It's a loss. There is a

350
00:26:13,820 --> 00:26:16,280
negative emotional connotation now that
I'm going to.

351
00:26:16,600 --> 00:26:22,960
take from this, and now that I'm gonna
see this type of pattern, so every time

352
00:26:22,960 --> 00:26:25,840
see this, I'm gonna assume that this is
gonna be a loss.

353
00:26:26,620 --> 00:26:32,800
So it all happens kind of like on a very
unconscious level for us, just because

354
00:26:32,800 --> 00:26:34,920
of the way how we function emotionally.

355
00:26:36,080 --> 00:26:39,080
So don't think about this as a bad
trait.

356
00:26:39,400 --> 00:26:44,520
Think about this as a good trait where
you executed this trait correctly.

357
00:26:45,080 --> 00:26:50,620
And you got out when the price shown to
you, you know, a final capitulation.

358
00:26:51,720 --> 00:26:52,720
And that's it.

359
00:26:53,640 --> 00:26:55,720
So really good example. Thank you, Rami.

360
00:26:57,100 --> 00:27:02,020
All right. Now let's go to our volume
case studies.

361
00:27:02,260 --> 00:27:06,740
And as I mentioned, we are studying
supply and demand. So this is our

362
00:27:06,740 --> 00:27:10,920
concentration. Today we're going to look
at this relationship from a slightly

363
00:27:10,920 --> 00:27:11,980
different angle.

364
00:27:14,060 --> 00:27:21,020
And here is the slide that I thought
that I want to convert more into an

365
00:27:21,020 --> 00:27:27,500
exercise. It's a slide with Apple's
chart, daily chart, 2015

366
00:27:27,500 --> 00:27:34,380
-17. And under the volume case studies,
I'm showing you the

367
00:27:34,380 --> 00:27:36,980
case studies of the supply and the
demand.

368
00:27:39,660 --> 00:27:45,560
Each of them have specific ways of
telling the story about how effort has

369
00:27:45,560 --> 00:27:48,640
emerged and how the price reacted to
this effort.

370
00:27:49,320 --> 00:27:55,860
So the first case study is the
absorption of supply on a

371
00:27:55,860 --> 00:27:57,660
horizontal basis.

372
00:27:58,100 --> 00:28:04,540
So we talked about the absorption of
supply through phases, so this is

373
00:28:04,540 --> 00:28:06,380
new to you. Obviously, duration.

374
00:28:07,230 --> 00:28:09,310
is gonna be extremely important here.

375
00:28:09,670 --> 00:28:15,470
And I'm just gonna kind of show you both
here, right? So we're looking at the

376
00:28:15,470 --> 00:28:22,390
climactic action, automatic rally,
secondary test, phase A, up thrust

377
00:28:22,390 --> 00:28:27,930
phase B, secondary test in B, and then
phase C.

378
00:28:28,430 --> 00:28:33,170
And through phase C and then going into
phase D.

379
00:28:36,080 --> 00:28:39,780
Let's look at the supply signature,
right? We're talking about horizontal

380
00:28:39,780 --> 00:28:40,780
absorption.

381
00:28:41,620 --> 00:28:45,260
What should happen during the horizontal
absorption?

382
00:28:45,460 --> 00:28:51,700
I've shown you guys how, you know,
different supply signatures going from

383
00:28:51,700 --> 00:28:54,640
A into phase C and D.

384
00:28:57,540 --> 00:29:01,020
We've discussed that. We did some
exercises on that.

385
00:29:01,560 --> 00:29:03,320
So look at the supply signature.

386
00:29:04,840 --> 00:29:06,840
or just the volume signature in general.

387
00:29:09,120 --> 00:29:13,700
So going into phase D, we have the
volume diminution.

388
00:29:14,500 --> 00:29:17,720
We also, that suggests supply
diminishes.

389
00:29:18,480 --> 00:29:20,960
And at least let's just look at supply
first.

390
00:29:21,740 --> 00:29:28,440
So this is the absorption through time,
through structure,

391
00:29:28,820 --> 00:29:30,100
through phases.

392
00:29:30,970 --> 00:29:37,210
And the key here is to look at all of
the phases and to understand how supply

393
00:29:37,210 --> 00:29:41,130
being observed in accumulation through
phases and what kind of story,

394
00:29:41,230 --> 00:29:47,610
institutional story, is being created
through all of this. And we're seeing

395
00:29:47,610 --> 00:29:51,290
supply through all of the phases is
diminishing and then going into phase E,

396
00:29:51,430 --> 00:29:53,830
into a trend, look at the supply
signature.

397
00:29:54,190 --> 00:29:55,950
It's the lowest on this chart.

398
00:29:57,270 --> 00:30:00,150
So that's kind of like a natural wave.

399
00:30:00,840 --> 00:30:04,640
of absorption of the supply through the
horizontal structure.

400
00:30:04,960 --> 00:30:08,040
We also would be thinking about the
duration here.

401
00:30:08,860 --> 00:30:15,220
And duration originally was not
discussed by Wyckoff or SMI or anyone

402
00:30:15,420 --> 00:30:20,860
This is just something that came out of
my conversations with more advanced

403
00:30:20,860 --> 00:30:27,040
students. One of the questions in the
practicum was could we identify a

404
00:30:27,040 --> 00:30:28,040
duration?

405
00:30:28,620 --> 00:30:31,300
of the trading range, how long it's
gonna unfold.

406
00:30:35,880 --> 00:30:39,200
Let's say in phase A or phase B, or
early phase B.

407
00:30:39,700 --> 00:30:45,640
And yes, there is a way to think about
this, not necessarily to determine

408
00:30:45,640 --> 00:30:49,700
exactly, but to think about this. And
the way how we would be thinking about

409
00:30:49,700 --> 00:30:54,440
this is all of the emerging supply into,
let's say, phase A.

410
00:30:55,690 --> 00:31:01,970
and this emergence of the supply
suggests that it's gonna take some time

411
00:31:01,970 --> 00:31:04,390
absorb this supply.

412
00:31:05,010 --> 00:31:08,630
And just because of that, we're thinking
that we're gonna go into a trading

413
00:31:08,630 --> 00:31:12,530
range. And then once we're in the
trading range, the timing becomes a

414
00:31:12,530 --> 00:31:17,710
simpler, right? Now that we know how the
price structural analysis works, we are

415
00:31:17,710 --> 00:31:20,310
waiting for phase C as our timing tool.

416
00:31:20,990 --> 00:31:22,330
We are calculating

417
00:31:25,230 --> 00:31:31,110
you know, on the number of tests, number
of

418
00:31:31,110 --> 00:31:36,330
panic on the way down in phases A and C.

419
00:31:36,570 --> 00:31:42,330
And that helps us to figure out where we
are

420
00:31:42,330 --> 00:31:46,790
going to take off.

421
00:31:49,650 --> 00:31:54,000
So that's... that's kind of like all
what i wanted to say today about the

422
00:31:54,000 --> 00:32:00,780
horizontal absorption and we've done
this before so um we went through this

423
00:32:00,780 --> 00:32:06,000
material on phase analysis and
specifically supply so if you guys don't

424
00:32:06,000 --> 00:32:12,440
this uh definitely revisit that you know
from the previous session now

425
00:32:12,440 --> 00:32:19,300
the next couple of items are going to be
something familiar

426
00:32:19,300 --> 00:32:23,110
but Definitely new, the way of how we're
approaching this.

427
00:32:23,870 --> 00:32:30,210
So there is another way to absorb the
supply, and this is called a vertical

428
00:32:30,210 --> 00:32:36,390
absorption. I always highly recommend
David Wise's book,

429
00:32:36,610 --> 00:32:40,390
which is called Traits About to Happen.

430
00:32:40,870 --> 00:32:45,250
There, David talks a lot about different
elements of absorption.

431
00:32:46,170 --> 00:32:51,970
At this point in your development, as of
a coffin, this would be an appropriate

432
00:32:51,970 --> 00:32:54,530
book. So go to Amazon, order that.

433
00:32:55,110 --> 00:33:00,030
And then, you know, if not during the
course, but then once you're done with

434
00:33:00,030 --> 00:33:04,290
course, please read it. I think it would
be a great read over summer.

435
00:33:04,790 --> 00:33:11,430
And obviously, I want you to read the
same way how you learn from this course.

436
00:33:11,910 --> 00:33:17,510
Take notes, write it down, think
through, don't be lazy, don't be just a

437
00:33:17,980 --> 00:33:24,720
But even if you don't have time and you
can just only read, then it's better

438
00:33:24,720 --> 00:33:27,340
than not reading. So do that as well.

439
00:33:27,640 --> 00:33:32,900
So in the vertical absorption, we're
always going to see different scenarios

440
00:33:32,900 --> 00:33:35,160
to how supply is being absorbed.

441
00:33:36,040 --> 00:33:42,260
We're going to talk about how supply is
being absorbed on the way down, on the

442
00:33:42,260 --> 00:33:45,100
way up, a feather situation.

443
00:33:46,350 --> 00:33:51,130
or if I have a scenario, and then
absorption through the test of the

444
00:33:51,130 --> 00:33:52,130
bar.

445
00:33:52,290 --> 00:33:55,970
So all those four scenarios are on this
chart.

446
00:33:58,890 --> 00:34:05,290
And then on the demand side, we're going
to see a stop in demand, we're going to

447
00:34:05,290 --> 00:34:09,210
see urgent demand, and we're going to
see diminishing demand. So stop in

448
00:34:09,210 --> 00:34:11,310
is always going to be increasing.

449
00:34:11,889 --> 00:34:15,810
Urgent demand is going to be always
increasing a lot.

450
00:34:16,350 --> 00:34:17,989
More than stopping demand sometimes.

451
00:34:18,750 --> 00:34:19,929
And then diminution.

452
00:34:20,650 --> 00:34:23,510
Demand is obviously everything is going
down.

453
00:34:25,170 --> 00:34:31,870
So I want to use this as an exercise
today. And your goal for the

454
00:34:31,870 --> 00:34:36,570
next minute or so, I'm going to give you
a little bit of a time to think about

455
00:34:36,570 --> 00:34:43,370
it. I want you to find all of these
scenarios for me. So vertical

456
00:34:43,370 --> 00:34:45,389
absorption and

457
00:34:51,940 --> 00:34:53,840
So let's go one by one.

458
00:34:56,340 --> 00:35:00,660
Let's start with the vertical absorption
on the way down.

459
00:35:01,680 --> 00:35:06,600
Where can you define this element on
this chart?

460
00:35:08,740 --> 00:35:12,220
And obviously, let's think about first
what it means.

461
00:35:12,920 --> 00:35:16,300
So there is an absorption on the way
down.

462
00:35:16,890 --> 00:35:22,730
So this means that we're going to see
supply increase, and we're also going to

463
00:35:22,730 --> 00:35:27,610
see a demand increase, which would bring
us to the overall volume

464
00:35:27,610 --> 00:35:30,510
increase in the volume signature.

465
00:35:34,310 --> 00:35:41,050
So please find me this element where you
think this is, and give me a

466
00:35:41,050 --> 00:35:42,050
time step.

467
00:35:44,810 --> 00:35:45,910
Year, months.

468
00:35:47,280 --> 00:35:49,480
Okay, labeling as well is fine.

469
00:35:49,720 --> 00:35:52,320
Okay, so Eric's saying selling climax.

470
00:35:53,360 --> 00:35:58,100
Okay. And Lash is saying, what is it,
February?

471
00:35:58,460 --> 00:35:59,880
February 2017.

472
00:36:02,180 --> 00:36:04,660
A bar with the high volume signature.

473
00:36:05,080 --> 00:36:06,240
This one right here?

474
00:36:08,160 --> 00:36:09,160
Lash?

475
00:36:10,740 --> 00:36:12,440
Okay, so 2016.

476
00:36:12,700 --> 00:36:14,680
So this is what, February 2016?

477
00:36:15,520 --> 00:36:18,380
Yes. Somewhere here, okay, got it.

478
00:36:21,780 --> 00:36:24,260
Okay, Adam is talking about the same
thing, yeah.

479
00:36:25,480 --> 00:36:32,460
So we could see that there are quite a
few places here where

480
00:36:32,460 --> 00:36:35,400
we could see this type of absorption on
the way down.

481
00:36:35,920 --> 00:36:41,060
So on the climactic action, we're
definitely gonna see a lot of increase

482
00:36:41,060 --> 00:36:42,060
supply.

483
00:36:42,240 --> 00:36:44,440
So how does absorption happens here?

484
00:36:44,880 --> 00:36:49,520
There is a lot of supply that is
available at this point of time. And

485
00:36:49,520 --> 00:36:53,300
obviously produces that institutional
requirement for the liquidity.

486
00:36:54,200 --> 00:36:57,040
And also there is some value at this
point.

487
00:36:57,820 --> 00:37:02,640
So what institutions are doing with this
increase of the liquidity is that

488
00:37:02,640 --> 00:37:05,560
they're coming in and they're absorbing
this supply.

489
00:37:05,860 --> 00:37:07,720
And therefore demand signature will
increase.

490
00:37:08,040 --> 00:37:12,740
And because both supply and demand
increases at the same time, that's going

491
00:37:12,740 --> 00:37:13,739
to...

492
00:37:13,740 --> 00:37:17,780
propel the volume signature in general
and we see that this is the highest

493
00:37:17,780 --> 00:37:24,700
volume signature here because this is
the first point of fear and it acts as a

494
00:37:24,700 --> 00:37:30,720
general capitulation therefore

495
00:37:31,600 --> 00:37:35,860
we are expecting that the volume
signature is going to be the highest. So

496
00:37:35,860 --> 00:37:40,020
the highest volume signature because of
general capitulation and because of a

497
00:37:40,020 --> 00:37:46,860
lot of interest from institutions on
value and liquidity at this point of

498
00:37:48,500 --> 00:37:53,740
Supply increases, demand increases, and
institutional demand starts to observe

499
00:37:53,740 --> 00:37:55,700
the supply.

500
00:37:55,920 --> 00:37:58,740
But it still happens on the way down.

501
00:38:00,230 --> 00:38:06,690
As the price goes down, demand comes in.
It cannot stop the price from going

502
00:38:06,690 --> 00:38:07,890
down right away.

503
00:38:08,350 --> 00:38:14,010
And therefore, absorption is happening
as the price still goes down.

504
00:38:15,890 --> 00:38:22,630
Look into the second example in Phase B.
We see the

505
00:38:22,630 --> 00:38:24,250
same phenomenon.

506
00:38:24,710 --> 00:38:26,670
We see the supply increasing.

507
00:38:27,050 --> 00:38:29,050
We see the demand increasing.

508
00:38:29,740 --> 00:38:34,900
Therefore, volume signature in general
is going to increase relative to what

509
00:38:34,900 --> 00:38:39,300
we've seen before somewhere in this
area. So this is a local increase of the

510
00:38:39,300 --> 00:38:40,300
supply signature.

511
00:38:41,620 --> 00:38:46,800
And the same process happens here. In
phase B, as the price comes to the

512
00:38:46,800 --> 00:38:52,700
level, institutions are feeling that
this is a good value proposition to

513
00:38:52,760 --> 00:38:57,820
especially with the bias that they
consider a bullish bias.

514
00:38:58,990 --> 00:39:04,690
So they're trying to acquire more at the
same price level as

515
00:39:04,690 --> 00:39:08,110
they did on the selling climax itself.

516
00:39:08,510 --> 00:39:13,490
And please note that selling climax was
kind of like a quick event, right? Like

517
00:39:13,490 --> 00:39:14,950
a V bottom type of event.

518
00:39:15,190 --> 00:39:20,710
So not a lot of institutions were able
to get in into this position right away.

519
00:39:20,890 --> 00:39:27,790
So they are seeking other opportunities
at the same value zone to scale in more.

520
00:39:28,170 --> 00:39:33,570
And the scaling in technique that I've
shown you with the chart that we've

521
00:39:33,570 --> 00:39:39,250
discussed from Ronnie, they're going to
use it in the same way and

522
00:39:39,250 --> 00:39:44,090
create the position by

523
00:39:44,090 --> 00:39:49,830
buying in the value zone multiple times.

524
00:39:50,550 --> 00:39:54,690
And this could be the second point of
entry for them here in phase B.

525
00:39:55,090 --> 00:40:00,030
So as the price goes down, and supply
increases and weak hands are getting rid

526
00:40:00,030 --> 00:40:04,570
of this position, whatever they have
left, institutions are coming in and

527
00:40:04,570 --> 00:40:06,510
they're presenting the demand.

528
00:40:06,870 --> 00:40:11,370
This demand absorbs whatever the share
is still available.

529
00:40:11,710 --> 00:40:16,590
There are fewer shares available, and
this is great. This is our phase

530
00:40:16,590 --> 00:40:21,350
here, right, from phase A low to phase B
low. And that suggests the confirmation

531
00:40:21,350 --> 00:40:26,050
that the buys, the bullish buys, is
being confirmed at least temporarily

532
00:40:26,960 --> 00:40:31,860
There is also absorption on the way down
right here. I'm not sure if anybody has

533
00:40:31,860 --> 00:40:36,640
mentioned this, but here's another one.
The price goes down, supply is

534
00:40:36,640 --> 00:40:42,100
increasing, demand is increasing, and
demand absorbs the supply

535
00:40:42,100 --> 00:40:46,560
and stops the price from moving further
down.

536
00:40:46,760 --> 00:40:50,440
So therefore, we know that only
institutions could do that.

537
00:40:51,160 --> 00:40:54,940
And therefore, it again confirms the
bullish buy.

538
00:40:57,660 --> 00:41:02,640
There are some other smaller spots and
pockets where we could use the same

539
00:41:02,640 --> 00:41:09,400
thinking. So for instance, this spot
right here,

540
00:41:09,560 --> 00:41:14,680
we're seeing how supply signature has
increased and then the price has stopped

541
00:41:14,680 --> 00:41:15,680
from moving down.

542
00:41:15,780 --> 00:41:18,920
So what does it mean? It means on this
last two bars,

543
00:41:19,710 --> 00:41:23,650
even though supply has increased, but
demand has increased as well. And

544
00:41:23,650 --> 00:41:26,170
therefore, from here, the volume
signature has increased.

545
00:41:26,810 --> 00:41:32,410
So that's a sign of absorption,
especially making a higher low

546
00:41:32,410 --> 00:41:36,230
after this spring and so on and so
forth.

547
00:41:36,450 --> 00:41:43,390
So this is also the same example. What
about here on the backing up action?

548
00:41:43,630 --> 00:41:44,630
Same thing.

549
00:41:44,810 --> 00:41:45,810
Supply is increasing.

550
00:41:46,400 --> 00:41:52,080
Demand is increasing on those bars as
well. Again, volume is highly misleading

551
00:41:52,080 --> 00:41:58,640
tool, visual tool, right? So even though
we see it in, you know, volume bars

552
00:41:58,640 --> 00:42:04,200
in red, and in this case, gray, dark
gray,

553
00:42:04,340 --> 00:42:09,780
it doesn't tell us everything about
what's going on.

554
00:42:10,420 --> 00:42:13,140
So therefore, we are...

555
00:42:14,330 --> 00:42:20,510
could be confused and a lot of people
are on the increasing volume signature

556
00:42:20,510 --> 00:42:26,410
on the way down, we could be confused
how to interpret this and we would be

557
00:42:26,410 --> 00:42:31,810
thinking that this is probably
interpretation for the bearish bias.

558
00:42:33,330 --> 00:42:35,230
Okay, let's go to the next one.

559
00:42:35,510 --> 00:42:41,650
How about vertical absorption on the way
up? Where do you see examples of that?

560
00:42:43,370 --> 00:42:45,970
So write it down, give me a timestamp.

561
00:42:59,690 --> 00:43:02,310
September 2016.

562
00:43:05,170 --> 00:43:06,310
Okay, great.

563
00:43:06,530 --> 00:43:08,030
Yes, definitely that.

564
00:43:08,770 --> 00:43:10,390
February 2017.

565
00:43:14,830 --> 00:43:19,450
Yes, there is an element of absorption
which is vertical on the way up.

566
00:43:20,370 --> 00:43:22,210
November 2015.

567
00:43:25,850 --> 00:43:29,890
Not sure about that.

568
00:43:35,550 --> 00:43:37,730
All reaccumulation on the way up.

569
00:43:39,730 --> 00:43:41,770
Not sure what Eric you mean by that.

570
00:43:43,320 --> 00:43:46,300
Okay, Joe is saying August of 2016.

571
00:43:47,920 --> 00:43:52,580
So I'm assuming, what, somewhere here?

572
00:43:54,120 --> 00:43:55,120
Joe?

573
00:43:56,700 --> 00:43:58,280
Is it there, Joe?

574
00:43:58,820 --> 00:44:02,120
August of 2016, end of July 2016.

575
00:44:02,320 --> 00:44:03,420
So somewhere here.

576
00:44:03,980 --> 00:44:10,580
Yes. Okay, well, I think that we are
getting a handle on this, as to

577
00:44:10,580 --> 00:44:12,080
what this is.

578
00:44:13,480 --> 00:44:18,640
I could also tell you that, you know,
this is the vertical absorption right

579
00:44:18,640 --> 00:44:21,080
here. These two bars right here.

580
00:44:22,000 --> 00:44:25,900
Look at the volume signature. Demand is
increasing relative to what it was

581
00:44:25,900 --> 00:44:31,940
before, and supply has increased before
that. So supply is coming in, taking the

582
00:44:31,940 --> 00:44:33,440
price down below the support.

583
00:44:35,900 --> 00:44:40,280
That increases capitulation by weak
hands, and then suddenly demand

584
00:44:40,540 --> 00:44:42,400
and the price goes up.

585
00:44:42,780 --> 00:44:46,860
So there is a movement to the upside and
actually this whole rally could be

586
00:44:46,860 --> 00:44:53,160
thought of as like supplies being
vertically observed. Supplies coming in,

587
00:44:53,160 --> 00:44:58,940
observed on the way down, on the way
down, and then on the way up, and then

588
00:44:58,940 --> 00:44:59,940
the way up.

589
00:45:01,360 --> 00:45:07,780
You kind of see guys how I took this
whole area and now I've shown you two

590
00:45:07,780 --> 00:45:10,340
of how supply has been observed.

591
00:45:10,920 --> 00:45:14,820
And as a result of that, the price has
stopped at this level.

592
00:45:18,620 --> 00:45:20,140
On the way down first.

593
00:45:25,260 --> 00:45:27,120
And then on the way up.

594
00:45:33,800 --> 00:45:34,800
Same process.

595
00:45:35,960 --> 00:45:37,840
Institutions are buying in both cases.

596
00:45:42,190 --> 00:45:47,110
Same bias, still bullish, but short
-term different results.

597
00:45:47,830 --> 00:45:53,330
In the first case, on the way down,
we're still going down.

598
00:45:53,930 --> 00:46:00,490
There is still not enough absorption
that has happened in this moment, and

599
00:46:00,490 --> 00:46:02,490
therefore the price still goes down.

600
00:46:03,970 --> 00:46:06,850
On the way up, the picture is different.

601
00:46:08,590 --> 00:46:15,170
There was an increase of supply first,
but demand is so urgent that it

602
00:46:15,170 --> 00:46:22,050
observes whatever remaining supply is
left, and that urgency, overwhelming

603
00:46:22,050 --> 00:46:28,330
demand, already pushes the price up
instead of

604
00:46:28,330 --> 00:46:33,990
traveling down or stopping that
downtrend.

605
00:46:34,330 --> 00:46:38,170
So this is more of how the price

606
00:46:39,130 --> 00:46:44,070
moves easier after the demand has
absorbed a big portion of the supply.

607
00:46:44,310 --> 00:46:49,110
And obviously other cases here as well,
right? So vertical absorption on the way

608
00:46:49,110 --> 00:46:51,930
up. There is definitely a lot of supply
right here.

609
00:46:52,610 --> 00:46:55,470
And yet we're observing this supply on
the way up.

610
00:46:55,790 --> 00:47:01,170
There is an increase of the supply here
on the reaction.

611
00:47:01,390 --> 00:47:06,030
And then look at this absorption on the
way up. There is so much. This is the

612
00:47:06,030 --> 00:47:07,030
best example.

613
00:47:07,280 --> 00:47:12,140
of the absorption on the way up that we
could see on this chart and this one too

614
00:47:12,140 --> 00:47:18,380
um again you know supply comes in and uh
there is a data absorption

615
00:47:18,380 --> 00:47:25,300
uh to the upside okay so uh let's now
look at the feather

616
00:47:25,300 --> 00:47:29,920
so you guys still don't know what this
is so i'm going to explain this a little

617
00:47:29,920 --> 00:47:33,720
bit later on but i want to show you
where the feather is

618
00:47:34,560 --> 00:47:38,340
And the feather, a really good example
is right here.

619
00:47:41,820 --> 00:47:45,980
Then a little bit here, probably less
so.

620
00:47:47,540 --> 00:47:50,380
Yeah, so this is a really good example
of the feather.

621
00:47:50,680 --> 00:47:52,020
So what is happening here?

622
00:47:52,620 --> 00:47:57,200
Well, first of all, the precondition of
the feather, and we'll study this, I

623
00:47:57,200 --> 00:47:58,920
have a slide on this for today.

624
00:48:00,620 --> 00:48:04,980
we're going to have an increase in the
supply signature. So supply emerges and

625
00:48:04,980 --> 00:48:06,640
produces some kind of reaction.

626
00:48:07,280 --> 00:48:11,500
And this reaction usually is going to
act more as a change of character type

627
00:48:11,500 --> 00:48:14,940
reaction. We kind of could see that
maybe the trading range is going to be

628
00:48:14,940 --> 00:48:16,420
developing here.

629
00:48:16,640 --> 00:48:18,280
But look what happens next.

630
00:48:18,880 --> 00:48:25,320
We are testing the initial change of
character as a high -low.

631
00:48:27,120 --> 00:48:33,740
And then with that test, we are
concluding that supply is actually at

632
00:48:33,740 --> 00:48:34,740
low level.

633
00:48:35,240 --> 00:48:40,160
And therefore, there is a possibility
for the price to come to the resistance.

634
00:48:40,500 --> 00:48:43,720
And as it comes to the resistance, it
does two things.

635
00:48:45,060 --> 00:48:51,180
The overall supply and demand signature
are diminishing

636
00:48:51,180 --> 00:48:55,920
while we are making slightly higher
highs.

637
00:48:56,670 --> 00:49:03,450
and higher lows in the context of the
structure where

638
00:49:03,450 --> 00:49:09,610
we are residing close to the resistance
or at the resistance level.

639
00:49:12,070 --> 00:49:17,810
So this is more a function of
diminishing supply

640
00:49:24,460 --> 00:49:26,140
rather than diminishing demand.

641
00:49:28,380 --> 00:49:33,800
And from here, because we're close to
the resistance, once the demand is going

642
00:49:33,800 --> 00:49:38,980
to come in, it's going to produce some
kind of momentum signature, increased

643
00:49:38,980 --> 00:49:39,980
momentum signature.

644
00:49:40,180 --> 00:49:46,860
So we definitely want to study this type
of absorption.

645
00:49:47,180 --> 00:49:52,580
It's not very fast. It's laborious. It's
kind of like grinding out to the...

646
00:49:52,860 --> 00:49:59,240
resistance type of movement, especially
in this area right here. Look into this

647
00:49:59,240 --> 00:50:04,180
movement. It goes up, but it doesn't
really break out and runs away.

648
00:50:04,380 --> 00:50:10,980
It's still there and produces those
small reactions that do not contain a

649
00:50:10,980 --> 00:50:11,980
supply.

650
00:50:13,220 --> 00:50:17,920
And that's what feather is, and we'll
look at this in a slightly different

651
00:50:20,910 --> 00:50:22,670
A test of a momentum bar.

652
00:50:22,910 --> 00:50:24,370
So here is that example.

653
00:50:24,590 --> 00:50:27,990
Here is the first momentum bar. Here is
the second momentum bar.

654
00:50:28,570 --> 00:50:34,230
The first momentum bar has the test

655
00:50:34,230 --> 00:50:39,750
that, and both of them, by the way, will
have some kind of increase of the

656
00:50:39,750 --> 00:50:44,810
supply. So there is no way that, you
know, the increase of the supply is not

657
00:50:44,810 --> 00:50:47,790
going to happen. This is an event. This
is probably earnings.

658
00:50:48,380 --> 00:50:52,960
Therefore, a lot of the institutions are
going to be selling into earnings like

659
00:50:52,960 --> 00:50:58,440
this. They're going to be selling on the
assumption that a mean reversion trade

660
00:50:58,440 --> 00:51:04,260
is possible here and that the price is
overbought, short -term overbought, and

661
00:51:04,260 --> 00:51:07,460
therefore it demands some kind of
reaction.

662
00:51:08,620 --> 00:51:13,380
In this case, they will be wrong because
supply is being observed almost

663
00:51:13,380 --> 00:51:16,180
instantly on the test.

664
00:51:16,810 --> 00:51:19,970
And some of the tests are not going to
be that great.

665
00:51:20,610 --> 00:51:25,010
But in these two cases, these tests are
pretty good.

666
00:51:25,550 --> 00:51:32,270
For the next two days after a momentum
bar, we're seeing that the reaction has

667
00:51:32,270 --> 00:51:35,550
not gone below the low of that bar.

668
00:51:36,150 --> 00:51:37,230
That's really important.

669
00:51:37,770 --> 00:51:42,590
So that shows us that whatever supply
has came in, it's been absorbed.

670
00:51:43,240 --> 00:51:48,040
And the price has an ability to hold on
to these levels and then actually

671
00:51:48,040 --> 00:51:49,040
advance.

672
00:51:49,320 --> 00:51:53,220
Usually the advancement of the price
after that is going to happen on

673
00:51:53,220 --> 00:51:54,360
diminishing demand signature.

674
00:51:55,500 --> 00:51:56,500
Why is that?

675
00:51:56,880 --> 00:51:59,440
Well, there is a lot of demand here on
this bar.

676
00:51:59,820 --> 00:52:04,020
And this demand is actually absorbing
whatever increase of the supply we have

677
00:52:04,020 --> 00:52:09,430
had. So imagine that this absorption
happens at this higher level, and once

678
00:52:09,430 --> 00:52:12,930
supply that came in has been observed,
what's going to happen with the price?

679
00:52:13,190 --> 00:52:15,910
There is no pressure anymore from the
supply.

680
00:52:16,170 --> 00:52:20,170
So the price is just going to go up and
up and up and up.

681
00:52:20,950 --> 00:52:26,350
So this is a very easy trade, by the
way. Well, one of the things here is

682
00:52:26,350 --> 00:52:32,950
to wait for this type of event and see
how it's going to play out. So it plays

683
00:52:32,950 --> 00:52:34,210
out favorably here.

684
00:52:34,830 --> 00:52:36,070
Wait for the test.

685
00:52:37,170 --> 00:52:43,190
And then once you see that the test is
successful, come in into the position,

686
00:52:43,390 --> 00:52:47,710
maybe somewhere on like a breakout of
this local highs.

687
00:52:47,950 --> 00:52:52,950
And here is your small trade here on the
breakout of this high. And here is your

688
00:52:52,950 --> 00:52:53,970
small trade right here.

689
00:52:54,450 --> 00:52:56,410
So that's a possibility as well.

690
00:52:58,910 --> 00:53:01,410
And, you know, obviously a very...

691
00:53:01,760 --> 00:53:07,980
Visual pattern attracts a lot of
attention, so you cannot miss it if

692
00:53:07,980 --> 00:53:09,320
following a specific stock.

693
00:53:09,920 --> 00:53:13,620
All right, now let's talk about the
demand.

694
00:53:14,040 --> 00:53:19,040
So let's talk about the stopping demand.
Think about the definition, stopping

695
00:53:19,040 --> 00:53:23,560
demand. So what are we stopping? We're
probably stopping a downtrend.

696
00:53:24,840 --> 00:53:28,360
So where on this chart could we find...

697
00:53:29,320 --> 00:53:36,200
and evidence of demand coming in when
the price is going down and

698
00:53:36,200 --> 00:53:39,760
stopping the price from going further
down.

699
00:53:42,900 --> 00:53:44,000
Automatic rally.

700
00:53:44,760 --> 00:53:49,620
Okay, so we're going down, Eric, right?
So we're going down. Okay, now I should

701
00:53:49,620 --> 00:53:51,040
say selling climax.

702
00:53:51,660 --> 00:53:57,000
Yes, definitely. This is a stop in
demand. So whatever demand is on this

703
00:53:58,700 --> 00:54:05,520
It's the demand that absorbs weak -hand
supply, and because of that, the price

704
00:54:05,520 --> 00:54:07,660
stops from going further down.

705
00:54:10,160 --> 00:54:12,600
What else? Another selling climax.

706
00:54:12,840 --> 00:54:14,840
Late April of 2016.

707
00:54:15,600 --> 00:54:17,740
Late April of 2016.

708
00:54:18,060 --> 00:54:24,740
Yes. So when we were discussing a
vertical absorption on the way down,

709
00:54:24,740 --> 00:54:26,280
basically the stopping demand.

710
00:54:27,020 --> 00:54:31,800
We're kind of looking at the same type
of action.

711
00:54:32,080 --> 00:54:37,120
We just were discussing how supply has
been observed at these spots, right?

712
00:54:37,580 --> 00:54:44,500
Now think about in here, in here, and

713
00:54:44,500 --> 00:54:45,500
look at where they come.

714
00:54:48,060 --> 00:54:54,600
This is actually so great because it
shows you guys where institutional

715
00:54:54,600 --> 00:54:55,600
demand

716
00:54:56,460 --> 00:55:01,620
comes in and becomes more of a stopping
action.

717
00:55:03,760 --> 00:55:10,480
And look how nicely we are seeing how
institutions

718
00:55:10,480 --> 00:55:13,980
are functioning and how their trend is
starting to emerge.

719
00:55:14,300 --> 00:55:20,340
So they're buying first in the value
zone in

720
00:55:20,340 --> 00:55:23,760
the lower part of the trading range.

721
00:55:25,420 --> 00:55:32,360
And as they buy, think about the supply,
right? So in other ways, I want

722
00:55:32,360 --> 00:55:34,980
you to imagine maybe, let me give you
the analogy.

723
00:55:35,240 --> 00:55:37,180
And today we're going to use a lot of
analogies.

724
00:55:42,220 --> 00:55:47,020
So analogy here would be that, let's say
that our supply level

725
00:55:47,020 --> 00:55:51,540
equals 100 units.

726
00:55:58,160 --> 00:56:03,440
So we come to the selling climax and we
are consuming an immense amount of

727
00:56:03,440 --> 00:56:04,440
supply units.

728
00:56:04,480 --> 00:56:09,440
So let's say that we've consumed here as
institutions 50 units at this spot.

729
00:56:10,700 --> 00:56:17,080
Then in phase B at the secondary test,
we are consuming another maybe

730
00:56:17,080 --> 00:56:19,180
20 units.

731
00:56:20,660 --> 00:56:26,120
Please note that the volume here went
down, right? So from 50 to 20.

732
00:56:26,840 --> 00:56:32,680
We are decreasing the volume signature,
and therefore we are decreasing also

733
00:56:32,680 --> 00:56:39,360
supply that is available, because now we
are left only with what before phase B?

734
00:56:39,440 --> 00:56:42,460
We are only left with 50 units of
supply.

735
00:56:42,780 --> 00:56:45,120
So supply is still present,

736
00:56:45,240 --> 00:56:51,380
and yet

737
00:56:51,380 --> 00:56:54,800
supply went down.

738
00:56:57,000 --> 00:57:03,140
And that's, again, that
misinterpretation by the beginners

739
00:57:03,140 --> 00:57:07,760
that could be made because they are
looking into this area of the beginning

740
00:57:07,760 --> 00:57:12,120
2016. They're looking at the volume
signature and they're saying, wow,

741
00:57:12,120 --> 00:57:15,280
lot of supply. The supply has increased.
The volume signature has increased

742
00:57:15,280 --> 00:57:17,060
locally. And that's true.

743
00:57:18,040 --> 00:57:23,740
But relative to phase A, we see how
supply has diminished slightly.

744
00:57:25,200 --> 00:57:28,740
all considerably, it doesn't really
matter, but there is a decrease.

745
00:57:29,220 --> 00:57:35,740
So then the next time we have in phase
C, two times where

746
00:57:35,740 --> 00:57:41,440
CO is buying on the spring

747
00:57:41,440 --> 00:57:48,080
and then a test, let's imagine that it

748
00:57:48,080 --> 00:57:50,160
buys another maybe

749
00:57:54,480 --> 00:58:01,220
much another 15 plus 5 another 20 units
of supply so

750
00:58:01,220 --> 00:58:05,460
now what are we left with we are left

751
00:58:05,460 --> 00:58:11,620
with so 20 20 50 with

752
00:58:11,620 --> 00:58:17,980
10 units of supply that's very
interesting think about this only

753
00:58:17,980 --> 00:58:20,120
10 units of supply

754
00:58:22,250 --> 00:58:26,050
is in the weak hands and 90 units of
supply in strong hands.

755
00:58:27,370 --> 00:58:31,590
If that's the case, who's going to be
selling to push the price down?

756
00:58:32,430 --> 00:58:36,050
Well, obviously, only weak hands are
going to sell at this point.

757
00:58:36,910 --> 00:58:41,970
And as they do, they're probably going
to sell at some kind of break -even

758
00:58:41,970 --> 00:58:47,310
point. So maybe somewhere here at the
higher levels, right, in the backing -up

759
00:58:47,310 --> 00:58:51,750
action. But once we come to the backing
up action, we might be thinking that,

760
00:58:51,830 --> 00:58:58,150
okay, in phase D at the backup, we are,
you know,

761
00:58:58,150 --> 00:59:02,150
consuming another 10 units of supply.

762
00:59:02,530 --> 00:59:07,190
You know, we, I mean, institutions,
right? So consuming another 10 points of

763
00:59:07,190 --> 00:59:12,150
supply, and supply is not available. And
we see that from the volume signature

764
00:59:12,150 --> 00:59:15,530
here after phase D going into phase E.

765
00:59:19,800 --> 00:59:22,860
Supply is in strong hands at this point.

766
00:59:25,700 --> 00:59:30,800
Weak hands don't own this supply, and
that's very important. So if supply is

767
00:59:30,800 --> 00:59:35,320
strong hands and their intention is just
to see how the price is going to

768
00:59:35,320 --> 00:59:39,720
progress to the upside, they have the
valuation much, much higher than the

769
00:59:39,720 --> 00:59:42,480
current price, what do you think is
going to happen with the price?

770
00:59:44,360 --> 00:59:45,880
Obviously, it's going to go up.

771
00:59:47,500 --> 00:59:53,200
And that's what's going to establish the
trend, the upward spread for the trend.

772
00:59:56,840 --> 01:00:02,540
When you look at it like that, and then
you go through this whole process of how

773
01:00:02,540 --> 01:00:09,240
absorption happens, then it becomes
clear as to where the trend is going to,

774
01:00:09,260 --> 01:00:13,320
what the bias is going to be, that's
number one, and where the trend is going

775
01:00:13,320 --> 01:00:14,320
start to emerge.

776
01:00:14,830 --> 01:00:16,990
then you're just seeking for the
confirmation.

777
01:00:17,330 --> 01:00:22,010
So with Ronnie's chart that we had at
the beginning of the session, we went

778
01:00:22,010 --> 01:00:23,050
the major sign of stress.

779
01:00:23,270 --> 01:00:26,890
We went into the first leg of the
backing up action, and then it failed.

780
01:00:28,010 --> 01:00:32,930
Here, same scenario, but is unfolding
differently.

781
01:00:33,950 --> 01:00:40,090
Instead of having this increase, first
increase here in October, November,

782
01:00:41,100 --> 01:00:45,280
And then having the test and continuing
to the upside with the reversal like

783
01:00:45,280 --> 01:00:46,280
this.

784
01:00:47,900 --> 01:00:50,920
In Rony's case, it just tanked on the
event.

785
01:00:51,740 --> 01:00:53,320
And that's what just happened.

786
01:00:55,040 --> 01:00:56,480
Nothing we can do about that.

787
01:00:56,900 --> 01:01:01,740
But in this case, we would be thinking
of adding to the position on the

788
01:01:01,740 --> 01:01:05,180
as a confirmation of this bias.

789
01:01:06,120 --> 01:01:08,180
We'll save you a lot of money.

790
01:01:08,490 --> 01:01:12,570
And I will talk about this maybe in like
four or five sessions.

791
01:01:13,330 --> 01:01:17,930
We still have to discuss this. And
obviously, Wyckoff Practicum is going to

792
01:01:17,930 --> 01:01:19,270
lot about the strategy.

793
01:01:19,630 --> 01:01:21,690
And by the way, I wanted to mention
this, guys.

794
01:01:23,150 --> 01:01:28,110
So we're almost done with the page for
the Wyckoff Practicum.

795
01:01:28,610 --> 01:01:30,430
Wyckoff Practicum is going to start.

796
01:01:31,310 --> 01:01:35,550
It's going to be on Mondays for summer
sessions, and it's going to start.

797
01:01:36,500 --> 01:01:40,000
After the last session that we're going
to have, our last session is going to be

798
01:01:40,000 --> 01:01:41,240
April 15th.

799
01:01:44,320 --> 01:01:51,320
WTC, April 15th. And then the practicum
is

800
01:01:51,320 --> 01:01:55,420
going to start a week after on April
22nd.

801
01:01:55,800 --> 01:01:59,980
So put this on your calendar, and this
is a free session.

802
01:02:00,400 --> 01:02:03,440
So I want you all to come, and we're
just going to...

803
01:02:04,050 --> 01:02:09,210
Continue our discussion, you know, and
I'm going to show you a couple of,

804
01:02:09,250 --> 01:02:12,010
actually probably one exercise that
we're going to do.

805
01:02:12,850 --> 01:02:14,750
Go to our YouTube channel.

806
01:02:15,450 --> 01:02:19,850
We've just posted the video from the
practicum, from this cycle, from the

807
01:02:19,850 --> 01:02:26,010
current cycle. I kind of wanted to do
this so that I could refer people to

808
01:02:26,010 --> 01:02:30,950
particular video. And I'll give you the
link next time, but you could explore

809
01:02:30,950 --> 01:02:35,810
this. So I would highly recommend that
video under the Wyckoff Practicum.

810
01:02:38,590 --> 01:02:43,750
And if you can come to the free
complimentary session, do that.

811
01:02:43,970 --> 01:02:48,890
And I'm expecting that a lot of you are
going to continue this education with

812
01:02:48,890 --> 01:02:55,830
the practicum and move to more advanced
knowledge here.

813
01:02:56,910 --> 01:02:59,250
Before I...

814
01:03:00,850 --> 01:03:02,190
erase all of this.

815
01:03:03,650 --> 01:03:06,890
I also want you to see something else.

816
01:03:08,330 --> 01:03:13,650
Because we started talking about how
supply is being observed at the level of

817
01:03:13,650 --> 01:03:19,830
the support on the way down, and then we
see the same picture on the way down at

818
01:03:19,830 --> 01:03:23,450
the higher level. So the value zone for
institutions is higher now.

819
01:03:25,430 --> 01:03:29,750
Now I also want you to think about other
ways that we've discussed.

820
01:03:30,380 --> 01:03:35,720
of absorbing the supply so look into
this area right here

821
01:03:35,720 --> 01:03:42,700
and this is by itself not only a

822
01:03:42,700 --> 01:03:46,900
vertical absorption on the way up but it
also shows an urgent demand

823
01:03:46,900 --> 01:03:53,420
here's another

824
01:03:53,420 --> 01:03:59,080
urgent demand that's coming in here is
another urgent demand that's coming in

825
01:04:02,090 --> 01:04:07,770
And then we're seeing diminishing demand
in the feather signature right here.

826
01:04:10,150 --> 01:04:14,910
And you would say that, well,
diminishing demand doesn't really, like,

827
01:04:14,910 --> 01:04:15,970
it have to do with anything?

828
01:04:16,650 --> 01:04:23,630
Well, diminishing demand with the price
moving up like this suggests that supply

829
01:04:23,630 --> 01:04:24,630
is exhausted.

830
01:04:25,730 --> 01:04:31,450
So now let's look at this whole picture
and kind of imagine of what happens.

831
01:04:32,030 --> 01:04:36,270
throughout this whole picture and i'm
thinking i should be i should do the

832
01:04:36,270 --> 01:04:42,950
study here we are seeing the first
initial absorption

833
01:04:42,950 --> 01:04:49,730
on the way down on the saline climax
itself but it's so quick that not

834
01:04:49,730 --> 01:04:55,330
all of the institutions got in at the
appropriate price that they want but

835
01:04:55,330 --> 01:04:59,070
supply goes up a lot

836
01:05:01,610 --> 01:05:04,430
demand goes up a lot too.

837
01:05:06,010 --> 01:05:12,830
In the second case, supply still
increases but increases less, and

838
01:05:12,830 --> 01:05:15,750
demand is increasing maybe the same way.

839
01:05:19,090 --> 01:05:25,630
Next time, supply is still increasing
locally, but yet demand

840
01:05:25,630 --> 01:05:32,120
is increasing as well, maybe not as much
as in the first two cases, but that's

841
01:05:32,120 --> 01:05:38,780
sufficient to stop the price from going
further down then we see how the

842
01:05:38,780 --> 01:05:45,080
price starts to go up on some kind of uh
emergence of the demand

843
01:05:45,080 --> 01:05:50,660
here is and then demand is increasing
more and more

844
01:05:50,660 --> 01:05:57,300
next leg up demand is

845
01:05:57,300 --> 01:05:58,920
increasing a lot

846
01:06:00,330 --> 01:06:01,490
Next leg up.

847
01:06:02,090 --> 01:06:08,130
Demand is not increasing a lot, but
supply is exhausted.

848
01:06:11,850 --> 01:06:17,790
And then the next move up, this is where
demand is increasing a lot again.

849
01:06:18,650 --> 01:06:20,550
So what does it all mean?

850
01:06:21,430 --> 01:06:27,050
I mean, all this, you know, demand
supply signatures that I put in right

851
01:06:27,130 --> 01:06:29,410
And why is it important at those places?

852
01:06:31,500 --> 01:06:37,980
Well, you kind of could see how first,
again, first step for institutional

853
01:06:37,980 --> 01:06:44,880
absorption is always going through the
process of accumulation in the

854
01:06:44,880 --> 01:06:45,759
trading range.

855
01:06:45,760 --> 01:06:51,320
And institutions predominantly are going
to first accumulate the stock on value

856
01:06:51,320 --> 01:06:54,700
and liquidity in the trading range in
the area of the support.

857
01:06:56,060 --> 01:06:58,700
We have to distinguish this.

858
01:06:59,310 --> 01:07:04,550
as a slightly different process than the
one that happens afterwards when the

859
01:07:04,550 --> 01:07:10,530
price is moving up under the conditions
of exhausted

860
01:07:10,530 --> 01:07:14,570
supply increasing demand signature.

861
01:07:15,050 --> 01:07:21,830
And we're seeing how demand has been
high throughout the first three phases,

862
01:07:22,110 --> 01:07:29,060
but still maybe not as in control as in
phase D and

863
01:07:29,060 --> 01:07:30,060
phase E.

864
01:07:31,020 --> 01:07:37,000
And through that, through how demand is
emerging here, you could see the

865
01:07:37,000 --> 01:07:39,680
characteristics of phase D and phase E.

866
01:07:42,260 --> 01:07:47,640
Why I always refer to supply as the most
important studies, volume studies for

867
01:07:47,640 --> 01:07:54,260
us? Well, because supply is going to be
the initial point of concern in the

868
01:07:54,260 --> 01:07:55,260
trading range.

869
01:07:55,880 --> 01:07:56,880
Is it still there?

870
01:07:57,740 --> 01:07:59,280
Is it at the higher level?

871
01:07:59,680 --> 01:08:04,500
Is it being under absorption through
phase analysis, through phases?

872
01:08:06,080 --> 01:08:07,660
How is this absorption happening?

873
01:08:07,920 --> 01:08:08,960
Is this happening fast?

874
01:08:09,200 --> 01:08:10,940
Is this happening slow? And so on and so
forth.

875
01:08:12,460 --> 01:08:18,300
And then after that, once supply has
been observed relatively well,

876
01:08:18,479 --> 01:08:24,080
that's when the price is going to start
showing you the emergence of the

877
01:08:24,080 --> 01:08:29,740
uptrend. And with the emergence of the
uptrend, institutional trend followers

878
01:08:29,740 --> 01:08:35,380
are going to be very attracted to this
area. In fact, all of these increases of

879
01:08:35,380 --> 01:08:42,100
the demand in phases D and E are going
to be associated with the bind waves by

880
01:08:42,100 --> 01:08:44,420
institutional trend followers.

881
01:08:45,300 --> 01:08:47,260
And we kind of could see all of that.

882
01:08:49,120 --> 01:08:53,279
Really good chart. I thought, you know,
this chart kind of shows so many

883
01:08:53,279 --> 01:08:54,279
examples.

884
01:08:54,869 --> 01:09:01,670
of how supply and demand are emerging,
how supply

885
01:09:01,670 --> 01:09:06,149
is being observed, and how urgent demand
starts to occur.

886
01:09:07,550 --> 01:09:10,470
All right, let's see if we have any
comments, questions here.

887
01:09:12,370 --> 01:09:19,069
Can you repeat the title of the book?
This one is from Joe, and this is

888
01:09:19,069 --> 01:09:20,609
obviously in reference to David Wise.

889
01:09:21,970 --> 01:09:23,590
Okay, so David Wise.

890
01:09:26,089 --> 01:09:27,609
trades about to happen.

891
01:09:34,270 --> 01:09:35,450
Okay, great.

892
01:09:36,490 --> 01:09:42,290
How to read the big volume spike in
February phase E, especially if we are

893
01:09:42,290 --> 01:09:48,950
already in position since phase C and D
from Nilesh? Yeah, this is a really good

894
01:09:48,950 --> 01:09:54,580
question. Because usually that's what
produces some kind of doubt, hesitation,

895
01:09:54,580 --> 01:10:00,620
and I've seen students come to me and
they're like, this has a lot of supply

896
01:10:00,620 --> 01:10:02,120
behind it, I'm out.

897
01:10:03,720 --> 01:10:09,000
Yeah, you can definitely do this, but
you have to think about where you are in

898
01:10:09,000 --> 01:10:10,480
the context of this whole structure.

899
01:10:12,640 --> 01:10:13,820
Hold on a second, guys.

900
01:10:43,430 --> 01:10:44,750
Such a weird class today.

901
01:10:45,030 --> 01:10:50,230
Everything distracts me today. I'm so
sorry, guys. I feel like my mind is

902
01:10:50,230 --> 01:10:55,310
just... I'd rather just concentrate on
this. It just takes me away from all of

903
01:10:55,310 --> 01:10:56,310
the things.

904
01:10:59,990 --> 01:11:05,290
Okay, so coming back to the question,
how do we interpret this volume

905
01:11:05,470 --> 01:11:09,650
Well, we kind of talked about this,
right? So definitely a lot of supply

906
01:11:09,650 --> 01:11:10,589
coming in.

907
01:11:10,590 --> 01:11:14,290
So with the emergence of the supply, we
need what? We need a test, right?

908
01:11:14,510 --> 01:11:20,650
We still cannot make this assumption
that this is going to be the stop in

909
01:11:20,650 --> 01:11:21,650
supply.

910
01:11:25,510 --> 01:11:31,650
It's just, you know, we are at the
beginning of the structure. This is a

911
01:11:31,650 --> 01:11:35,750
strength, a backing up action, test,
feather.

912
01:11:37,640 --> 01:11:41,680
And then after that, we're jumping out
of the structure. So we are relatively

913
01:11:41,680 --> 01:11:44,520
early in phase E.

914
01:11:44,980 --> 01:11:49,540
Just on this assumption alone, on this
structural assumption knowledge, I would

915
01:11:49,540 --> 01:11:52,280
just say that I want to see what's going
to come next.

916
01:11:53,100 --> 01:11:56,860
And more importantly, we need to
understand how the test is going to

917
01:11:57,720 --> 01:12:03,640
So the test obviously needs to be judged
by what happens afterwards.

918
01:12:04,360 --> 01:12:06,100
So the next two or three days.

919
01:12:06,650 --> 01:12:12,490
And we see how favorable the test is,
how favorable the test is here as well.

920
01:12:13,110 --> 01:12:18,610
So therefore, we would be on the, after
the test is successful, we would be

921
01:12:18,610 --> 01:12:21,790
thinking, should we add to the position
at this point?

922
01:12:22,090 --> 01:12:26,450
And again, depending on who you are as a
trader, are you a swing trader?

923
01:12:26,710 --> 01:12:29,970
Are you a long -term trader? Those
entries are going to be somewhat

924
01:12:30,110 --> 01:12:36,500
So those distinctions, obviously for the
practical, but for now, We just want to

925
01:12:36,500 --> 01:12:41,400
make sure that we could analyze this
spot correctly, meaning that supply

926
01:12:41,400 --> 01:12:42,400
emerges.

927
01:12:42,520 --> 01:12:43,880
We need a test.

928
01:12:44,480 --> 01:12:46,260
Test is successful or no.

929
01:12:46,960 --> 01:12:48,280
Yes, successful.

930
01:12:48,740 --> 01:12:52,980
Then here in the middle of the range,
yeah, we could open the position. That's

931
01:12:52,980 --> 01:12:56,780
another point of entry for us right
here. And this is just a sign of

932
01:12:56,780 --> 01:13:03,640
bar. When we look at the actual true
range, remember we

933
01:13:03,640 --> 01:13:04,640
had that slide?

934
01:13:04,860 --> 01:13:09,500
Where with the gap action, you take the
close of the previous day. Then you take

935
01:13:09,500 --> 01:13:14,220
the high of this gap day. And this is
your true range for the day.

936
01:13:14,640 --> 01:13:19,800
There were some trades done by
institutions behind the doors overnight.

937
01:13:20,020 --> 01:13:24,100
We don't see those unless we have the
software that shows us that type of

938
01:13:24,780 --> 01:13:26,720
But this is a sign of strength bar.

939
01:13:27,420 --> 01:13:30,360
And sign of strength bar, we definitely
buy.

940
01:13:32,200 --> 01:13:35,940
But because of the emergence of the
supply, we want to test it. We don't

941
01:13:35,940 --> 01:13:38,000
necessarily want to buy it right away.

942
01:13:39,120 --> 01:13:40,880
Okay, what else?

943
01:13:43,260 --> 01:13:48,360
From Adam. When you see a gap like in
February of 2017,

944
01:13:49,020 --> 01:13:53,020
does the gap have to be filled in the
future?

945
01:13:53,320 --> 01:13:57,880
What does it mean if the gap is filled
or not for the trading purposes? From

946
01:13:57,880 --> 01:14:00,180
Adam. Really interesting question.

947
01:14:01,070 --> 01:14:05,350
Because it kind of goes, the way how I'm
explaining this to you guys, right,

948
01:14:05,390 --> 01:14:12,150
kind of goes in a different way than the
conventional

949
01:14:12,150 --> 01:14:13,650
technical analysis definition.

950
01:14:13,870 --> 01:14:19,670
And I see what Adam is implying here,
because Adam knows technical analysis.

951
01:14:19,670 --> 01:14:26,410
in technical analysis, we would say
that, you know, the gap should be closed

952
01:14:26,410 --> 01:14:29,630
at some point revisited.

953
01:14:30,280 --> 01:14:37,020
And usually that revisit, like look at
this gap right here, happens relatively

954
01:14:37,020 --> 01:14:43,860
fast. Well, we kind of see the testing
of the gap right here. By itself, this

955
01:14:43,860 --> 01:14:47,080
a sign of strength just because it
didn't go below this area.

956
01:14:48,580 --> 01:14:52,640
We don't see the path here in the second
case.

957
01:14:53,640 --> 01:14:57,080
But what we need to understand, Adam, is
that

958
01:14:58,440 --> 01:15:03,980
We are talking right now just about this
small scenario right here where supply

959
01:15:03,980 --> 01:15:09,000
emerges and then we want to go through
the test and therefore through the

960
01:15:09,000 --> 01:15:10,200
vertical absorption.

961
01:15:10,880 --> 01:15:17,000
But this is a very good, relevant
question to our discussion. So thank you

962
01:15:17,000 --> 01:15:21,540
this question. We definitely can address
it a little bit more.

963
01:15:23,920 --> 01:15:26,040
Usually when the gap happens,

964
01:15:27,340 --> 01:15:33,180
there is a tendency of the price to come
back to the gap area in order to retest

965
01:15:33,180 --> 01:15:34,840
what kind of line we had.

966
01:15:35,560 --> 01:15:41,920
I still think that you could define that
retest here at this point.

967
01:15:42,060 --> 01:15:48,240
And that strength could show you that
even if the price comes back, we still

968
01:15:48,240 --> 01:15:52,380
probably will be thinking more bullish
about this, just of how this has

969
01:15:52,380 --> 01:15:55,900
happened, rather than the scenarios
where...

970
01:15:57,350 --> 01:16:04,250
let's say maybe something close to this,
right? So we have some kind of

971
01:16:04,250 --> 01:16:07,770
gap, and this is not a big gap, so not a
really good example, but still.

972
01:16:08,150 --> 01:16:10,530
And the volume signature is not extreme.

973
01:16:10,810 --> 01:16:15,210
But this could be an example of where we
see how the test might be somewhat

974
01:16:15,210 --> 01:16:20,030
failing slightly, right? So look at this
low, and the price commits below.

975
01:16:20,390 --> 01:16:25,210
Look at the true range, and the price
commits below. So this is different than

976
01:16:25,210 --> 01:16:26,210
what we have here.

977
01:16:26,650 --> 01:16:31,410
So I would be less inclined to enter the
position here than here.

978
01:16:32,870 --> 01:16:35,930
Let me kind of see what else we have.

979
01:16:40,390 --> 01:16:43,430
Yeah, it really has to be a gap like
this.

980
01:16:43,650 --> 01:16:48,690
I mean, like everything has to be
compared apples to apples, right? So I

981
01:16:48,690 --> 01:16:53,510
only really two places here on this
chart where gap happened in a meaningful

982
01:16:53,510 --> 01:16:58,990
way. in the direction of the uptrend and
it has an extreme volume signature and

983
01:16:58,990 --> 01:17:03,790
then we're looking at the test and
they're somewhat similar so the gap

984
01:17:03,790 --> 01:17:08,790
not an issue rather the future test of
the gap is the real issue um i would say

985
01:17:08,790 --> 01:17:13,290
so adam yeah at least this would be an
issue that we would be extremely

986
01:17:13,290 --> 01:17:18,570
concerned about or we would be extremely
aware that the task is going to happen

987
01:17:18,570 --> 01:17:22,750
and we want to see what kind of test is
going to it's going to be and obviously

988
01:17:22,750 --> 01:17:27,280
again We want to put the context on the
small scenario.

989
01:17:28,340 --> 01:17:29,500
All right, great.

990
01:17:29,920 --> 01:17:34,100
Wow, what a great case study here we've
developed. And thank you for all of the

991
01:17:34,100 --> 01:17:37,940
questions. So now let's quickly go
through some of the volume case studies.

992
01:17:38,600 --> 01:17:43,340
Let's look at the absorption of the
supply. Again, this is just my attempt

993
01:17:43,340 --> 01:17:47,340
teacher to show you the same concept in
a slightly different way.

994
01:17:48,920 --> 01:17:52,400
So we've talked about horizontal.

995
01:17:53,200 --> 01:17:59,880
absorption right absorption through the
price consolidation or sometimes i say

996
01:17:59,880 --> 01:18:06,460
through time it requires time to go
through the absorption so look at um

997
01:18:06,460 --> 01:18:12,500
how here in the first case in example
number one we have a trading range after

998
01:18:12,500 --> 01:18:18,500
the initial buying wave after momentum
comes in supply increases and then until

999
01:18:18,500 --> 01:18:20,620
supply starts to decrease

1000
01:18:21,509 --> 01:18:25,810
relative to what we've seen before in
the trading structure.

1001
01:18:26,150 --> 01:18:32,510
And until we start showing the result on
that diminishing supply signature, and

1002
01:18:32,510 --> 01:18:38,770
the result is going to be higher highs,
higher lows, more of the bullish

1003
01:18:38,770 --> 01:18:42,890
characteristics on the rallies and more
of the bullish characteristics on the

1004
01:18:42,890 --> 01:18:46,890
reactions. And we're going to say when
we see that, higher highs, higher lows,

1005
01:18:47,110 --> 01:18:48,690
diminishing supply signature.

1006
01:18:49,210 --> 01:18:50,870
We're going to be on the springboard.

1007
01:18:51,130 --> 01:18:56,270
What is the springboard? Well, the
springboard is just, again, another

1008
01:18:56,270 --> 01:18:57,270
tool for us.

1009
01:18:57,990 --> 01:19:02,030
Springboard has those definitions that I
mentioned, high highs, high lows, the

1010
01:19:02,030 --> 01:19:04,550
mission supply signature in the
consolidation.

1011
01:19:04,990 --> 01:19:11,210
And it just tells us that this is the
area where it shows to us that supply is

1012
01:19:11,210 --> 01:19:17,230
exhausted to the point that the move can
start right now. And therefore, that's

1013
01:19:17,230 --> 01:19:18,310
a timing tool for us.

1014
01:19:20,349 --> 01:19:24,950
In some instances, supply is not
necessarily going to diminish.

1015
01:19:25,270 --> 01:19:30,290
It might increase locally, let's say
going into a spring or a last point of

1016
01:19:30,290 --> 01:19:36,810
support. And that also could be
interpreted as a bullish sign where

1017
01:19:36,810 --> 01:19:41,450
increase, but the result to the downside
still is going to decrease.

1018
01:19:43,470 --> 01:19:47,230
And that's still going to be interpreted
as bullish for us.

1019
01:19:47,950 --> 01:19:49,690
Okay, vertical absorption.

1020
01:19:49,990 --> 01:19:54,870
And I thought that these are very
interesting two examples of the vertical

1021
01:19:54,870 --> 01:20:01,370
absorption, but they have the same
characteristics where supply emerges

1022
01:20:01,370 --> 01:20:08,330
on the reaction, and at the same time,
demand is also

1023
01:20:08,330 --> 01:20:14,950
trying to stop that supply from moving
the price further down. So we have...

1024
01:20:16,490 --> 01:20:17,690
increase of the supply.

1025
01:20:17,950 --> 01:20:22,570
We have demand that's coming in and
starts to absorb the supply.

1026
01:20:23,010 --> 01:20:27,130
But then in some instances, that demand
is not going to be that great.

1027
01:20:28,610 --> 01:20:34,290
And what comes next is going to be more
important because the price has been

1028
01:20:34,290 --> 01:20:39,270
taken down and on the short -term basis,
there is some kind of value.

1029
01:20:40,390 --> 01:20:46,990
And this value is related more, and
Adam, I think you'll appreciate this,

1030
01:20:46,990 --> 01:20:51,070
value is related to more of the
institutional

1031
01:20:51,070 --> 01:20:57,350
long -term trend than anything

1032
01:20:57,350 --> 01:21:04,070
else. Within an established trend, we're
seeing that this

1033
01:21:04,070 --> 01:21:09,150
spot is short -term oversold from value
and some liquidity.

1034
01:21:09,690 --> 01:21:11,590
Not a lot, but still, it's there.

1035
01:21:12,050 --> 01:21:13,990
So what do they do, institutions?

1036
01:21:15,010 --> 01:21:19,790
They're just basically coming in
aggressively, and they're having some

1037
01:21:19,790 --> 01:21:25,230
urgent demand that increases, like right
here, these two bars.

1038
01:21:25,790 --> 01:21:31,970
And what it does is supply is still
there, but because demand is so

1039
01:21:31,970 --> 01:21:37,790
overwhelming, it observes all of the
supply and moves the price even.

1040
01:21:38,250 --> 01:21:44,010
higher from this point so let's just say
this supply is increasing

1041
01:21:44,010 --> 01:21:50,050
demand is increasing even more and
that's what pushes the price up

1042
01:21:50,050 --> 01:21:57,030
and usually this type of action will
bring the price to the resistance

1043
01:21:57,030 --> 01:22:02,590
level in this case it's a cluster and
then at this point of time

1044
01:22:02,590 --> 01:22:05,130
the test is going to happen

1045
01:22:06,570 --> 01:22:12,510
So think about the test that we've seen,
you know, on the momentum bars, right,

1046
01:22:12,590 --> 01:22:17,510
on the previous slide. I'm going to come
back to this slide.

1047
01:22:18,630 --> 01:22:25,590
And look at how here it's the same type
of action, right? So supply is there,

1048
01:22:25,830 --> 01:22:30,070
but demand is so much more that it
pushes the price up.

1049
01:22:30,470 --> 01:22:33,170
But because supply has increased, we
need to test.

1050
01:22:35,020 --> 01:22:36,560
And we have a small test here.

1051
01:22:36,800 --> 01:22:41,500
Well, the same happens in this example.

1052
01:22:43,100 --> 01:22:48,160
We've seen that the price goes up,
demand pushes it up to the resistance

1053
01:22:48,340 --> 01:22:50,460
and then we go into the test action.

1054
01:22:50,800 --> 01:22:54,860
If we were to come back here, our
interpretation would be different.

1055
01:22:56,140 --> 01:23:01,440
But here, because of the successful
test, we're assuming that we're still

1056
01:23:01,440 --> 01:23:02,440
to go up.

1057
01:23:03,180 --> 01:23:09,280
Now this happens here, this example
number two happens within the structure.

1058
01:23:09,500 --> 01:23:13,280
Look at the structure. So we could say
that this is a minor sign of strength

1059
01:23:13,280 --> 01:23:15,620
this is a minor backing up action.

1060
01:23:19,740 --> 01:23:26,640
In a different, more complicated way,
the vertical absorption of

1061
01:23:26,640 --> 01:23:27,960
the supply happens

1062
01:23:31,370 --> 01:23:36,030
not within the context of the structure,
but more within the context of

1063
01:23:36,030 --> 01:23:37,030
absorption itself.

1064
01:23:37,430 --> 01:23:42,970
So we see that the first initial
reaction has all of the same elements,

1065
01:23:42,970 --> 01:23:43,970
supply increases.

1066
01:23:44,350 --> 01:23:48,450
Demand increases, too, behind the volume
signature, but not as significant

1067
01:23:48,450 --> 01:23:50,370
because the price is still going down.

1068
01:23:50,590 --> 01:23:56,270
But we already see in the deterioration
of the spread that demand is there. We

1069
01:23:56,270 --> 01:23:59,630
could see that. And then aggressive
demand comes.

1070
01:24:00,410 --> 01:24:01,930
this big bar right here.

1071
01:24:02,650 --> 01:24:05,410
In this case, it happens on multiple
bars.

1072
01:24:06,630 --> 01:24:09,950
In the example number three, it happens
just on one bar.

1073
01:24:10,550 --> 01:24:12,570
But the principle is going to be the
same.

1074
01:24:13,650 --> 01:24:16,330
Supply increases, but demand increases
even more.

1075
01:24:16,710 --> 01:24:19,730
That pushes the price up significantly.

1076
01:24:20,710 --> 01:24:25,530
And then after that, we see supplies
coming in right here.

1077
01:24:26,060 --> 01:24:30,420
And that suggests, again, it comes to
the resistance point. It comes to the

1078
01:24:30,420 --> 01:24:35,320
resistance point. And at this point, the
biggest question that we have is what

1079
01:24:35,320 --> 01:24:36,600
kind of test we're going to have.

1080
01:24:37,500 --> 01:24:44,000
And it's out of this test that we could
produce some kind of minus swing trade

1081
01:24:44,000 --> 01:24:50,520
right here. Or it could act for us even
as maybe like a point of an add -on, a

1082
01:24:50,520 --> 01:24:53,320
point where we are going to scale in a
little bit more.

1083
01:24:53,770 --> 01:24:57,170
But more importantly for you guys, I
just want you to understand the concept,

1084
01:24:57,390 --> 01:25:02,750
right? How does absorption happen?
Supply emerges, demand could emerge on

1085
01:25:02,750 --> 01:25:07,410
way down, and then there could be an
urgent demand. If there is an urgent

1086
01:25:07,410 --> 01:25:11,610
demand, then it's going to take us up to
the resistance.

1087
01:25:13,170 --> 01:25:16,110
Same here on this chart.

1088
01:25:16,810 --> 01:25:18,670
Look at this reaction right here.

1089
01:25:19,310 --> 01:25:20,310
Supply is increasing.

1090
01:25:21,100 --> 01:25:27,080
and then demands that to emerge in two
different spots, but still it does.

1091
01:25:27,760 --> 01:25:30,620
And look at where it brings us.

1092
01:25:34,140 --> 01:25:36,220
Isn't it uncanny how this pattern works?

1093
01:25:36,820 --> 01:25:42,240
And isn't it uncanny how technical
analysis is not necessarily discussing

1094
01:25:42,240 --> 01:25:47,920
type of scenario? So that's why it's
important for us to go into such details

1095
01:25:47,920 --> 01:25:49,480
understand this material because

1096
01:25:50,280 --> 01:25:55,940
If you see this pattern, it's going to
act as a confirmation

1097
01:25:55,940 --> 01:26:02,280
to you not to get out of this position
on the increased supply signature.

1098
01:26:03,660 --> 01:26:08,320
And it's going to confirm to you that,
oh, we might be having a vertical

1099
01:26:08,320 --> 01:26:12,660
absorption right here, so I don't have
to wait for the trading range to

1100
01:26:12,840 --> 01:26:17,040
And that's a big, big, big item on this
list.

1101
01:26:20,930 --> 01:26:25,870
We're going to wait for the test. Test
is confirmed with the reversal, and that

1102
01:26:25,870 --> 01:26:31,270
acts as a confirmation, and you can
produce another trade or another entry

1103
01:26:31,270 --> 01:26:35,450
point. You know that the price is going
to come to the resistance point, and

1104
01:26:35,450 --> 01:26:38,330
then it's going to test.

1105
01:26:39,510 --> 01:26:42,770
And if test is successful, you know that
there's going to be a continuation.

1106
01:26:43,090 --> 01:26:45,190
Why not open another position right
here?

1107
01:26:46,910 --> 01:26:48,890
But you have to know those things.

1108
01:26:49,450 --> 01:26:54,390
You have to be able to see them in real
time. So visual recognition skill that

1109
01:26:54,390 --> 01:26:56,790
we develop in the practical becomes
extremely important.

1110
01:26:58,350 --> 01:27:01,310
I'll go even further than this.

1111
01:27:05,730 --> 01:27:07,370
Let's look at the current market.

1112
01:27:16,490 --> 01:27:18,050
What do you think happened here?

1113
01:27:19,690 --> 01:27:22,390
On the way down, volume signature
increases.

1114
01:27:23,550 --> 01:27:25,890
We know supply is increasing a lot.

1115
01:27:26,170 --> 01:27:31,050
But we already know, even in hindsight,
that demand was increasing as well.

1116
01:27:31,750 --> 01:27:35,650
And even in real time, you see this
volume signature?

1117
01:27:36,410 --> 01:27:38,930
There is nothing else like this.

1118
01:27:39,330 --> 01:27:44,370
So what do you think is happening here?
Most likely, demand is increasing as

1119
01:27:44,370 --> 01:27:47,510
well. If demand is increasing, on the
way down,

1120
01:27:51,600 --> 01:27:56,080
This usually would suggest some kind of
stopping action at some point. And

1121
01:27:56,080 --> 01:28:01,200
that's how this call has been made, that
we're going to stop.

1122
01:28:01,440 --> 01:28:03,520
Obviously, oversold condition as well.

1123
01:28:04,420 --> 01:28:11,000
But the trade that I had here, I shorted

1124
01:28:11,000 --> 01:28:13,360
Russell on this bar right here.

1125
01:28:14,560 --> 01:28:17,420
And my exit was a little bit premature.

1126
01:28:17,780 --> 01:28:20,120
My exit was somewhere here.

1127
01:28:21,719 --> 01:28:25,380
was not necessarily waiting for the
continuation.

1128
01:28:25,720 --> 01:28:30,820
But still, as a hedge strategy to some
of the long positions that I have had,

1129
01:28:31,080 --> 01:28:32,580
this was a good trade.

1130
01:28:32,880 --> 01:28:38,220
So on the way down, we're anticipating
that emergence of the demand is gonna

1131
01:28:38,220 --> 01:28:41,520
produce a stop in action, which it did.

1132
01:28:41,880 --> 01:28:47,040
And then after that, we are gonna have
some demand, which is right here.

1133
01:28:47,580 --> 01:28:50,680
And you might say that, well, it's not a
lot, it's not increasing.

1134
01:28:51,020 --> 01:28:56,460
But don't forget, there is also in this
course, I'm talking about the

1135
01:28:56,460 --> 01:28:59,800
consistency of the volume signature.

1136
01:29:00,960 --> 01:29:05,720
What does it mean? It means that during
this whole time, for two months,

1137
01:29:05,800 --> 01:29:09,940
institutions are consistently

1138
01:29:09,940 --> 01:29:14,140
buying.

1139
01:29:15,280 --> 01:29:19,730
They don't have to... increase the
demand signature a lot, but they have to

1140
01:29:19,730 --> 01:29:24,310
consistently. And when they are buying
consistently, this is what's going to

1141
01:29:24,310 --> 01:29:25,930
produce this type of move.

1142
01:29:28,490 --> 01:29:30,450
But the key here is different.

1143
01:29:31,770 --> 01:29:37,590
We've talked about how out of this
pattern where we see

1144
01:29:39,440 --> 01:29:43,920
A lot of supply coming in and then
demand overwhelms this supply and

1145
01:29:43,920 --> 01:29:45,940
on the way up with the vertical
absorption.

1146
01:29:46,320 --> 01:29:49,980
And all of the V bottoms are going to
have this type of vertical absorption

1147
01:29:49,980 --> 01:29:50,980
pattern.

1148
01:29:51,580 --> 01:29:54,100
It's going to bring us to the area of
the resistance.

1149
01:29:55,960 --> 01:30:00,940
Here we are. We don't have to go to the
high resistance. We could have one of

1150
01:30:00,940 --> 01:30:05,580
the analogs that I've been showing you
guys in the Wednesday class was on

1151
01:30:06,200 --> 01:30:11,140
and Dow Industrial in the 1974 -75.

1152
01:30:12,140 --> 01:30:13,620
Look at those charts again.

1153
01:30:14,960 --> 01:30:18,240
This rally could have gone a little bit
further.

1154
01:30:18,460 --> 01:30:22,940
And I think that if there's going to be
some kind of really, really great news

1155
01:30:22,940 --> 01:30:29,480
on China and U .S. trade talks, we could
still possibly have this type of move.

1156
01:30:29,600 --> 01:30:36,310
But last week, You know, I started
talking about the emergence of the

1157
01:30:36,430 --> 01:30:37,550
It's so subtle.

1158
01:30:38,090 --> 01:30:42,630
And you could see this more in other
instruments, for instance, in oil and

1159
01:30:42,750 --> 01:30:45,730
because those are so correlated right
now.

1160
01:30:47,930 --> 01:30:54,410
So, you know, that was kind of like my
premise last week to think about that we

1161
01:30:54,410 --> 01:30:55,410
are...

1162
01:30:55,840 --> 01:30:58,460
probably close to the beginning of the
reaction.

1163
01:30:58,720 --> 01:31:03,660
And then today was such a great bar
because it showed finally the

1164
01:31:04,200 --> 01:31:07,400
Now we had a bar like this before, right
here.

1165
01:31:08,460 --> 01:31:13,240
So we still have to see how it's gonna
react, but this is the largest spread

1166
01:31:13,240 --> 01:31:17,020
that we had on the down bar with an
exception of this bar right here.

1167
01:31:18,060 --> 01:31:22,600
But after this bar, this is the largest
spread. So volatility is coming to the

1168
01:31:22,600 --> 01:31:24,000
market. We should be ready.

1169
01:31:24,800 --> 01:31:31,480
for some kind of reaction and what else?
We said that once the price comes

1170
01:31:31,480 --> 01:31:36,720
back after the vertical absorption to
the area of the resistance, we are gonna

1171
01:31:36,720 --> 01:31:38,040
have some kind of test.

1172
01:31:41,000 --> 01:31:43,920
And test could take a different shape.

1173
01:31:46,540 --> 01:31:52,580
We could have the test that's gonna
suggest that we're gonna stay here like

1174
01:31:52,580 --> 01:31:56,730
this. And we're going to have some kind
of symmetry with this structure.

1175
01:31:58,810 --> 01:32:04,030
That's test number one. We could have a
different test. Imagine more unfavorable

1176
01:32:04,030 --> 01:32:09,570
catalysts that come our way. So we
probably could go even here.

1177
01:32:10,250 --> 01:32:14,270
And then out of here, we're going to
develop some kind of structure.

1178
01:32:14,530 --> 01:32:20,850
And that's why I'm thinking that for
2019, just because of this testing

1179
01:32:20,850 --> 01:32:22,270
that we have to go through.

1180
01:32:23,340 --> 01:32:29,760
We're probably going to be in the
positive, but kind of single -digit

1181
01:32:29,760 --> 01:32:31,280
return for 2019.

1182
01:32:31,860 --> 01:32:37,100
So for those of you who are
institutional money managers, and there

1183
01:32:37,100 --> 01:32:42,940
you here in this class, think about your
strategies for the rest of the year.

1184
01:32:43,500 --> 01:32:48,600
So what are you doing with the profits
that you already have? These two months

1185
01:32:48,600 --> 01:32:52,300
have been incredible. This is one of the
best historical rallies.

1186
01:32:52,990 --> 01:32:53,990
that we have had.

1187
01:32:54,290 --> 01:33:00,890
So I hear and I see a lot of
institutional people, they're thinking

1188
01:33:00,890 --> 01:33:07,630
they'd rather lock in this profit that
so quickly

1189
01:33:07,630 --> 01:33:13,350
came in this two months of the first
year. And then after that, just kind of

1190
01:33:13,350 --> 01:33:15,310
like be more selective with the
opportunities.

1191
01:33:15,550 --> 01:33:17,290
And I think this is an appropriate
strategy.

1192
01:33:17,650 --> 01:33:20,150
Another appropriate strategy here until
the...

1193
01:33:20,480 --> 01:33:27,380
at least fall would be scale out or
hedge for your positions or

1194
01:33:27,380 --> 01:33:28,760
against your positions rather.

1195
01:33:30,000 --> 01:33:34,300
I'm thinking about the testing that
should come this way.

1196
01:33:34,800 --> 01:33:39,100
We also, as another possibility I
mentioned, if there's going to be some

1197
01:33:39,100 --> 01:33:42,320
favorable news and we're going to
continue, let's say that we're going to

1198
01:33:42,320 --> 01:33:45,860
some kind of reaction and then we're
still going to continue, you know, to

1199
01:33:45,860 --> 01:33:46,860
upside.

1200
01:33:46,960 --> 01:33:51,940
There is another opportunity that we
might consolidate at the higher level.

1201
01:33:51,940 --> 01:33:55,840
something that I've shown you on the
slide and then go up from here.

1202
01:33:56,280 --> 01:33:57,480
That's also a possibility.

1203
01:33:57,720 --> 01:34:01,820
But I think it's a much lower
possibility, and it's also going to

1204
01:34:01,820 --> 01:34:04,440
what's going to happen after the first
initial reaction.

1205
01:34:05,660 --> 01:34:09,840
My preference would be something that
we've experienced in 1975.

1206
01:34:10,580 --> 01:34:12,920
That is, maybe go...

1207
01:34:13,130 --> 01:34:16,870
try and then come back and kind of like
go into a trading range.

1208
01:34:18,230 --> 01:34:25,030
And then this trading range, what it's
gonna do is it's gonna unwind all of the

1209
01:34:25,030 --> 01:34:26,570
positions that were created here.

1210
01:34:27,310 --> 01:34:33,550
So think about, let's say, ITFs,
institutional trend followers.

1211
01:34:34,030 --> 01:34:36,390
They're gonna give up here on this
trend.

1212
01:34:37,850 --> 01:34:40,130
This is gonna be their first
capitulation.

1213
01:34:45,070 --> 01:34:47,530
So what's going to happen here at this
spot?

1214
01:34:48,510 --> 01:34:51,290
They're going to sell, so supply is
going to increase.

1215
01:34:51,810 --> 01:34:56,310
They're not going to buy, so therefore
volume is going to increase and the

1216
01:34:56,310 --> 01:34:57,310
is going to go down.

1217
01:34:59,370 --> 01:35:06,170
And this movement of the price is going
to be a reminder of what has

1218
01:35:06,170 --> 01:35:08,930
happened on the way down in October,
November, December.

1219
01:35:09,790 --> 01:35:12,990
And you're going to see in the news, and
I think that if we're going to start

1220
01:35:12,990 --> 01:35:14,550
reaction here, I think...

1221
01:35:14,760 --> 01:35:18,700
Within the next two weeks, three weeks,
if we're going to have the reaction,

1222
01:35:19,000 --> 01:35:25,580
you're going to see in the news that the
bearish trend is still intact

1223
01:35:25,580 --> 01:35:28,260
and we are in the bear market.

1224
01:35:28,640 --> 01:35:34,320
And this is where the sentiment is going
to be mixed because a lot of

1225
01:35:34,320 --> 01:35:39,540
institutions just got into the
positions. It's not in their habit to

1226
01:35:39,540 --> 01:35:41,720
positions right away.

1227
01:35:43,240 --> 01:35:49,880
Big CEO type of institutions do not have
a two -month or three -month trading

1228
01:35:49,880 --> 01:35:50,880
investment horizon.

1229
01:35:51,240 --> 01:35:53,060
It's just not in their nature.

1230
01:35:53,360 --> 01:35:58,260
I'm working with some institutional
clients right now, and the questions

1231
01:35:58,260 --> 01:36:03,060
we're discussing is more about, well,
once we are in the position, it's really

1232
01:36:03,060 --> 01:36:04,060
hard to get out.

1233
01:36:04,240 --> 01:36:10,440
So we need to select such positions
where we're going to stay for at least

1234
01:36:10,440 --> 01:36:11,440
a year.

1235
01:36:13,680 --> 01:36:19,300
And we want to have low turnover on our
portfolio, meaning that we want to buy

1236
01:36:19,300 --> 01:36:22,800
in the position and we don't necessarily
want to get out right away.

1237
01:36:24,440 --> 01:36:30,040
So the bearish sentiment by the ITFs is
going to develop this first initial

1238
01:36:30,040 --> 01:36:32,240
change of character and meaningful
reaction.

1239
01:36:33,020 --> 01:36:36,380
We need to assess what kind of character
we're going to have in this reaction.

1240
01:36:36,760 --> 01:36:43,360
And then once they are out, And let's
say what the COO is going to do. So

1241
01:36:43,360 --> 01:36:47,640
ITF is going to sell and then it's going
to become inactive.

1242
01:36:49,500 --> 01:36:54,880
The COO is just going to hold on to
their position and maybe hedge

1243
01:36:54,880 --> 01:36:58,920
against market volatility.

1244
01:37:01,000 --> 01:37:02,860
And then public.

1245
01:37:06,030 --> 01:37:10,750
is coming in in the later portion of the
swing right here. So weak hands are

1246
01:37:10,750 --> 01:37:11,750
coming in here.

1247
01:37:11,930 --> 01:37:15,750
And they're going to be giving up their
positions right here as well together

1248
01:37:15,750 --> 01:37:19,990
with ITFs. And that's why that is going
to produce some kind of rally.

1249
01:37:20,230 --> 01:37:25,370
But then, you know, CO is not going to
probably present a lot of supply in this

1250
01:37:25,370 --> 01:37:28,490
spot. So that's what's going to create
this apex.

1251
01:37:28,890 --> 01:37:33,490
ITFs are going to stay away because if
there is no trend, they don't want to

1252
01:37:33,490 --> 01:37:34,490
come in.

1253
01:37:34,570 --> 01:37:39,710
and then public is going to be in and
out, in and out, and that's going to

1254
01:37:39,710 --> 01:37:42,150
produce frustration, and at some point
they're going to give up.

1255
01:37:42,770 --> 01:37:49,410
So this dullness by the end of this
trading range might be just a function

1256
01:37:49,410 --> 01:37:53,010
how all of the market participants are
going to behave.

1257
01:37:53,410 --> 01:37:56,610
Having said this, who knows how it's
going to unfold?

1258
01:37:56,890 --> 01:38:01,650
I mean, this is just my preferable
scenario, and I could have some

1259
01:38:01,650 --> 01:38:05,120
this. And this is kind of like my 2019
call.

1260
01:38:05,640 --> 01:38:12,460
But if I see different price action, I
might change that. But for now, it's all

1261
01:38:12,460 --> 01:38:13,460
based on what?

1262
01:38:14,020 --> 01:38:20,840
It's all based on our material here as
to how supply is being observed and

1263
01:38:20,840 --> 01:38:26,400
what kind of price structure that
absorption could form.

1264
01:38:27,100 --> 01:38:29,600
All right, so let's go to the next one.

1265
01:38:30,540 --> 01:38:35,660
I see some questions here, but I'm
thinking maybe we should go because

1266
01:38:35,660 --> 01:38:40,160
almost like quarter to five. Yeah, we
might stay late today, maybe like until

1267
01:38:40,160 --> 01:38:41,820
six. We'll see.

1268
01:38:45,500 --> 01:38:48,020
Ooh, hold on a second. Ease of movement.

1269
01:38:49,420 --> 01:38:55,920
This is a good one because as I started
working with institutional clients, and

1270
01:38:55,920 --> 01:38:59,360
my first institutional client that I had
was in 2009.

1271
01:39:01,139 --> 01:39:07,940
And this was, you know, and a lot of you
are becoming friends, guys. You know,

1272
01:39:07,940 --> 01:39:13,440
if you stick around and if you kind of
communicate with me and I see your

1273
01:39:13,440 --> 01:39:19,040
contributions and we talk, you know, a
lot of my students, you know, became

1274
01:39:19,040 --> 01:39:24,680
friends, you know, and friends, kind of
professional friends, obviously not like

1275
01:39:24,680 --> 01:39:26,440
personal friends, but professional
friends.

1276
01:39:28,160 --> 01:39:32,820
And I was working with this person in
2009, and we're looking here at Home

1277
01:39:32,820 --> 01:39:37,400
Depot, but basically the pattern was the
same, right? So we had such a big move

1278
01:39:37,400 --> 01:39:38,800
to the downside in the markets.

1279
01:39:39,360 --> 01:39:41,580
And then the volume signature was like
this.

1280
01:39:41,820 --> 01:39:48,740
There was a lot of volume into the
climactic action, into phase B,

1281
01:39:48,860 --> 01:39:50,000
into phase C.

1282
01:39:51,060 --> 01:39:52,120
And then...

1283
01:39:52,840 --> 01:39:56,600
the volume signature was diminishing
throughout the whole structure. And then

1284
01:39:56,600 --> 01:40:02,920
once the price started moving up, the
overall volume signature, including

1285
01:40:02,920 --> 01:40:08,520
demand, was decreasing volume signature.
And then we could see maybe in 2010,

1286
01:40:09,080 --> 01:40:15,600
2011, 2012, some kind of increased

1287
01:40:15,600 --> 01:40:19,640
volatility, which was the increase of
the short -term volatility.

1288
01:40:26,220 --> 01:40:30,340
So the market chart, and you should
remember those charts by heart, you

1289
01:40:30,360 --> 01:40:32,100
all of their price and volume
signatures.

1290
01:40:32,620 --> 01:40:34,640
That's why, you know, you kind of see
that.

1291
01:40:35,220 --> 01:40:39,720
I know the history because, not because
I teach, but because it's important to

1292
01:40:39,720 --> 01:40:40,720
know, right?

1293
01:40:41,440 --> 01:40:42,560
So the same pattern.

1294
01:40:43,220 --> 01:40:49,900
So the question that we have here, and
that, you know, that person, that

1295
01:40:49,900 --> 01:40:54,230
had, at that point of time in 2009,

1296
01:40:55,550 --> 01:41:01,930
10, and 11, was that with the decrease
in demand signature, that in the

1297
01:41:01,930 --> 01:41:07,690
conventional technical analysis would
suggest that there is less buying.

1298
01:41:10,210 --> 01:41:13,370
How is it that the price is not going
down?

1299
01:41:15,050 --> 01:41:19,510
And I've seen this over and over again.

1300
01:41:20,190 --> 01:41:24,990
Since 2009 is where I would go to the
conference and then technical analysts

1301
01:41:24,990 --> 01:41:31,390
going to discuss this no demand
confirmation, no volume confirmation.

1302
01:41:32,110 --> 01:41:38,490
And therefore, they would be scaling
down. They would be underweight in their

1303
01:41:38,490 --> 01:41:44,950
positions. And my question to them was,
well, the price still goes

1304
01:41:44,950 --> 01:41:48,250
up. How could you scale out?

1305
01:41:48,840 --> 01:41:50,180
How can you scale down?

1306
01:41:51,540 --> 01:41:55,720
So let me raise the same question for
you.

1307
01:41:57,920 --> 01:42:04,920
Why do you think the price is going up,
whereas at

1308
01:42:04,920 --> 01:42:09,660
the same time the demand is decreasing,
the buying is decreasing?

1309
01:42:11,500 --> 01:42:13,520
What do you guys think? Write it down.

1310
01:42:16,420 --> 01:42:17,420
All right.

1311
01:42:20,019 --> 01:42:21,019
Good.

1312
01:42:23,300 --> 01:42:24,300
Great.

1313
01:42:24,920 --> 01:42:26,360
Great, great, great, great, great.

1314
01:42:27,640 --> 01:42:28,640
Awesome.

1315
01:42:29,260 --> 01:42:31,980
Yes, a lot of you are totally correct.

1316
01:42:34,140 --> 01:42:38,320
What is happening, you know, let's kind
of create this story, right? So what

1317
01:42:38,320 --> 01:42:44,320
does CO does at this point? Well,
obviously CO is accumulating.

1318
01:42:47,400 --> 01:42:54,040
Again, we're talking about, 100 units,
right, of supply, as an

1319
01:42:54,040 --> 01:42:58,700
example, then ITFs are getting in into
this position as well.

1320
01:42:59,660 --> 01:43:04,480
And they are consuming, you know, a
specific number of units.

1321
01:43:06,500 --> 01:43:11,260
Short -term value, again, buying by
institutions.

1322
01:43:11,500 --> 01:43:14,660
Short -term value, buying by
institutions.

1323
01:43:15,980 --> 01:43:21,520
So they are absorbing the supply in this
area to the point where supply, as some

1324
01:43:21,520 --> 01:43:24,600
of you have said, is in strong hands.

1325
01:43:26,740 --> 01:43:30,640
Well, one thing that we forget to add to
this is by confidence.

1326
01:43:32,120 --> 01:43:38,000
And supply is not

1327
01:43:38,000 --> 01:43:44,200
being put on the market.

1328
01:43:49,930 --> 01:43:55,830
One of the ways to think about this is
kind of like a concept of a safe,

1329
01:43:56,070 --> 01:43:57,070
right?

1330
01:43:59,590 --> 01:44:02,830
So, safe box.

1331
01:44:05,970 --> 01:44:12,810
And you can think about this from the

1332
01:44:12,810 --> 01:44:19,030
perspective of just, you know, 100 years
ago when somebody would buy the stock.

1333
01:44:20,039 --> 01:44:24,860
they literally could have the stock
certificates in their hands and they

1334
01:44:24,860 --> 01:44:27,520
just put it in the safe box and just
keep it there.

1335
01:44:28,380 --> 01:44:31,700
So CO is not providing supply.

1336
01:44:33,280 --> 01:44:39,320
It has absorbed the supply, put it in
the safe box, and it doesn't provide

1337
01:44:39,320 --> 01:44:40,940
supply to the market.

1338
01:44:41,720 --> 01:44:47,760
So therefore, when there is no supply,
the only way... that the price could

1339
01:44:47,760 --> 01:44:54,120
potentially behave is to go up, even on
the

1340
01:44:54,120 --> 01:44:55,780
diminishing demand signature.

1341
01:44:56,780 --> 01:45:03,780
And the demand signature is going to
diminish, decrease, just because there

1342
01:45:03,780 --> 01:45:05,640
is no need for the CEO to buy more.

1343
01:45:06,360 --> 01:45:08,120
ITF is already in the position.

1344
01:45:08,880 --> 01:45:13,980
All of the strong hands are operating
within the context of the uptrend.

1345
01:45:15,640 --> 01:45:19,920
The only in and out and emergence of the
supply is going to be some profit

1346
01:45:19,920 --> 01:45:26,820
taking and some weak hands being at the
wrong time selling.

1347
01:45:27,920 --> 01:45:32,620
That's the only supply that is available
on the way up.

1348
01:45:34,280 --> 01:45:40,100
Well, let's look at this in a slightly
different way. So today's session,

1349
01:45:40,280 --> 01:45:41,720
today's lecture is all about

1350
01:45:42,490 --> 01:45:47,530
alternative ways of how we look at this,
right? So supply is decreasing here.

1351
01:45:48,010 --> 01:45:54,750
Okay, so let's look at this from using
another analogy.

1352
01:45:57,290 --> 01:46:03,770
And this analogy I call an ice cream
analogy, an ice cream story.

1353
01:46:09,750 --> 01:46:10,750
So,

1354
01:46:11,370 --> 01:46:18,030
Imagine that you and I, we are an ice
cream vendor.

1355
01:46:19,310 --> 01:46:26,150
And our total supply of ice creams that

1356
01:46:26,150 --> 01:46:33,110
we have equals 10 ice cream

1357
01:46:33,110 --> 01:46:34,110
cones.

1358
01:46:36,330 --> 01:46:37,550
10 ice creams.

1359
01:46:40,360 --> 01:46:46,460
So we are selling, our goal is to sell,
and our goal is to sell in the most

1360
01:46:46,460 --> 01:46:48,080
advantageous way.

1361
01:46:50,180 --> 01:46:55,860
Imagine that we have different, you
know, acts, right? So act number one,

1362
01:46:55,980 --> 01:47:02,820
our supply still equals 10, and

1363
01:47:02,820 --> 01:47:04,660
then demand comes in.

1364
01:47:06,640 --> 01:47:09,500
And let's say that the demand is going
to be,

1365
01:47:10,220 --> 01:47:11,220
Seven people.

1366
01:47:13,220 --> 01:47:19,820
And these seven people is going to act
as a CO and it's going to act as

1367
01:47:19,820 --> 01:47:21,000
ITFs.

1368
01:47:23,560 --> 01:47:27,460
And they're going to buy seven ice
creams from us

1369
01:47:27,460 --> 01:47:33,620
at the price of $1.

1370
01:47:34,180 --> 01:47:36,360
Let's say one ice cream, $1.

1371
01:47:38,670 --> 01:47:41,810
So what is it going to do to the supply?

1372
01:47:43,190 --> 01:47:47,130
So in act number one, supply is going to
go down.

1373
01:47:47,450 --> 01:47:48,450
Is this correct?

1374
01:47:50,030 --> 01:47:54,970
And supply is going to equal now three.

1375
01:47:56,010 --> 01:48:01,610
So we had ten, we sold seven, and we
sold at one dollar price.

1376
01:48:02,850 --> 01:48:07,610
At the same time, we know that demand
has increased, right?

1377
01:48:08,270 --> 01:48:12,010
Demand was zero before the seven people
came to us.

1378
01:48:13,350 --> 01:48:19,410
And now that they're here, the demand
drastically went up. It went up seven

1379
01:48:19,410 --> 01:48:20,410
units.

1380
01:48:20,890 --> 01:48:24,950
So we sold in Act 1 a lot of supply.

1381
01:48:25,350 --> 01:48:30,370
And a lot of that supply at this low
value and a lot of liquidity, please

1382
01:48:30,370 --> 01:48:31,530
that both is there.

1383
01:48:31,750 --> 01:48:35,950
The value is at $1. The liquidity is
huge.

1384
01:48:36,460 --> 01:48:39,000
10 units, the highest liquidity
possible.

1385
01:48:39,660 --> 01:48:42,340
So now what happens in the act number
two?

1386
01:48:44,080 --> 01:48:50,960
Well, someone else comes and we're gonna
start

1387
01:48:50,960 --> 01:48:57,480
with supply equal in three and the price
is gonna be at still $1,

1388
01:48:57,500 --> 01:49:04,020
right? We're starting at $1. Now we'll
imagine that the demand comes in

1389
01:49:05,420 --> 01:49:11,980
Only at two. So two people come to us
and

1390
01:49:11,980 --> 01:49:17,660
we still have more supply than, you
know, let's say the two ice creams that

1391
01:49:17,660 --> 01:49:18,660
want to buy.

1392
01:49:20,240 --> 01:49:24,120
But there is something very interesting
that's going on with the supply here.

1393
01:49:25,960 --> 01:49:28,180
Look at how much supply is left.

1394
01:49:28,880 --> 01:49:34,180
There is less of the supply in Act 2
than in Act 1.

1395
01:49:35,210 --> 01:49:40,390
Instead of 10, now we have supply at
three.

1396
01:49:42,450 --> 01:49:48,250
So if we're thinking, if we are going to
sell to two people, we're going to be

1397
01:49:48,250 --> 01:49:49,850
left only with one ice cream.

1398
01:49:52,710 --> 01:49:57,730
Do you think that we could raise the
price and then these two people are

1399
01:49:57,730 --> 01:49:58,730
going to buy it?

1400
01:50:01,550 --> 01:50:03,090
Well, most likely, yes.

1401
01:50:03,720 --> 01:50:07,420
why would they be buying? What's the
psychology behind them buying?

1402
01:50:07,640 --> 01:50:12,140
I mean, like they know at the higher
price, they know that there is still,

1403
01:50:12,140 --> 01:50:14,580
know, some supply available.

1404
01:50:14,800 --> 01:50:16,400
Why would they buy in at $1?

1405
01:50:16,860 --> 01:50:22,300
Or let's say at $2. No, instead of one,
we're going to move the price to $2.

1406
01:50:23,660 --> 01:50:29,120
Well, because only three ice creams are
left.

1407
01:50:33,320 --> 01:50:39,380
And they know that if they're not going
to buy it at this point, then they might

1408
01:50:39,380 --> 01:50:46,080
actually not get it at all. So they are
willing to buy at $2 price, and we could

1409
01:50:46,080 --> 01:50:47,120
increase the price.

1410
01:50:47,540 --> 01:50:50,420
So you kind of could see this from the
chart as well.

1411
01:50:52,960 --> 01:50:59,860
They were buying a lot here. They bought
seven units here in this area.

1412
01:51:01,130 --> 01:51:03,250
CO plus ITFs.

1413
01:51:04,190 --> 01:51:06,450
That diminished supply a lot.

1414
01:51:06,950 --> 01:51:12,130
And supply right now in strong hands.

1415
01:51:18,390 --> 01:51:20,770
Now Act 2, this is Act 1.

1416
01:51:23,590 --> 01:51:30,010
Now Act 2 is that supply that is left is
less.

1417
01:51:31,340 --> 01:51:32,460
Here's your Act 2.

1418
01:51:36,540 --> 01:51:39,900
There is still some supply left, but
it's not as much.

1419
01:51:46,440 --> 01:51:53,240
But because of that diminishing supply,
the price should go up.

1420
01:51:53,800 --> 01:51:57,040
And we could raise the price to $2.

1421
01:51:57,280 --> 01:51:58,960
So let's say that they bought it.

1422
01:51:59,420 --> 01:52:06,220
So what is it in the Act 3 that we're
seeing here? So our

1423
01:52:06,220 --> 01:52:08,840
supply is at one unit of ice cream.

1424
01:52:10,040 --> 01:52:12,580
We're going to talk about the price a
little bit later on.

1425
01:52:13,040 --> 01:52:19,660
And then let's discuss two scenarios
here where demand is

1426
01:52:19,660 --> 01:52:26,280
just one person and where

1427
01:52:26,280 --> 01:52:28,040
demand, so demand goes down.

1428
01:52:28,600 --> 01:52:29,880
and where demand increases.

1429
01:52:30,620 --> 01:52:32,980
Let's say maybe three people.

1430
01:52:35,080 --> 01:52:39,480
So under the first assumption where
demand is decreasing, and we kind of see

1431
01:52:39,480 --> 01:52:40,480
this here, right?

1432
01:52:40,960 --> 01:52:42,640
You know, act number three.

1433
01:52:47,660 --> 01:52:50,800
We see how demand is decreasing.

1434
01:52:52,740 --> 01:52:57,700
Supply is at the low, not being
presented.

1435
01:52:58,060 --> 01:52:59,720
you know, to the market at all.

1436
01:53:00,760 --> 01:53:06,140
So the question in here, let's say if
one person comes, it's kind of like in

1437
01:53:06,140 --> 01:53:07,240
number two.

1438
01:53:07,900 --> 01:53:09,900
We only have one ice cream left.

1439
01:53:11,480 --> 01:53:15,660
And we know that if this person does not
buy this ice cream, well, maybe someone

1440
01:53:15,660 --> 01:53:18,380
else will buy it. Most likely someone
else will buy it.

1441
01:53:19,520 --> 01:53:25,420
Can we increase the price for this
person to buy this ice cream? We

1442
01:53:25,420 --> 01:53:31,080
can. So we could go and we could say
instead of $2, you're going to pay us

1443
01:53:31,100 --> 01:53:32,100
Do you want it or not?

1444
01:53:32,220 --> 01:53:34,100
If you don't want it, step away.

1445
01:53:34,400 --> 01:53:35,940
Someone else is going to buy it.

1446
01:53:36,140 --> 01:53:40,020
When people feel this urgency, they're
going to buy it.

1447
01:53:41,520 --> 01:53:44,700
So therefore, the price is going to go
up higher.

1448
01:53:47,380 --> 01:53:50,820
Scenario number two under act number
three.

1449
01:53:51,260 --> 01:53:56,440
Now imagine that instead of one person
on the last ice cream, We have three

1450
01:53:56,440 --> 01:53:59,700
takers. Three people come at the same
time.

1451
01:54:00,100 --> 01:54:05,120
There is some kind of emerging demand.

1452
01:54:05,440 --> 01:54:08,860
Maybe somebody heard that the ice cream
that we make is so good.

1453
01:54:09,980 --> 01:54:13,800
So they want to come and, you know, to
purchase this ice cream, the last

1454
01:54:13,800 --> 01:54:19,060
remaining ice cream. So my question to
all of you guys, what do you think is

1455
01:54:19,060 --> 01:54:23,060
going to happen with the price when
we're going to have three people?

1456
01:54:23,640 --> 01:54:30,320
trying to buy one ice cream write it
down

1457
01:54:30,320 --> 01:54:37,220
what's going to happen with the price in

1458
01:54:37,220 --> 01:54:44,040
act number three when we have only one
ice cream left and

1459
01:54:44,040 --> 01:54:49,660
three people are coming to take this
okay let's let's see what you guys are

1460
01:54:49,660 --> 01:54:52,540
saying they beat it up Absolutely.

1461
01:54:52,820 --> 01:54:55,000
Price jump. Third to the last bar.

1462
01:54:55,360 --> 01:54:57,620
Go up to $5 to $10.

1463
01:54:58,160 --> 01:55:02,620
Price goes hypodermic, climactic action.
It's like buying climax.

1464
01:55:03,120 --> 01:55:09,440
Yes, yes, yes, and yes again to
everything what you're saying.

1465
01:55:11,580 --> 01:55:16,880
I'm so pleased that you guys have seen
this concept, you know, and I'm using an

1466
01:55:16,880 --> 01:55:19,320
ice cream here. I'm using those.

1467
01:55:22,519 --> 01:55:27,380
analogies you know the stories that Bob
Evans created you know when he was

1468
01:55:27,380 --> 01:55:32,000
working for SMI after Wyckoff died you
know the story of

1469
01:55:32,000 --> 01:55:37,100
of the ice right

1470
01:55:37,100 --> 01:55:44,040
breaking of the ice where this diver the
boy who was diving

1471
01:55:44,040 --> 01:55:48,760
for the shelves cannot come back at some
point to the surface

1472
01:55:49,520 --> 01:55:54,440
And, you know, he drowns. Very sad
story. I don't know why Pope Evans, you

1473
01:55:54,460 --> 01:55:56,080
maybe just, you know, to make a big
point.

1474
01:55:56,300 --> 01:55:57,440
So that was one.

1475
01:55:58,860 --> 01:56:05,080
One eye drill, you know, the apex
formation and how that resolves also a

1476
01:56:05,840 --> 01:56:10,560
And maybe I'm forgetting some other
stories. But, you know, this is my story

1477
01:56:10,560 --> 01:56:15,120
about this particular concept. So
hopefully it just resonates. But

1478
01:56:15,120 --> 01:56:18,200
that you said here.

1479
01:56:18,800 --> 01:56:19,779
is correct.

1480
01:56:19,780 --> 01:56:25,880
The price will go up. And not only that,
it will go up substantially and much

1481
01:56:25,880 --> 01:56:30,180
faster. And look at how it travels up at
this point.

1482
01:56:31,800 --> 01:56:32,980
So freely.

1483
01:56:33,200 --> 01:56:40,160
There is no supply that is capable of
influencing the

1484
01:56:40,160 --> 01:56:43,400
price to the downside in a meaningful
way.

1485
01:56:44,910 --> 01:56:49,470
Because all of the supply is in the
strong hands, in the hands of the CEO

1486
01:56:49,470 --> 01:56:51,990
institutional trend followers.

1487
01:56:53,690 --> 01:56:58,290
And therefore, whoever comes here, we
could dictate any price because

1488
01:56:58,290 --> 01:57:01,270
this becomes an auction.

1489
01:57:02,990 --> 01:57:08,510
And at the auction, you know yourselves
how that goes.

1490
01:57:08,910 --> 01:57:10,390
The highest bidder wins.

1491
01:57:11,050 --> 01:57:14,510
And that's what happens at this point of
time.

1492
01:57:14,890 --> 01:57:16,450
And yes, you are totally correct.

1493
01:57:16,890 --> 01:57:21,450
There could be a hypodermic action, you
know, with price just accelerating to

1494
01:57:21,450 --> 01:57:22,108
the upside.

1495
01:57:22,110 --> 01:57:24,330
There will be a buy -in climax. That's
true.

1496
01:57:26,170 --> 01:57:31,990
And the price could go and we could
charge more. We could charge instead of,

1497
01:57:31,990 --> 01:57:38,690
we started here with $2, instead of $2
or even $3, we could charge $5

1498
01:57:38,690 --> 01:57:41,890
for the last item that we have for the
last unit.

1499
01:57:42,570 --> 01:57:48,370
And that's how the price starts to
accelerate closer to more of a

1500
01:57:48,370 --> 01:57:53,990
behavior, right? So three people are
going to exhibit a speculative behavior

1501
01:57:53,990 --> 01:57:57,990
because three of them would want that
item and only one can get it.

1502
01:57:59,950 --> 01:58:06,770
Speculation on the way up, auction
situation, price will go up and

1503
01:58:10,510 --> 01:58:11,690
How neat is that?

1504
01:58:13,930 --> 01:58:14,930
You like this?

1505
01:58:15,630 --> 01:58:21,350
You like this analogy? Does that help
you to understand how the price moves

1506
01:58:21,350 --> 01:58:25,530
when the demand is just going down?

1507
01:58:26,090 --> 01:58:32,810
So whenever you see this type of
picture, the price is going up and

1508
01:58:32,810 --> 01:58:37,690
going down and somebody is going to tell
you, oh my gosh, you know, there is a

1509
01:58:37,690 --> 01:58:41,750
divergence between the volume signature
and what the price is doing. This is

1510
01:58:41,750 --> 01:58:42,750
true.

1511
01:58:42,800 --> 01:58:45,060
But the interpretation could be
different.

1512
01:58:46,420 --> 01:58:48,160
So be careful about that.

1513
01:58:48,860 --> 01:58:54,340
Well, if you think that this is all
done, you're kind of wrong about that.

1514
01:58:54,580 --> 01:58:57,320
Now imagine that we have Act No.

1515
01:58:57,540 --> 01:58:58,540
4.

1516
01:58:59,480 --> 01:59:01,900
What do you think happens in Act No. 4?

1517
01:59:04,520 --> 01:59:06,040
Where are we going with this?

1518
01:59:12,480 --> 01:59:14,020
Yeah, you're correct, Joe.

1519
01:59:14,640 --> 01:59:16,440
Yeah, now Ash as well.

1520
01:59:17,240 --> 01:59:20,340
So Joe is saying, CO gives away supply.

1521
01:59:20,660 --> 01:59:25,900
Now Ash is saying, CO comes in with this
hit supply or her supply, or I usually

1522
01:59:25,900 --> 01:59:27,500
say it for the CO.

1523
01:59:29,140 --> 01:59:30,340
Yeah, exactly.

1524
01:59:30,600 --> 01:59:33,880
So we are in the buy -in climax here.

1525
01:59:35,660 --> 01:59:37,040
So what's going to happen?

1526
01:59:37,340 --> 01:59:41,040
We're going to have zero supply on our
hands.

1527
01:59:42,480 --> 01:59:48,620
And we're going to have a total revenue
of $7.

1528
01:59:50,760 --> 01:59:54,100
What do we have to add? Two plus four,
11.

1529
01:59:54,540 --> 02:00:00,160
And then five. So we made $16. That's
our

1530
02:00:00,160 --> 02:00:06,880
total incoming net revenue for this
product.

1531
02:00:07,140 --> 02:00:09,160
So we are the producer.

1532
02:00:09,820 --> 02:00:13,740
And who is the producer, by the way, in
the stock market?

1533
02:00:15,300 --> 02:00:16,400
What do you guys think?

1534
02:00:18,580 --> 02:00:19,580
Companies, right?

1535
02:00:20,000 --> 02:00:23,220
So companies provide the product, which
is shares.

1536
02:00:24,340 --> 02:00:29,360
So a company providing

1537
02:00:29,360 --> 02:00:35,040
shares.

1538
02:00:37,340 --> 02:00:38,980
Okay, so what do you think?

1539
02:00:39,580 --> 02:00:44,060
Now we're going to discuss this from the
position of the CO. So let's put the CO

1540
02:00:44,060 --> 02:00:50,220
hat on and let's talk about the CO. So
CO has,

1541
02:00:50,900 --> 02:00:57,860
let's just say that in the first act, CO

1542
02:00:57,860 --> 02:01:02,240
is buying, let's say, four units.

1543
02:01:08,460 --> 02:01:10,800
The trend followers are going to buy
three units.

1544
02:01:12,200 --> 02:01:14,840
So CO comes in with four units.

1545
02:01:15,880 --> 02:01:20,600
And the cost for the CO was on average
$1.

1546
02:01:22,340 --> 02:01:24,240
So now the price is at $5.

1547
02:01:31,850 --> 02:01:35,730
And the COO decides to sell. Well, first
of all, let's just kind of like see

1548
02:01:35,730 --> 02:01:40,590
what kind of profit COO is going to
have. So P andL for the COO is going to be

1549
02:01:40,590 --> 02:01:44,750
plus 4 times 4 plus 16.

1550
02:01:47,370 --> 02:01:53,490
And please note that the COO buys at the
time when nobody wants their ice cream.

1551
02:01:53,610 --> 02:01:58,070
There is a lot of ice cream, but the COO
values the product.

1552
02:01:58,590 --> 02:02:00,670
And it also sees the value.

1553
02:02:01,230 --> 02:02:06,590
of the product in the price, and also
the value of the product in the

1554
02:02:06,590 --> 02:02:10,810
that is available, because they want to
buy something meaningful as a position.

1555
02:02:12,510 --> 02:02:14,810
Okay, so that's what COO has done.

1556
02:02:15,110 --> 02:02:19,550
And COO is usually gonna distribute
this, obviously not just on the buying

1557
02:02:19,550 --> 02:02:23,650
climax. COO is gonna do distribution.

1558
02:02:24,550 --> 02:02:27,810
So this is a distribution.

1559
02:02:31,790 --> 02:02:38,030
buy CO, and CO is going to do it on the
way up to the buying climax,

1560
02:02:38,350 --> 02:02:44,930
on the way down to a change of
character, and then even throughout this

1561
02:02:44,930 --> 02:02:50,090
other trading range, right, this whole
trading range. So it could be in phases

1562
02:02:50,090 --> 02:02:55,970
B, C, and D, depending on how large the
position is.

1563
02:02:57,770 --> 02:02:59,710
What are the ITFs going to do?

1564
02:03:01,830 --> 02:03:08,730
ITFs are also going to sell, but they're
going to sell at a slightly different

1565
02:03:08,730 --> 02:03:09,730
price.

1566
02:03:10,550 --> 02:03:14,070
ITFs are going to be concerned about the
break of the trend.

1567
02:03:16,890 --> 02:03:22,370
They're also going to be concerned about
absolute performance

1568
02:03:22,370 --> 02:03:29,310
and also

1569
02:03:29,310 --> 02:03:30,350
relative performance.

1570
02:03:35,210 --> 02:03:42,150
So they're going to sell on a change of

1571
02:03:42,150 --> 02:03:49,010
character throughout the trading range
and then in phase D on the other change

1572
02:03:49,010 --> 02:03:52,990
of character. So change of character
phase A and on the way out, change of

1573
02:03:52,990 --> 02:03:57,650
character in phase D. So this is going
to be early

1574
02:03:57,650 --> 02:04:04,270
ITFs and then late.

1575
02:04:07,249 --> 02:04:11,510
ITFs are going to sell on the way down.

1576
02:04:14,610 --> 02:04:21,590
And because of the nature of how they
function, think about the definition.

1577
02:04:22,870 --> 02:04:24,210
Trend followers.

1578
02:04:24,430 --> 02:04:29,010
So they need to find the trend when it
emerges. So they are not going to

1579
02:04:29,010 --> 02:04:33,330
necessarily act as contrarians and buy
at the bottom.

1580
02:04:33,790 --> 02:04:39,230
They're going to buy on the way up as
they're seeing that conditions are

1581
02:04:39,230 --> 02:04:43,270
changing. And every time they're going
to do that. On the way out, they're

1582
02:04:43,270 --> 02:04:49,550
to do the same thing. They're going to
sell on the way down when the trend

1583
02:04:49,550 --> 02:04:55,830
changes, when they no longer have
absolute and relative performance, when

1584
02:04:55,830 --> 02:04:59,290
is a break of a trend based on their
methodology.

1585
02:05:03,960 --> 02:05:06,100
P andL is going to be slightly different.

1586
02:05:06,960 --> 02:05:13,860
Think about the price, right? If the CEO
usually would like to sell into the

1587
02:05:13,860 --> 02:05:20,280
excitement, selling into excitement of
weak hands.

1588
02:05:23,760 --> 02:05:28,600
And again, where does this happen?
Excitement, right? Buying climax plus

1589
02:05:28,600 --> 02:05:30,480
upthrust of the distribution.

1590
02:05:31,310 --> 02:05:35,290
Those are the two points of excitement
that we studied for weekend.

1591
02:05:35,850 --> 02:05:38,110
And this is where CO is going to sell
into.

1592
02:05:38,390 --> 02:05:44,130
CO wants to sell into this strength
because the size is so big.

1593
02:05:44,950 --> 02:05:50,290
If it sells on the way down, that
influences the price much more than when

1594
02:05:50,290 --> 02:05:51,690
sells on the way up.

1595
02:05:53,370 --> 02:05:57,390
Okay, but the idea of the price for them
is going to be slightly different.

1596
02:05:57,850 --> 02:06:02,290
So think about the change of character
in phase A. It might not be $5 anymore.

1597
02:06:02,470 --> 02:06:03,730
It might be $4.

1598
02:06:04,250 --> 02:06:10,730
Then think about throughout this whole
trading range. Also, probably on average

1599
02:06:10,730 --> 02:06:15,410
$4, maybe $3 .50. And then on the change
of character in phase B, they might

1600
02:06:15,410 --> 02:06:16,910
even sell maybe at $3.

1601
02:06:17,770 --> 02:06:19,990
So let's just put it this way.

1602
02:06:20,250 --> 02:06:24,310
P andL for ITFs. We had initial three
units here.

1603
02:06:27,400 --> 02:06:28,400
of ice cream.

1604
02:06:28,520 --> 02:06:35,300
So we are gonna sell, let's say one unit
at $4, one

1605
02:06:35,300 --> 02:06:38,000
times four, plus two units of three.

1606
02:06:38,340 --> 02:06:41,520
So that's four and six, $10.

1607
02:06:43,800 --> 02:06:46,520
Slightly different P andL than for the
CRO.

1608
02:06:48,120 --> 02:06:50,520
And I think that's kind of logical.

1609
02:06:51,120 --> 02:06:56,840
Why? Because trend followers are gonna
come in later on. They're gonna take

1610
02:06:56,840 --> 02:07:03,640
from 50 to 80 % of the trend. That's
their goal. And that's our goal.

1611
02:07:03,780 --> 02:07:05,380
We are trend followers.

1612
02:07:05,980 --> 02:07:12,040
Trend is an edge for us. It creates an
opportunity for us if we follow the

1613
02:07:12,040 --> 02:07:18,080
correctly. And if it's a sustainable
trend, we could make a lot of money just

1614
02:07:18,080 --> 02:07:19,080
staying in this trend.

1615
02:07:19,300 --> 02:07:23,680
So we are more of the trend followers
rather than the CEO.

1616
02:07:24,820 --> 02:07:28,550
And then obviously, look at what the
weak hands are doing.

1617
02:07:30,730 --> 02:07:37,590
So weak hands are going to be buying at

1618
02:07:37,590 --> 02:07:40,430
two points of excitement.

1619
02:07:44,910 --> 02:07:48,630
That's going to be on the climactic run

1620
02:07:48,630 --> 02:07:52,770
and on the upthrust.

1621
02:07:53,170 --> 02:07:59,960
They also will be buying at any type of
short -term value for them

1622
02:07:59,960 --> 02:08:06,560
in the distribution, meaning that this
is going to be at the support level,

1623
02:08:06,860 --> 02:08:11,780
after the reaction, once they have seen
such a big move up.

1624
02:08:13,400 --> 02:08:17,180
So they will sell or they will
distribute

1625
02:08:17,180 --> 02:08:22,200
distribution by weekends.

1626
02:08:22,980 --> 02:08:24,720
They're going to distribute when?

1627
02:08:25,460 --> 02:08:31,100
not in the distribution, not on the
change of character in phase D, not even

1628
02:08:31,100 --> 02:08:36,580
necessarily on the first break to the
downside. They're going to usually sell

1629
02:08:36,580 --> 02:08:41,620
a group, not individually, but as a
group in the moment of a general

1630
02:08:41,620 --> 02:08:46,540
capitulation. And obviously, again, I'm
going to repeat that by weak hands, I

1631
02:08:46,540 --> 02:08:47,540
don't mean just public.

1632
02:08:47,920 --> 02:08:52,060
There are institutions that are going to
be in that position and they're going

1633
02:08:52,060 --> 02:08:53,060
to be weak hands.

1634
02:08:53,580 --> 02:08:54,580
So therefore,

1635
02:08:55,230 --> 02:09:01,750
they will be selling in phase E of a

1636
02:09:01,750 --> 02:09:06,810
downtrend on

1637
02:09:06,810 --> 02:09:09,610
general capitulation.

1638
02:09:12,330 --> 02:09:19,310
A lot of general capitulations are going
to happen on which type

1639
02:09:19,310 --> 02:09:20,310
of events?

1640
02:09:21,250 --> 02:09:22,450
Climactic action.

1641
02:09:25,290 --> 02:09:28,710
So with this ice cream story, we went
through the whole price cycle.

1642
02:09:30,190 --> 02:09:32,890
Obviously, we could talk about the P andL
here as well.

1643
02:09:33,470 --> 02:09:38,750
So let's just say that, you know, all of
this supply goes to

1644
02:09:38,750 --> 02:09:45,650
weak hands, right? So all of the, let's
say, 10 units

1645
02:09:45,650 --> 02:09:52,030
gradually through the climactic run

1646
02:09:52,030 --> 02:09:53,810
in the uptrend.

1647
02:09:54,170 --> 02:09:59,950
through the distribution formation, and
then on the way down, the supply from

1648
02:09:59,950 --> 02:10:03,250
strong hands is going to migrate to weak
hands.

1649
02:10:03,650 --> 02:10:09,010
And by the time the selling climax
unfolds, we're going to have a reverse

1650
02:10:09,010 --> 02:10:16,010
picture. Because as the weak hands are
participating in the late stages of

1651
02:10:16,010 --> 02:10:20,990
the uptrend, then in the distributional
structure and in the beginning of the

1652
02:10:20,990 --> 02:10:21,990
downtrend,

1653
02:10:23,210 --> 02:10:29,690
they cannot sustain the losses and
emotionally kind of react to the

1654
02:10:29,690 --> 02:10:32,510
a good way. So they're going to
capitulate and sell everything.

1655
02:10:34,130 --> 02:10:38,110
And that usually is going to produce,
you know, that type of loss. So they're

1656
02:10:38,110 --> 02:10:42,270
going to, let's say, buy, let's say,
let's do this.

1657
02:10:45,430 --> 02:10:50,350
Let's say how much the CEO is selling
here, how many units. So CEO has four.

1658
02:10:53,480 --> 02:10:55,920
So four at price five.

1659
02:10:56,320 --> 02:11:02,240
So this is buying four times five.

1660
02:11:03,380 --> 02:11:09,060
Then from ITFs, we're going to have
three and four dollars. So

1661
02:11:09,060 --> 02:11:14,680
one at four

1662
02:11:14,680 --> 02:11:20,060
plus two at three.

1663
02:11:22,220 --> 02:11:28,060
So this is the cost here, right? So $20,
$4, and $6. So $30.

1664
02:11:28,800 --> 02:11:31,020
This is not the P andL. This is cost.

1665
02:11:34,180 --> 02:11:41,080
$30 weak hands are spending on this
position, whereas initially Theo

1666
02:11:41,080 --> 02:11:44,000
had spent only $4.

1667
02:11:45,540 --> 02:11:46,760
Huge difference.

1668
02:11:48,840 --> 02:11:49,840
Really big.

1669
02:11:51,440 --> 02:11:53,160
But that's unfortunately how it
happened.

1670
02:11:53,560 --> 02:11:58,700
And then on the way down, they start
selling maybe like at two places, right?

1671
02:11:58,800 --> 02:12:05,420
Maybe they are selling like at $2, and
then they are selling maybe even

1672
02:12:05,420 --> 02:12:08,940
below $1. Let's say just $1.

1673
02:12:10,100 --> 02:12:15,300
So they are going to sell, let's say,
five units at two and five units at one.

1674
02:12:15,920 --> 02:12:20,540
So their revenue from that.

1675
02:12:21,230 --> 02:12:27,890
So net revenue is going to be, okay, so
two and one, so five plus

1676
02:12:27,890 --> 02:12:28,890
10, 12.

1677
02:12:29,490 --> 02:12:34,310
So their P andL, and I'm so sorry that I'm
writing it like this, is going to be

1678
02:12:34,310 --> 02:12:35,310
what?

1679
02:12:35,770 --> 02:12:38,790
18 bucks minus $18.

1680
02:12:41,610 --> 02:12:44,330
What do you think is going to happen at
the selling climax?

1681
02:12:46,650 --> 02:12:49,990
As weak hands are generally
capitulating.

1682
02:12:51,280 --> 02:12:57,040
And they're just saying, like, get me
out at any cost, even at $2 and $1.

1683
02:12:58,300 --> 02:13:02,880
The CEO is going to see it as a value of
liquidity and is going to go and buy.

1684
02:13:03,700 --> 02:13:08,480
And the price circle is going to repeat
over and over and over again.

1685
02:13:11,480 --> 02:13:16,720
A really sad picture, if you would think
about weak hands as public hands,

1686
02:13:16,880 --> 02:13:19,740
somebody who doesn't know what's going
on.

1687
02:13:20,240 --> 02:13:22,600
and then they're just being caught up in
this process.

1688
02:13:23,180 --> 02:13:28,480
And the way how I view this process now
on kind of like very emotional level,

1689
02:13:28,700 --> 02:13:30,620
it's just sad.

1690
02:13:30,900 --> 02:13:37,300
It's sad to see people repeat this
behavior over and over, and then they

1691
02:13:37,300 --> 02:13:40,080
reinforce it every time.

1692
02:13:40,720 --> 02:13:46,200
So the key of this course and just
education on trading in general,

1693
02:13:46,240 --> 02:13:51,860
if it's a good education, is to change
this behavior, to change this way in

1694
02:13:51,860 --> 02:13:56,880
minds of how you guys operate, how we
all operate. And we've all been in this

1695
02:13:56,880 --> 02:14:00,440
situation. So I have been in this
situation many times.

1696
02:14:01,060 --> 02:14:06,000
I've been on the wrong side. I've been
weak hands many times. You have to be

1697
02:14:06,000 --> 02:14:08,640
weak hands in order for you to become
strong hands.

1698
02:14:09,150 --> 02:14:14,130
And the first step for weak hands to
become strong hands is all in the

1699
02:14:14,130 --> 02:14:16,890
awareness. So you have to bring this
knowledge.

1700
02:14:17,550 --> 02:14:22,630
And then you have to build the skill to
recognize the situations as they unfold

1701
02:14:22,630 --> 02:14:29,050
in real time. You have to understand how
your self is going to be in the way

1702
02:14:29,050 --> 02:14:35,450
of this profitability because usually
your self is going to protect you from

1703
02:14:35,450 --> 02:14:36,990
incurring a loss.

1704
02:14:37,690 --> 02:14:44,210
And again, the nature created this
emotional algorithm for us to protect

1705
02:14:44,330 --> 02:14:47,850
right? For us to survive as pieces and
multiply and grow.

1706
02:14:48,650 --> 02:14:54,350
Well, it doesn't work in trading this
way. We've got to be more at least as

1707
02:14:54,350 --> 02:14:55,350
trend followers.

1708
02:14:55,590 --> 02:15:00,730
We don't necessarily have to be
contrarian in our views as the CEO.

1709
02:15:01,230 --> 02:15:05,050
But we have to be trend followers as
institutional trend followers.

1710
02:15:05,290 --> 02:15:07,610
We could be contrarian with our
analysis.

1711
02:15:07,810 --> 02:15:09,210
I like that a lot.

1712
02:15:10,330 --> 02:15:15,870
But then our analysis would show us when
exactly the timing of when we should be

1713
02:15:15,870 --> 02:15:17,390
coming in into this.

1714
02:15:17,810 --> 02:15:19,190
Wow, that took a while.

1715
02:15:19,850 --> 02:15:26,370
I was not expecting this. But sometimes,
you know, the class can carry me away

1716
02:15:26,370 --> 02:15:27,370
like this.

1717
02:15:29,170 --> 02:15:30,170
Okay.

1718
02:15:31,120 --> 02:15:32,120
What up?

1719
02:15:42,420 --> 02:15:44,280
Okay. All right.

1720
02:15:44,980 --> 02:15:47,900
So I don't see necessarily any comments.

1721
02:15:48,120 --> 02:15:52,180
This is the way I was explaining this in
the previous cycle, so I thought I

1722
02:15:52,180 --> 02:15:53,180
would just have this.

1723
02:15:53,840 --> 02:15:58,840
Still have to create probably a proper
slide, but I just like drawing. I just

1724
02:15:58,840 --> 02:16:00,440
like explaining it like this.

1725
02:16:00,990 --> 02:16:07,470
Okay, let's talk about maybe, let's do
this.

1726
02:16:07,590 --> 02:16:09,430
Let's not go into this study.

1727
02:16:11,370 --> 02:16:16,390
Let's switch really quickly right away
to the exercise, and we'll spend the

1728
02:16:16,390 --> 02:16:18,970
30 minutes going through the exercise.

1729
02:16:19,790 --> 02:16:24,310
Okay, so as usual, I just want to point
this out again.

1730
02:16:25,050 --> 02:16:30,050
I want you to watch the video of this
exercise again and make notes and email

1731
02:16:30,050 --> 02:16:33,330
those to me. So continue doing this
work.

1732
02:16:34,629 --> 02:16:39,209
And this is definitely going to be
something that's going to help you out a

1733
02:16:40,170 --> 02:16:44,450
Okay, now I also put here a solution
slide number one.

1734
02:16:45,090 --> 02:16:49,370
Solution does not necessarily mean for
me here in this exercise that I'm going

1735
02:16:49,370 --> 02:16:50,690
to show you all of the bars.

1736
02:16:50,910 --> 02:16:56,219
Maybe in the future cycles, you know,
I'll... Ask my teaching assistants to do

1737
02:16:56,219 --> 02:16:59,139
that, and we'll create that for you
guys.

1738
02:16:59,360 --> 02:17:03,879
But for now, this is just a solution
slide in terms of the labeling, phases,

1739
02:17:03,879 --> 02:17:04,900
so on and so forth, bias.

1740
02:17:06,040 --> 02:17:07,799
So just have a look at this.

1741
02:17:09,980 --> 02:17:13,379
And here we go. This is where we have
stopped.

1742
02:17:13,740 --> 02:17:19,280
So I'm going to give you 20 seconds to
orient.

1743
02:17:19,980 --> 02:17:24,160
yourself here that's number one and
secondly in this 20 seconds i want

1744
02:17:24,160 --> 02:17:29,240
to say yes uh a volunteer and then we're
going to go through this um and

1745
02:17:29,240 --> 02:17:33,459
hopefully we're going to finish at least
this portion for today all right guys

1746
02:17:33,459 --> 02:17:39,480
uh you know 20 20 30 seconds and say yes
if you want to volunteer

1747
02:19:13,870 --> 02:19:14,870
All right.

1748
02:19:15,570 --> 02:19:17,350
Let's go to Adam.

1749
02:19:18,049 --> 02:19:19,049
Hi, Adam.

1750
02:19:19,370 --> 02:19:20,370
Hey, how are you?

1751
02:19:20,670 --> 02:19:21,809
Good. How are you doing, Adam?

1752
02:19:22,209 --> 02:19:23,389
I'm doing great tonight.

1753
02:19:23,629 --> 02:19:26,389
Can you hear me okay? Yes, absolutely.
Good audio.

1754
02:19:26,670 --> 02:19:32,350
I hope there is like a dog barking
outside, so I hope you guys cannot hear

1755
02:19:32,350 --> 02:19:39,350
dog. Okay, let's start with 41

1756
02:19:39,350 --> 02:19:41,090
and 40.

1757
02:19:41,959 --> 02:19:43,639
We had a distribution.

1758
02:19:43,920 --> 02:19:48,680
We've talked about it, right? So really
quickly, I'm just going to do this

1759
02:19:48,680 --> 02:19:49,680
really quickly.

1760
02:19:50,420 --> 02:19:54,100
Supply has come in first on bar number
31.

1761
02:19:54,380 --> 02:19:56,940
This is where the CEO is selling.

1762
02:19:57,640 --> 02:20:02,300
So remember that ice cream story? We
wanted to see where the CEO is going to

1763
02:20:02,300 --> 02:20:07,100
sell. The CEO is going to sell on the
excitement of weekends in the auction

1764
02:20:07,100 --> 02:20:11,040
of situation where there is a lot of
speculation on the way up.

1765
02:20:11,390 --> 02:20:15,390
Why do they need to sell on the way up
with all of these strengths? Well,

1766
02:20:15,430 --> 02:20:21,590
because there should be so much
liquidity to unload their position at

1767
02:20:21,590 --> 02:20:26,290
value that this is the first initial
point where they're going to sell.

1768
02:20:27,710 --> 02:20:32,470
The second point of selling is going to
be all in phase A, and this is going to

1769
02:20:32,470 --> 02:20:34,190
be on the change of character.

1770
02:20:35,600 --> 02:20:41,320
they still have some price value and
they still have excitement of weak hands

1771
02:20:41,320 --> 02:20:47,220
because the weak hands are going to see
35 as the short -term oversold value

1772
02:20:47,220 --> 02:20:53,320
proposition to them after the big
leadership run up. So they're going to

1773
02:20:53,320 --> 02:20:58,480
value here and finally they're going to
do technically something correct but

1774
02:20:58,480 --> 02:21:00,100
analytically totally off.

1775
02:21:01,769 --> 02:21:06,250
And this is where the selling is going
to be unfolding for the CEO.

1776
02:21:07,130 --> 02:21:12,810
And we see that, that the consistency of
selling is so different than anything

1777
02:21:12,810 --> 02:21:13,810
what we've seen before.

1778
02:21:14,170 --> 02:21:19,970
If there is some selling on the way up
and on the way down at 13, 14, 18, and

1779
02:21:19,970 --> 02:21:23,070
19, this selling comes and goes.

1780
02:21:23,510 --> 02:21:26,790
Whatever selling we have between 31 and
35,

1781
02:21:27,660 --> 02:21:31,620
There is a consistency of selling. So
they are selling on the way up. They are

1782
02:21:31,620 --> 02:21:37,160
selling on the way down. And that
defines for us a potential bias, which

1783
02:21:37,160 --> 02:21:38,160
the downside.

1784
02:21:38,520 --> 02:21:41,780
We need a confirmation of that bias.
Where does it come?

1785
02:21:42,180 --> 02:21:48,720
Well, it comes in the 36, 37, 38 area,
where we see that supply increases

1786
02:21:48,720 --> 02:21:53,080
and produces the diminishing result to
the upside.

1787
02:21:53,870 --> 02:21:58,770
that suggests a bearish bias or a
confirmation of this bearish bias.

1788
02:21:59,150 --> 02:22:05,290
And it acts also as a potential attempt
to upthrust, and it fails.

1789
02:22:05,570 --> 02:22:12,290
Also, we note that the supply signature
goes down, and still that produces a

1790
02:22:12,290 --> 02:22:18,110
much better result to the downside or
much lesser result to the upside. That

1791
02:22:18,110 --> 02:22:19,650
suggests timing for us.

1792
02:22:19,930 --> 02:22:23,070
Bar number 38 has an ease of movement.

1793
02:22:23,760 --> 02:22:29,740
ease of movement is going to be
associated with diminishing volume

1794
02:22:29,740 --> 02:22:33,420
increasing price movement with the
commitment to the downside.

1795
02:22:33,760 --> 02:22:34,760
And that's what we see.

1796
02:22:34,960 --> 02:22:41,620
And then going through this whole
downtrend, we're seeing the continuation

1797
02:22:41,620 --> 02:22:43,080
the commitment to the downside.

1798
02:22:43,420 --> 02:22:48,960
And this could act as a major sign of
weakness for us. Bar number 39 below,

1799
02:22:48,960 --> 02:22:49,779
number 39.

1800
02:22:49,780 --> 02:22:52,320
And then we have a small attempt to go
up.

1801
02:22:52,650 --> 02:22:58,410
we always know that LPSY, last point of
supply, would come to the point of the

1802
02:22:58,410 --> 02:23:01,290
resistance that acted before as the
support.

1803
02:23:01,810 --> 02:23:03,670
And then we're going to have a reversal.

1804
02:23:03,930 --> 02:23:08,370
This would provide us another point of
entry after bar number 38.

1805
02:23:09,170 --> 02:23:16,050
So point of entry number two, point of
entry number one, and point

1806
02:23:16,050 --> 02:23:20,870
of entry number three. We could also
enter somewhere here. So three and a

1807
02:23:21,110 --> 02:23:22,110
three.

1808
02:23:22,480 --> 02:23:27,980
Okay, and then we are in downtrend up to
bar number 40 and 41.

1809
02:23:28,280 --> 02:23:32,080
And Adam, this is where we want to start
our discussion.

1810
02:23:32,440 --> 02:23:36,940
So what is 40 and 41 in Wycroft terms?

1811
02:23:37,300 --> 02:23:38,620
So we have a selling climax.

1812
02:23:38,960 --> 02:23:40,760
And why is this a selling climax?

1813
02:23:41,200 --> 02:23:42,640
You have higher volume.

1814
02:23:43,940 --> 02:23:44,940
What else?

1815
02:23:45,500 --> 02:23:47,880
You also have that long tail.

1816
02:23:48,740 --> 02:23:51,060
And so you have some stopping action.

1817
02:23:51,520 --> 02:23:58,000
So you know that the CO is probably

1818
02:23:58,000 --> 02:23:59,160
coming in there to buy.

1819
02:23:59,360 --> 02:24:04,480
And so you've got – that big tail tells
me that there's a lot of buying going on

1820
02:24:04,480 --> 02:24:05,480
there. Absolutely.

1821
02:24:05,820 --> 02:24:11,920
And if we look way back across to bars
5, 7, 10, we can also see that it held

1822
02:24:11,920 --> 02:24:13,420
that resistance break.

1823
02:24:14,680 --> 02:24:16,840
This one right here.

1824
02:24:17,280 --> 02:24:22,260
Yeah, like right in there. Yeah, it
falls into this area here. And by the

1825
02:24:22,260 --> 02:24:24,620
also a really good comment here, Adam.

1826
02:24:24,880 --> 02:24:30,240
Also think about this area right here.
This whole area between 13 and 24 acts

1827
02:24:30,240 --> 02:24:31,019
a support.

1828
02:24:31,020 --> 02:24:36,700
So we're kind of falling into a slightly
oversold condition of this area. And

1829
02:24:36,700 --> 02:24:42,740
that creates obviously, you know, short
-term oversold condition. It tracks, you

1830
02:24:42,740 --> 02:24:43,740
know, shows value.

1831
02:24:44,270 --> 02:24:46,710
And, you know, we have a lot of
liquidity here.

1832
02:24:47,790 --> 02:24:51,850
Really good, Adam. One more item that I
would add here on the price side. So we

1833
02:24:51,850 --> 02:24:53,670
see an acceleration to the downside.

1834
02:24:53,970 --> 02:24:57,950
So this acts as the selling climax run,
climactic run.

1835
02:24:58,430 --> 02:25:05,290
It also could be interpreted as, you
know, a potential stop in action at 40

1836
02:25:05,290 --> 02:25:07,830
41. I like interpretation of details.

1837
02:25:08,170 --> 02:25:09,930
Let's talk about the volume signature.

1838
02:25:10,290 --> 02:25:12,710
Specifically, I want to talk about bar
number 40.

1839
02:25:13,150 --> 02:25:14,350
which is this one right here.

1840
02:25:14,750 --> 02:25:19,930
So this is the first bar where we see
some kind of demand coming in. So let's

1841
02:25:19,930 --> 02:25:20,930
write the volume signature.

1842
02:25:21,130 --> 02:25:22,710
The volume is definitely increasing.

1843
02:25:23,190 --> 02:25:25,030
What is happening with the supply?

1844
02:25:26,390 --> 02:25:31,670
Supply is going up, but demand is going
up more.

1845
02:25:32,410 --> 02:25:37,950
Okay, demand is going up. And I think
that you are actually correct in this.

1846
02:25:38,860 --> 02:25:42,980
And the reason why I think that you're
correct is because I'm looking at the

1847
02:25:42,980 --> 02:25:49,700
previous bar, and it's much purer supply
on this bar than

1848
02:25:49,700 --> 02:25:56,420
on bar number 40. So let's label this as
39

1849
02:25:56,420 --> 02:25:57,420
.5.

1850
02:25:59,380 --> 02:26:02,840
Why is that? Well, because the volume
signature is...

1851
02:26:03,080 --> 02:26:07,040
Pretty high right here, and yet the
movement is kind of pure to the

1852
02:26:07,300 --> 02:26:10,580
There is some demand that's coming in
here at the beginning of the session.

1853
02:26:11,400 --> 02:26:17,940
So not as pure as we think, but still
much purer supply than at 40. At 40,

1854
02:26:18,020 --> 02:26:21,980
there is a lot of demand that pushes the
price like this to the upside.

1855
02:26:22,260 --> 02:26:29,000
So we could say that the demand at 40
relative to the demand at 39 .5

1856
02:26:29,000 --> 02:26:30,000
is doing what?

1857
02:26:30,920 --> 02:26:32,260
It's going up. Going up.

1858
02:26:32,510 --> 02:26:39,070
So and that tells us that there is more
buying that

1859
02:26:39,070 --> 02:26:40,990
is happening at 40.

1860
02:26:41,850 --> 02:26:48,010
So that's why I'm thinking that maybe
supply even either stays the same or

1861
02:26:48,010 --> 02:26:54,430
increases just marginally. And I could
see how Adam could be correct here and

1862
02:26:54,430 --> 02:26:59,390
demand is not just increasing, but could
increase slightly more than the supply.

1863
02:27:00,320 --> 02:27:04,300
Having said this, we're still going to
indicate that supply still slightly

1864
02:27:04,300 --> 02:27:07,160
dominates the demand at this point just
because of the close.

1865
02:27:07,560 --> 02:27:12,220
Yeah. And then we see also the
domination of the supply on the next

1866
02:27:12,560 --> 02:27:14,320
which is gray bar right here.

1867
02:27:14,580 --> 02:27:20,700
So if we would look at the intraday,
Adam, and I'm going to quiz you a little

1868
02:27:20,700 --> 02:27:26,160
bit more here because I know what you
do. So let's definitely, you know, get

1869
02:27:26,160 --> 02:27:28,300
into nitty gritty of things.

1870
02:27:28,910 --> 02:27:30,590
Let's do this, 39 .5.

1871
02:27:31,030 --> 02:27:34,530
This is our close at 39 .5.

1872
02:27:35,610 --> 02:27:41,490
So what do we do at the open, and what
is the intraday picture of bar number

1873
02:27:41,790 --> 02:27:48,030
It looks like we came down pretty far.

1874
02:27:49,050 --> 02:27:50,550
Where do we open?

1875
02:27:51,970 --> 02:27:52,970
We open.

1876
02:27:58,190 --> 02:27:59,190
Bar 40.

1877
02:28:00,930 --> 02:28:03,190
Yeah, we actually opened up slightly.

1878
02:28:04,050 --> 02:28:05,490
Maybe I was slightly.

1879
02:28:05,730 --> 02:28:08,170
I was thinking like the same level.

1880
02:28:08,370 --> 02:28:13,750
So this is open bar number 40. Just a
fraction, then we drop, and then we come

1881
02:28:13,750 --> 02:28:19,590
back up and close where we were there,
where it shows.

1882
02:28:19,890 --> 02:28:26,490
Yeah, so we're closing somewhat below
the open, and that's why it becomes a

1883
02:28:26,490 --> 02:28:27,490
bar.

1884
02:28:27,500 --> 02:28:28,980
So this is the close.

1885
02:28:29,240 --> 02:28:30,320
Then the next bar.

1886
02:28:30,960 --> 02:28:35,620
And gray means, yes, we're opening at
the same level. So we're opening at the

1887
02:28:35,620 --> 02:28:37,280
same level. What do you think happens
next?

1888
02:28:39,760 --> 02:28:40,760
It's a good question.

1889
02:28:43,160 --> 02:28:44,400
Probably the same pattern.

1890
02:28:45,320 --> 02:28:49,040
It looks like there was a lot of selling
pressure coming in and then buyers

1891
02:28:49,040 --> 02:28:52,200
showed back up and pushed the price
right back up.

1892
02:28:52,620 --> 02:28:58,470
Well, first of all, from the previous
day, the momentum, Going into the close

1893
02:28:58,470 --> 02:29:00,550
to the upside, right?

1894
02:29:01,010 --> 02:29:06,310
Right. And then these two indicate the
same close. The gray means that the

1895
02:29:06,310 --> 02:29:07,289
is the same.

1896
02:29:07,290 --> 02:29:13,050
So this means that this is an open, and
we are opening with a slight gap.

1897
02:29:13,390 --> 02:29:16,110
So actually not here, but somewhere
here.

1898
02:29:17,210 --> 02:29:20,110
Let's say somewhere here. Oh, right,
right. Open.

1899
02:29:20,710 --> 02:29:22,150
Open, number 41.

1900
02:29:22,390 --> 02:29:26,110
Then the momentum probably carries us up
again.

1901
02:29:26,750 --> 02:29:33,730
to the high of 40 and then we go down
okay and we go down slightly below the

1902
02:29:33,730 --> 02:29:40,090
low of the previous day and then we go
up and close at the same uh level as bar

1903
02:29:40,090 --> 02:29:43,050
number 40. so this is close 41.

1904
02:29:43,610 --> 02:29:50,170
so looking at this intraday picture we
see two waves to the downside and

1905
02:29:50,170 --> 02:29:53,630
that still suggests that supply is still
present

1906
02:29:55,030 --> 02:30:01,910
Supply is still present on both. But at
the same time,

1907
02:30:01,970 --> 02:30:03,030
demand is increasing.

1908
02:30:03,630 --> 02:30:09,010
Demand is increasing. And on the second
day, bar number 41, demand is increasing

1909
02:30:09,010 --> 02:30:10,010
more.

1910
02:30:10,350 --> 02:30:16,650
Kind of have a much better increase in
the demand. And probably supply, even

1911
02:30:16,650 --> 02:30:20,550
though it's present, supply might be
diminishing, right? So going from this

1912
02:30:20,550 --> 02:30:21,630
picture to this one.

1913
02:30:22,110 --> 02:30:28,190
most likely there is a diminishing
supply signature and probably increase

1914
02:30:28,190 --> 02:30:29,190
demand signature.

1915
02:30:29,450 --> 02:30:35,470
And these two bars act so differently
than any of the bars in the down

1916
02:30:35,750 --> 02:30:40,870
The bars to the upside that we have had
or reactions to the upside that we have

1917
02:30:40,870 --> 02:30:47,050
had are kind of muted. There is nothing
big in those reactions or those up bars.

1918
02:30:47,270 --> 02:30:48,870
And we're seeing how...

1919
02:30:50,190 --> 02:30:52,730
On the way up, there is so much
strength.

1920
02:30:53,050 --> 02:30:58,150
So by itself, Adam, would you say that
there is a change of character happening

1921
02:30:58,150 --> 02:30:59,150
on these two bars?

1922
02:31:00,730 --> 02:31:02,050
I would, definitely.

1923
02:31:02,990 --> 02:31:08,390
Those two bars, to me, would confirm
that that's pretty strong stopping

1924
02:31:08,390 --> 02:31:10,210
for prices to move a lot lower.

1925
02:31:10,750 --> 02:31:17,530
And especially with bar 41 on decreased
volume, you had...

1926
02:31:18,330 --> 02:31:20,470
The same result, but with decreased
volume.

1927
02:31:20,690 --> 02:31:25,490
So that tells me that that supply is
being absorbed and prices will probably

1928
02:31:25,490 --> 02:31:27,730
move higher at some point.

1929
02:31:27,930 --> 02:31:31,830
Yeah, and there is some kind of – I like
that notion that you said.

1930
02:31:32,370 --> 02:31:37,630
It moves easier to the upside. So there
is an ease of movement on –

1931
02:31:39,360 --> 02:31:43,940
the demand that we have here. And I
think that it could increase here. It

1932
02:31:43,940 --> 02:31:48,360
also decrease, although 40 seems to have
more supply than, let's say, 41.

1933
02:31:49,420 --> 02:31:52,260
So that's how the intraday unfolds here.

1934
02:31:52,700 --> 02:31:55,800
I'm curious, Adam, if you would be a
buyer here.

1935
02:31:56,260 --> 02:31:57,260
I would.

1936
02:31:57,400 --> 02:31:58,400
You would?

1937
02:31:58,860 --> 02:31:59,860
I would.

1938
02:31:59,900 --> 02:32:01,360
It depends on the client.

1939
02:32:02,810 --> 02:32:04,530
It depends on the account. It depends on
their risk profile.

1940
02:32:04,830 --> 02:32:07,470
You have to disclose what you do now
because you're just an investment

1941
02:32:07,890 --> 02:32:10,450
Yeah, I'm an investment advisor. I have
an RIA firm.

1942
02:32:11,590 --> 02:32:15,850
But it would only be in certain
accounts. It wouldn't be like a

1943
02:32:16,530 --> 02:32:18,770
It might be like new money coming in.

1944
02:32:19,230 --> 02:32:22,830
I've got clients that will sit on cash
for a few months waiting for something

1945
02:32:22,830 --> 02:32:23,830
like this.

1946
02:32:24,130 --> 02:32:28,850
And I'm not as exact as, say, your
institutional money managers.

1947
02:32:32,570 --> 02:32:37,570
half their allocation in here and get
confirmation a little bit later. And,

1948
02:32:37,570 --> 02:32:43,030
know, maybe like on bar 50, that would
be in 51. But again, this what coffee

1949
02:32:43,030 --> 02:32:46,610
stuff for me anyway, this is why I
appreciate the course. It's all new to

1950
02:32:46,610 --> 02:32:48,430
mean, I've really changed a lot of my
thinking.

1951
02:32:49,530 --> 02:32:53,650
And I think, you know, you know, being a
trend follower is probably what I've

1952
02:32:53,650 --> 02:32:57,790
done. I see a lot. I see a lot of flaws
in that. And so anyway.

1953
02:32:58,290 --> 02:32:59,950
OK, great. But I want.

1954
02:33:00,440 --> 02:33:02,840
you guys to pay attention to what Adam
is saying.

1955
02:33:03,520 --> 02:33:09,560
He's saying that I have the size from
clients that I need to invest.

1956
02:33:10,040 --> 02:33:14,540
And sometimes, you know, I'm going to
wait for an opportunity.

1957
02:33:14,760 --> 02:33:19,520
And that opportunity is going to be
defined by the specific price volume

1958
02:33:20,120 --> 02:33:25,680
Maybe, you know, some other factors. In
this case, at 4041, there might be some

1959
02:33:25,680 --> 02:33:26,680
position.

1960
02:33:26,870 --> 02:33:27,890
being established.

1961
02:33:28,210 --> 02:33:33,610
Why? Well, because, again, Adam, as an

1962
02:33:33,610 --> 02:33:40,390
institutional type of trader,
institutional type of investor, is going

1963
02:33:40,390 --> 02:33:44,770
for those liquidity spots and oversold
spots.

1964
02:33:45,090 --> 02:33:48,330
And that's exactly the oversold spot
that we see here.

1965
02:33:48,830 --> 02:33:54,470
Now, putting on the Wycoffian hat, we
are thinking that, as Adam has said,

1966
02:33:54,470 --> 02:33:55,470
is a selling climax.

1967
02:33:56,010 --> 02:33:57,650
So what should happen next?

1968
02:33:57,870 --> 02:34:02,150
We know that the next structural thing
that's going to happen is some kind of

1969
02:34:02,150 --> 02:34:06,770
change of character that is going to be
so different from what we've seen before

1970
02:34:06,770 --> 02:34:07,970
since 37.

1971
02:34:08,390 --> 02:34:12,470
So up to 42, Adam, we have that change
of character.

1972
02:34:12,710 --> 02:34:16,390
And let's just give out the
characteristic for the change of

1973
02:34:16,630 --> 02:34:20,890
So change of character from 41 to 42.

1974
02:34:21,310 --> 02:34:24,470
Why would we call this a change of
character? Just to repeat this.

1975
02:34:25,770 --> 02:34:29,790
Well, we have an automatic reaction up
to 42, but that's different than the

1976
02:34:29,790 --> 02:34:35,650
previous downswing. So swing 13 to 14 is
completely different than what we've

1977
02:34:35,650 --> 02:34:39,690
experienced from 12 to 13. So we know
that something has changed fundamentally

1978
02:34:39,690 --> 02:34:40,690
there.

1979
02:34:41,470 --> 02:34:46,970
Okay, but technically, when we look at
41 to 42, you mentioned that the

1980
02:34:46,970 --> 02:34:52,950
has increased, right? So the up distance
for the swing has increased. What else

1981
02:34:52,950 --> 02:34:54,630
do we see here that is so different?

1982
02:34:57,190 --> 02:34:58,290
41 to 42.

1983
02:34:59,210 --> 02:35:03,350
And then compare it to everything what
we had from 37 to 40.

1984
02:35:05,850 --> 02:35:09,330
Well, I mean... What about the demand
signature?

1985
02:35:10,550 --> 02:35:11,810
Oh, yes, of course.

1986
02:35:12,110 --> 02:35:13,110
Increased or decreased?

1987
02:35:13,330 --> 02:35:14,890
It's been decreasing the whole time,
yeah.

1988
02:35:16,290 --> 02:35:17,610
It's increasing here.

1989
02:35:17,950 --> 02:35:20,470
Yeah, the demand signature is
increasing. Demand is increasing.

1990
02:35:21,990 --> 02:35:24,810
The distance of the rally has increased.

1991
02:35:25,530 --> 02:35:27,650
What about the upspread?

1992
02:35:31,310 --> 02:35:36,310
Yeah, I mean it's... And look at the
upspread that we've had on the way down.

1993
02:35:36,450 --> 02:35:39,010
There was only one instance, right?
This.

1994
02:35:41,750 --> 02:35:44,770
And then instead we're having this and
this.

1995
02:35:45,650 --> 02:35:47,030
And this type of rally.

1996
02:35:47,910 --> 02:35:49,230
So much more, right?

1997
02:35:50,520 --> 02:35:54,360
Okay, so the spread has increased. And
those are the characteristics of the

1998
02:35:54,360 --> 02:35:55,219
change of character.

1999
02:35:55,220 --> 02:36:01,320
So now that we have defined that the
change of character has happened, that

2000
02:36:01,320 --> 02:36:03,140
usually means what for us?

2001
02:36:03,900 --> 02:36:08,680
We've moved into a trading range. Yes.
So we move into a change of environment,

2002
02:36:08,760 --> 02:36:13,460
a trading range from a downtrend. We're
moving into the consolidation. Our first

2003
02:36:13,460 --> 02:36:14,880
thought is going to be that...

2004
02:36:15,290 --> 02:36:19,170
the trading range is going to be defined
by the low of the selling climax and

2005
02:36:19,170 --> 02:36:20,490
the high of the automatic rally.

2006
02:36:20,770 --> 02:36:24,690
So at that point of time, this is what
we're looking at. We're looking at the

2007
02:36:24,690 --> 02:36:29,690
horizontal structure after the selling
climax, automatic rally, and then

2008
02:36:29,690 --> 02:36:34,930
structurally, what point do we await
next to occur in phase A?

2009
02:36:35,210 --> 02:36:37,810
We want to see the secondary test of the
selling climax.

2010
02:36:38,450 --> 02:36:40,770
Exactly. So we are testing.

2011
02:36:41,530 --> 02:36:47,650
So locally, the test, the selling
climax, is it a successful test?

2012
02:36:48,090 --> 02:36:49,410
Yes. Why?

2013
02:36:50,710 --> 02:36:52,190
Bar 44 is higher.

2014
02:36:54,430 --> 02:36:58,330
Yeah, it's a higher low. Higher low. And
then what about the volume signature?

2015
02:36:59,070 --> 02:37:00,150
Definitely decreasing.

2016
02:37:00,370 --> 02:37:05,710
Yeah. So those are the two requirements
that we want to have for any type of

2017
02:37:05,710 --> 02:37:06,710
test.

2018
02:37:06,790 --> 02:37:11,410
We want a structural confirmation, and
we want also volume confirmation.

2019
02:37:11,670 --> 02:37:17,450
And when we have both together with any
type of the reversal, and we're

2020
02:37:17,450 --> 02:37:23,930
reversing bar number 43 here, that acts
as a confirmation of the path and

2021
02:37:23,930 --> 02:37:25,550
suggests that we're going to go up.

2022
02:37:25,770 --> 02:37:27,550
Now let's go into tricky stuff.

2023
02:37:28,370 --> 02:37:32,050
Okay, so 44 is a – yeah, I like it.

2024
02:37:32,460 --> 02:37:36,540
44 is a secondary test.

2025
02:37:38,580 --> 02:37:44,960
And it happens not

2026
02:37:44,960 --> 02:37:47,040
necessarily at the level of the support.

2027
02:37:48,320 --> 02:37:54,160
It happens maybe like close to one half
of the range.

2028
02:37:54,880 --> 02:37:58,640
And we said that, yeah, supply
definitely went lower.

2029
02:37:58,920 --> 02:38:01,460
What kind of deduction could we make?

2030
02:38:01,790 --> 02:38:03,250
out of the secondary test.

2031
02:38:03,490 --> 02:38:07,410
What could the price do next based on
how the test behaves?

2032
02:38:11,090 --> 02:38:17,450
I mean, just the good news is we can see
the chart, but because we tested so

2033
02:38:17,450 --> 02:38:22,230
much higher, one would think that price
would move higher, at least to the top

2034
02:38:22,230 --> 02:38:23,230
of the trading range.

2035
02:38:25,350 --> 02:38:28,570
Yes. That's the whole logic there.

2036
02:38:29,160 --> 02:38:33,420
And that could create a very short -term
trade for any type of swing trader,

2037
02:38:33,620 --> 02:38:37,740
somebody who's thinking, okay, now we're
going into phase B.

2038
02:38:38,600 --> 02:38:45,480
Because of the strength that we have at
44 on the secondary test, supply

2039
02:38:45,480 --> 02:38:52,240
is so low, and that movement starts at
one half of the trading range. So not

2040
02:38:52,240 --> 02:38:57,040
only are we probably going to touch the
resistance at 42, we might actually

2041
02:38:57,040 --> 02:38:58,040
overcome it.

2042
02:38:58,400 --> 02:39:03,740
And phase B, when we overcome the
resistance at M, then how would we label

2043
02:39:03,740 --> 02:39:05,200
action when the price is up?

2044
02:39:05,580 --> 02:39:06,559
Up thrust.

2045
02:39:06,560 --> 02:39:11,620
Up thrust, yeah. And we still don't know
at this point is this a bullish trading

2046
02:39:11,620 --> 02:39:15,700
range or is this a bearish trading
range. The only thing that we could

2047
02:39:15,700 --> 02:39:20,100
about the structure because of the up
thrust, this is going to be a higher

2048
02:39:20,540 --> 02:39:27,260
So with the higher high and the higher
low on the test, We're thinking that

2049
02:39:27,260 --> 02:39:29,960
maybe we're going to have some kind of
upsloping structure.

2050
02:39:30,220 --> 02:39:34,000
So we should be thinking about the
upsloping structure.

2051
02:39:34,440 --> 02:39:39,680
Okay, well, this is very interesting.
We're expecting an upthrust.

2052
02:39:39,900 --> 02:39:44,520
Let's imagine that we have opened a
position somewhere here, Adam, right

2053
02:39:44,600 --> 02:39:45,960
and our stop loss is here.

2054
02:39:46,820 --> 02:39:50,580
Based on our logic that we should
overcome the resistance.

2055
02:39:52,750 --> 02:39:57,170
How would we get out of this position?
Imagine that we are very short -term

2056
02:39:57,170 --> 02:40:02,810
oriented traders. We are looking at the
daily intraday, and our time horizon for

2057
02:40:02,810 --> 02:40:05,670
this trade is from a day to maybe like
five days.

2058
02:40:07,690 --> 02:40:09,470
Yes, I'm having to think differently
now.

2059
02:40:11,830 --> 02:40:17,090
Well, if you're thinking you're going to
move to the top of the trading range,

2060
02:40:17,790 --> 02:40:19,830
We said above the resistance.

2061
02:40:20,130 --> 02:40:24,750
Yeah, above, yeah. Then I think maybe
your resistance would be your stop loss

2062
02:40:24,750 --> 02:40:25,990
get out, I guess. I don't know.

2063
02:40:27,010 --> 02:40:31,130
We could definitely use the stop loss,
right? So we could say like, okay, we

2064
02:40:31,130 --> 02:40:34,730
could use the stop loss like this and
then get out somewhere here.

2065
02:40:35,130 --> 02:40:38,610
But if we want to be a little bit more
precise, we know that we're going to

2066
02:40:38,610 --> 02:40:41,810
overcome the resistance. We know that
it's going to create an upthrust.

2067
02:40:42,910 --> 02:40:48,110
what would be the conditions of the
pricing volume for the opera that would

2068
02:40:48,110 --> 02:40:54,150
us that i'm done there is no more move
to the upside that you can expect get

2069
02:40:54,150 --> 02:41:01,110
yeah um think about what should

2070
02:41:01,110 --> 02:41:05,390
happen on the up thrust right so we had
some kind of bullish sentiment here

2071
02:41:05,390 --> 02:41:07,310
going into the up thrust then what
should occur

2072
02:41:08,680 --> 02:41:12,380
Yeah, you have stopping action, so you
see the tail. You actually have two

2073
02:41:12,380 --> 02:41:13,460
on 46 and 48.

2074
02:41:13,780 --> 02:41:15,440
You also have an increase in volume.

2075
02:41:16,240 --> 02:41:21,740
So to me, something doesn't look right
there because you failed to basically

2076
02:41:21,740 --> 02:41:24,160
hold the upthrust, if you will, or you
failed to move higher.

2077
02:41:26,720 --> 02:41:31,740
Yeah, absolutely, all of that, but it
has to be a little bit more technical,

2078
02:41:31,900 --> 02:41:34,460
right? So you mentioned the volume
increase.

2079
02:41:34,660 --> 02:41:35,660
You mentioned the tails.

2080
02:41:35,840 --> 02:41:36,749
Let's go.

2081
02:41:36,750 --> 02:41:38,030
through the volume signature first.

2082
02:41:38,250 --> 02:41:44,730
And we're going to be comparing, let's
say, bar number 46 with 45.

2083
02:41:45,230 --> 02:41:49,250
So let's do this. This is bar number 46.

2084
02:41:50,610 --> 02:41:56,590
And the effort for bar number 46
relative to the effort at bar number 45.

2085
02:41:57,070 --> 02:41:58,230
Yeah, much greater.

2086
02:41:58,430 --> 02:41:59,570
Yeah, much greater.

2087
02:42:00,330 --> 02:42:04,950
Okay, so increased. And then what is the
result?

2088
02:42:05,520 --> 02:42:11,120
to the upside of bar number 46 in
comparison to bar number 45?

2089
02:42:14,100 --> 02:42:15,079
It's greater.

2090
02:42:15,080 --> 02:42:21,700
I mean, 46 to 45, but let's do more on
this. Let's do it more

2091
02:42:21,700 --> 02:42:26,480
detailed. So let's talk about the
upspread. What happens with the

2092
02:42:28,500 --> 02:42:33,740
Between bar 45 and 46, the upspread is
less.

2093
02:42:34,460 --> 02:42:39,880
Okay, what about close relative to the
spread?

2094
02:42:41,720 --> 02:42:44,960
Which one is better, 46 or 45?

2095
02:42:45,480 --> 02:42:51,000
45. 45 is better, so you were talking
about the tail. Look at how the price

2096
02:42:51,000 --> 02:42:56,320
closes closer to one half of this
spread, so dimension characteristic

2097
02:42:56,520 --> 02:42:59,040
What about close to close?

2098
02:43:00,030 --> 02:43:04,470
Yeah, 45 is definitely better. It's
better because from the previous close,

2099
02:43:04,570 --> 02:43:09,970
we're traveling this much. From the
close of 45 to the close of 46, that

2100
02:43:09,970 --> 02:43:16,770
distance goes down. So we have a lot of
the characteristics that are showing

2101
02:43:16,770 --> 02:43:21,850
some deterioration of price.

2102
02:43:22,270 --> 02:43:25,930
And then we said that the effort has
increased.

2103
02:43:27,120 --> 02:43:30,920
On the increased effort, we have a
deterioration of the price.

2104
02:43:31,600 --> 02:43:32,600
Bullish or bearish?

2105
02:43:32,980 --> 02:43:37,780
Bearish. Bearish. One thing that we did
not talk about here is the intention.

2106
02:43:38,860 --> 02:43:40,460
What was the intention here?

2107
02:43:41,740 --> 02:43:44,660
Intention was to stay above the
resistance.

2108
02:43:45,280 --> 02:43:47,780
Which could be defined how?

2109
02:43:51,340 --> 02:43:55,220
I guess the top of – well, like the top
of 42.

2110
02:43:56,640 --> 02:44:00,020
Top of the tail of 42 or possibly 45
there, yeah. Both.

2111
02:44:00,340 --> 02:44:01,440
Both would be okay.

2112
02:44:01,880 --> 02:44:07,360
Because we want to define more of kind
of like a local resistance right here.

2113
02:44:07,360 --> 02:44:10,920
the local is going to be the previous
bar, the high of the previous bar, and

2114
02:44:10,920 --> 02:44:12,640
then the high of the 42.

2115
02:44:13,780 --> 02:44:18,940
So did we fulfill that intention? Did we
commit above these levels of the

2116
02:44:18,940 --> 02:44:21,100
resistance? We did. We did.

2117
02:44:21,320 --> 02:44:22,320
Okay,

2118
02:44:22,680 --> 02:44:23,680
so here's a tricky question.

2119
02:44:25,710 --> 02:44:31,810
With the increased effort to the upside
and with the diminishing results based

2120
02:44:31,810 --> 02:44:37,710
on the spread and the close, we're
seeing that the short -term picture is

2121
02:44:37,710 --> 02:44:42,190
to be bearish. We are anticipating some
kind of reaction to the downside.

2122
02:44:42,570 --> 02:44:49,230
Yet we have had a commitment at bar
number 46 above the level of the

2123
02:44:49,230 --> 02:44:53,210
resistance. So think about the bearish
bias here.

2124
02:44:54,760 --> 02:44:58,860
that will produce some kind of reaction
as the long -term bias.

2125
02:44:59,200 --> 02:45:04,040
And think about the opposite to what has
happened with the result, with the

2126
02:45:04,040 --> 02:45:08,040
intention that there was a commitment,
as a short -term result.

2127
02:45:08,580 --> 02:45:14,800
So based on the short -term result,
which is still positive, which is yes,

2128
02:45:14,800 --> 02:45:19,420
we expect some kind of attempt to
continue to the upside?

2129
02:45:25,100 --> 02:45:28,380
So intention, yes. Short -term result is
bullish.

2130
02:45:28,700 --> 02:45:29,700
Yeah.

2131
02:45:31,780 --> 02:45:36,180
And this suggests some kind of retest.

2132
02:45:36,580 --> 02:45:38,160
Where is this retest?

2133
02:45:41,680 --> 02:45:42,680
48.

2134
02:45:44,940 --> 02:45:51,800
So this is that situation, guys, where a
ball like 46 is going to look

2135
02:45:51,800 --> 02:45:52,800
bullish.

2136
02:45:53,290 --> 02:45:55,830
but will be interpreted in two ways.

2137
02:45:57,870 --> 02:46:03,830
More of the longer term picture is going
to suggest that supply is coming in and

2138
02:46:03,830 --> 02:46:09,570
we're going to have a stop in action, as
Adam said, and we should be expecting a

2139
02:46:09,570 --> 02:46:13,790
reaction. So all of your trading
decisions should be based on this

2140
02:46:14,250 --> 02:46:20,430
Having said this, your timing is going
to be based on the synchronicity of the

2141
02:46:20,430 --> 02:46:21,510
effort and the result.

2142
02:46:22,120 --> 02:46:25,540
And therefore, when we look at the
intention, the intention was to commit

2143
02:46:25,540 --> 02:46:30,780
upside, and the 46 bar did exactly that.
It committed to the upside.

2144
02:46:31,040 --> 02:46:35,860
So that suggests that short term, there
is some kind of strength still left in

2145
02:46:35,860 --> 02:46:41,940
the tank. And we are probably going to
have another attempt to retest, and 48

2146
02:46:41,940 --> 02:46:42,940
exactly that.

2147
02:46:43,560 --> 02:46:50,200
Okay, so now we know that when supply
comes, it should produce some kind

2148
02:46:50,200 --> 02:46:54,640
of... Change of behavior, change of
character. Do we see that change of

2149
02:46:54,640 --> 02:46:56,160
character somewhere after 46?

2150
02:46:57,700 --> 02:47:00,280
Yeah, I mean, 49 is a pretty big bar.

2151
02:47:01,680 --> 02:47:07,200
And it commits below the support, so
it's on the way out. Is there a change

2152
02:47:07,200 --> 02:47:08,800
character within the trading range?

2153
02:47:12,180 --> 02:47:13,800
Yeah, I mean, that's the biggest down
bar.

2154
02:47:14,870 --> 02:47:16,590
That's a fairly bearish engulfing bar.

2155
02:47:16,830 --> 02:47:20,270
It's almost as big as some of the down
bars on the way down.

2156
02:47:20,670 --> 02:47:25,150
Label this bar 49 for me within the
structure of the trading range. This is

2157
02:47:25,150 --> 02:47:27,830
trading range. There is a trading range
between 46 and 49.

2158
02:47:28,370 --> 02:47:30,510
So 49 is going to be labeled as how?

2159
02:47:33,510 --> 02:47:35,810
So volume goes up.

2160
02:47:38,870 --> 02:47:40,890
Label that for me in Wyckoff terms.

2161
02:47:41,270 --> 02:47:42,870
Oh, you mean like, oh, sorry.

2162
02:47:47,230 --> 02:47:48,930
You're referring to like a secondary
test?

2163
02:47:49,810 --> 02:47:54,070
Yeah, any type of Wyckoff event. So what
is 49 for us?

2164
02:47:54,290 --> 02:47:58,330
And I don't mean for the whole
formation. I mean for the trading range

2165
02:47:58,330 --> 02:47:59,830
46 and 49.

2166
02:48:03,690 --> 02:48:06,310
Well, I guess that would be phase B,
part of phase B.

2167
02:48:08,230 --> 02:48:11,590
I mean, it would be... We're looking at
this, right?

2168
02:48:12,390 --> 02:48:18,780
Yes. So we're looking at... 46 being
what? We're stopping the price from

2169
02:48:18,780 --> 02:48:19,780
further up.

2170
02:48:20,320 --> 02:48:23,540
Right. How would we label it in Wyckoff
terms?

2171
02:48:24,300 --> 02:48:27,720
Well, 46 would be your upthrust action.

2172
02:48:28,360 --> 02:48:35,000
Yeah. Hold on a second. I'm just kind of
like probably giving you the

2173
02:48:35,000 --> 02:48:38,560
wrong impression of what we want to do
here. So we're not discussing this,

2174
02:48:38,800 --> 02:48:41,380
selling Linux automatic reactions.

2175
02:48:42,890 --> 02:48:47,570
We are more, and this is an upthrust,
but in the upthrust, we have a trading

2176
02:48:47,570 --> 02:48:52,050
range, right? So, for instance, if I
would look at the intraday picture here,

2177
02:48:52,050 --> 02:48:58,430
would say that, okay, so we have the
close at 46, then we have a slight open.

2178
02:48:59,330 --> 02:49:05,890
We're probably trying to go up, going
down, closing, then opening down

2179
02:49:05,890 --> 02:49:11,630
again somewhere here, going up,
retesting at 48.

2180
02:49:12,320 --> 02:49:18,940
coming down, opening up again at the
same level, attempt to go up and then

2181
02:49:19,540 --> 02:49:21,900
So this is our trading range right here.

2182
02:49:22,620 --> 02:49:27,060
We are trying to label this action right
here. How would we label this action?

2183
02:49:28,500 --> 02:49:29,760
Oh, last point of supply.

2184
02:49:30,480 --> 02:49:34,520
Yes. Okay. Sorry. I just didn't
understand what you were saying. Yeah, I

2185
02:49:34,520 --> 02:49:36,100
follow. I wasn't following you.

2186
02:49:36,480 --> 02:49:40,060
So major sign of strength, a change of
character.

2187
02:49:41,100 --> 02:49:44,040
on the way out on the major sign of
strength.

2188
02:49:44,880 --> 02:49:48,980
And then this is a change of character
on the way out.

2189
02:49:49,560 --> 02:49:51,640
This here, change of character.

2190
02:49:51,880 --> 02:49:53,960
Where is the change of character on the
way in?

2191
02:49:54,880 --> 02:49:58,300
Probably somewhere on the way in
somewhere here in phase A, right?

2192
02:49:59,220 --> 02:50:01,540
So we have two changes of character.

2193
02:50:01,820 --> 02:50:04,800
This is a change of character and then
this is a change of character.

2194
02:50:05,600 --> 02:50:08,580
This is a change of character and then
this is a change of character.

2195
02:50:08,800 --> 02:50:10,060
This is going to be important.

2196
02:50:11,460 --> 02:50:15,060
Because when we're going to look into
this trading range, I'm going to ask you

2197
02:50:15,060 --> 02:50:19,900
the same question as to how do you guys
see this trading range?

2198
02:50:20,120 --> 02:50:23,000
You know, where are the changes of
character in that smaller trading range?

2199
02:50:23,200 --> 02:50:27,500
And one of the things that I want you
guys to start practicing as we go, you

2200
02:50:27,500 --> 02:50:30,680
how we quickly go and switch into the
intraday picture.

2201
02:50:31,200 --> 02:50:36,020
We are trying to extract this intraday
information without going to the

2202
02:50:36,020 --> 02:50:41,390
level. What we want to do is we want to
extract this information from the high,

2203
02:50:41,550 --> 02:50:47,030
low, close, and open. So whenever you
practice looking at the chart, in your

2204
02:50:47,030 --> 02:50:52,850
mind, practice the way of how intraday
swings might potentially unfold.

2205
02:50:53,170 --> 02:50:57,490
You might not be exactly right, but you
will be extremely close to that.

2206
02:50:57,970 --> 02:51:03,370
Okay, so now that we are in the larger
formation here, let's come back to the

2207
02:51:03,370 --> 02:51:04,370
larger formation here.

2208
02:51:06,300 --> 02:51:11,500
You taught us to identify change of
characters and, like, phase A and phase

2209
02:51:12,740 --> 02:51:16,060
So I'm just having to change my mindset
again. So I'm tracking with you.

2210
02:51:16,820 --> 02:51:17,820
Okay.

2211
02:51:18,040 --> 02:51:19,040
All right.

2212
02:51:19,280 --> 02:51:25,440
So upthrust. We said an upthrust at 44,
46.

2213
02:51:26,500 --> 02:51:30,840
By the way, let's quickly do 48 because
this is an important bar.

2214
02:51:31,480 --> 02:51:38,180
So effort at 48 relative to the effort
at 46, because these are the two

2215
02:51:38,180 --> 02:51:39,180
analog bars.

2216
02:51:39,220 --> 02:51:45,640
The intention behind 48 is to commit
above the resistance level at 46. So

2217
02:51:45,640 --> 02:51:48,700
is happening with the effort?

2218
02:51:49,120 --> 02:51:51,180
Effort drops. Effort is less.

2219
02:51:51,420 --> 02:51:57,500
Okay. And then we have at 48 the result
to the upside.

2220
02:51:58,400 --> 02:52:03,180
relative to the result to the upside at
46. How would we interpret that?

2221
02:52:04,220 --> 02:52:05,220
Less.

2222
02:52:05,700 --> 02:52:08,400
Yeah, look at the close below.

2223
02:52:08,860 --> 02:52:13,720
Look at the spread, the same size, but
yet the close is lower.

2224
02:52:13,980 --> 02:52:19,840
The intention was to commit. So if bar
number 46 had intention to commit and it

2225
02:52:19,840 --> 02:52:25,420
did commit above the local level of the
resistance, bar 48 cannot do this.

2226
02:52:27,260 --> 02:52:30,480
And that's what defines the timing for
us.

2227
02:52:31,020 --> 02:52:37,820
Finally, we see some synchronicity
between effort and the result.

2228
02:52:38,180 --> 02:52:44,780
And when the synchronicity appears, that
defines the timing for us

2229
02:52:44,780 --> 02:52:49,960
to come in and to say that this is
probably the beginning of the move to

2230
02:52:49,960 --> 02:52:51,500
downside. And we do.

2231
02:52:51,780 --> 02:52:57,250
Okay, great. So if we've experienced an
up thrust, and we still don't know the

2232
02:52:57,250 --> 02:53:04,050
bias of this whole formation, then the
next move to the

2233
02:53:04,050 --> 02:53:08,830
downside into the area of the support is
going to be labeled in Phase B as how?

2234
02:53:12,230 --> 02:53:13,410
How would we label it?

2235
02:53:13,790 --> 02:53:14,870
It would be a secondary test.

2236
02:53:15,250 --> 02:53:17,450
Yeah, a secondary test in Phase B.

2237
02:53:18,090 --> 02:53:21,650
I was thinking like a second point of
fear as well, but that would be, you

2238
02:53:21,670 --> 02:53:25,750
that would be phase C, but yeah. Too
early, right? Yeah. We have to have,

2239
02:53:25,870 --> 02:53:31,350
we have to have multiple tests. Multiple
tests, right. Going into phase C. So

2240
02:53:31,350 --> 02:53:35,730
phase C is going to be that, you know,
test number three, and we just

2241
02:53:35,730 --> 02:53:37,890
experienced test number one, test number
two.

2242
02:53:39,630 --> 02:53:43,410
Okay, now let's look at this from a
different perspective. We said that

2243
02:53:43,410 --> 02:53:46,370
we have high highs and high lows,

2244
02:53:47,260 --> 02:53:50,800
we're going to be thinking if there are
some kind of upsloping structure.

2245
02:53:51,140 --> 02:53:55,500
And a lot of you guys in your homework
have done this. So I'm actually very

2246
02:53:55,500 --> 02:53:58,820
pleased as to how we conducted all of
this.

2247
02:53:59,720 --> 02:54:06,520
Okay, so phase A, phase B, upthrust,
secondary test. Now

2248
02:54:06,520 --> 02:54:10,300
it makes sense because all of these
points are on the same line.

2249
02:54:11,120 --> 02:54:16,740
All of these points at the resistance
are on the same line. And now let's

2250
02:54:16,970 --> 02:54:23,710
really quickly, if this is phase B in 50
and 51, what can we say

2251
02:54:23,710 --> 02:54:27,210
about this area right here? What is
happening as a process here?

2252
02:54:28,710 --> 02:54:32,850
You're coming up to the point of
resistance, but you're also having

2253
02:54:33,010 --> 02:54:38,890
so it's some sort of an apex -type
formation or a rising wedge.

2254
02:54:39,370 --> 02:54:44,770
Okay. Well, I could see that maybe
supply has increased a little bit.

2255
02:54:45,320 --> 02:54:46,840
over the previous reaction.

2256
02:54:48,820 --> 02:54:53,800
And then the price goes up. So we are
probably thinking that there is some

2257
02:54:53,800 --> 02:55:00,160
of absorption here that is going on. And
we could see that from

2258
02:55:00,160 --> 02:55:02,560
the bars and volume analysis.

2259
02:55:02,820 --> 02:55:09,800
So at 51, there is another attempt, the
last attempt to go down. So in this

2260
02:55:09,800 --> 02:55:12,960
smaller trigonation, this probably could
be defined as phase C.

2261
02:55:13,820 --> 02:55:16,300
So here's this volume. The volume
increases.

2262
02:55:17,980 --> 02:55:20,920
So what do you think is happening with
supply?

2263
02:55:22,920 --> 02:55:23,920
Supply's going up.

2264
02:55:24,720 --> 02:55:26,520
And what is happening with the demand?

2265
02:55:28,080 --> 02:55:29,840
It's probably going down just a hair.

2266
02:55:30,800 --> 02:55:33,880
But this is still an up bar, right?
Yeah, you're right.

2267
02:55:34,400 --> 02:55:35,840
It's still going up, too. You're right.

2268
02:55:36,400 --> 02:55:39,380
Supply comes at the end and at the
beginning.

2269
02:55:39,580 --> 02:55:42,600
So we have the open.

2270
02:55:43,310 --> 02:55:48,990
an attempt to go down first, then a
really big rally, which is a very good

2271
02:55:48,990 --> 02:55:53,190
because it overcomes the point of the
resistance for the first time, tries to

2272
02:55:53,190 --> 02:55:56,510
commit on the intraday level, and then
we're still coming back.

2273
02:55:56,830 --> 02:55:58,030
But we're closing.

2274
02:55:59,090 --> 02:56:02,510
So here's this demand that is
increasing.

2275
02:56:02,870 --> 02:56:05,710
Some supply, some supply.

2276
02:56:06,380 --> 02:56:10,480
But probably demand still dominates the
supply just based on the close, based on

2277
02:56:10,480 --> 02:56:11,239
the intray.

2278
02:56:11,240 --> 02:56:18,200
And then supply is relative to the
previous bar, maybe

2279
02:56:18,200 --> 02:56:22,580
stays the same, maybe slightly increases
or slightly decreases.

2280
02:56:22,860 --> 02:56:27,940
And it doesn't really matter that much
because we know that supply still comes

2281
02:56:27,940 --> 02:56:33,380
in because of this tail. And it tries to
take it down. It tries to take it down

2282
02:56:33,380 --> 02:56:34,420
to the low 50.

2283
02:56:35,440 --> 02:56:36,900
And it cannot do this.

2284
02:56:37,260 --> 02:56:44,120
So as we go up on the next two bars, we
could see how absorption is

2285
02:56:44,120 --> 02:56:46,100
happening on the way up.

2286
02:56:46,420 --> 02:56:52,200
It's one of the elements of the vertical
absorption, right? So look at the

2287
02:56:52,200 --> 02:56:57,240
volume signature, how high it is
relative to, let's say, 51. And yet the

2288
02:56:57,240 --> 02:57:03,020
is up and holding at the level of the
resistance, which was before.

2289
02:57:03,720 --> 02:57:06,360
producing some kind of difficulty for
the price to overcome.

2290
02:57:06,840 --> 02:57:12,540
So the first bar after 51 has the close
at that resistance level.

2291
02:57:13,160 --> 02:57:18,880
And this is a small feather. We'll talk
about this more next time, about the

2292
02:57:18,880 --> 02:57:20,040
characteristics of the feather.

2293
02:57:20,600 --> 02:57:26,860
All of this area is just basically an
absorption of supply, and that's just a

2294
02:57:26,860 --> 02:57:27,980
movement to the upside.

2295
02:57:28,880 --> 02:57:32,520
And let's stop here.

2296
02:57:33,150 --> 02:57:36,350
And we're probably going to pick up,
there are a lot of things that we need

2297
02:57:36,350 --> 02:57:37,550
discuss here in this area.

2298
02:57:37,990 --> 02:57:43,130
But we'll start there. What I'm going to
do for you guys is I'm going to unveil

2299
02:57:43,130 --> 02:57:45,290
what's going to happen next.

2300
02:57:45,670 --> 02:57:50,990
Because I want you, as a part of your
homework, to think about what should

2301
02:57:50,990 --> 02:57:51,990
happen next.

2302
02:57:53,670 --> 02:57:54,670
Here we go.

2303
02:57:56,170 --> 02:58:00,930
So that's the next move. It actually
went down. So in the next class, we're

2304
02:58:00,930 --> 02:58:02,010
going to start with 52.

2305
02:58:02,920 --> 02:58:05,020
And then we're going to go through this
whole thing.

2306
02:58:05,240 --> 02:58:11,740
And from 52 to 58, we're going to
determine as to why the

2307
02:58:11,740 --> 02:58:14,960
bias has changed to bearish bias.

2308
02:58:15,320 --> 02:58:19,980
And what does it mean for the overall
long -term structure?

2309
02:58:20,560 --> 02:58:26,340
Adam, really good. Thank you. And thank
you for some of the insights into how

2310
02:58:26,340 --> 02:58:27,340
you operate.

2311
02:58:27,800 --> 02:58:32,200
It's always interesting to me to talk to
institutional guys and, you know,

2312
02:58:32,910 --> 02:58:39,790
figure out their behaviors as to how do
they actually conduct their analysis and

2313
02:58:39,790 --> 02:58:46,130
trading so thank you good all right okay
guys this is the homework

2314
02:58:46,130 --> 02:58:52,670
uh so just uh determine what's gonna
happen next watch the video again make

2315
02:58:52,670 --> 02:58:58,530
notes um and please go through that
initial material especially you know

2316
02:58:58,530 --> 02:58:59,530
ice cream stories

2317
02:59:00,740 --> 02:59:07,140
You know, all of the volume case
studies, those are important because

2318
02:59:07,140 --> 02:59:13,840
study is going to have something
special, specific to a specific

2319
02:59:14,100 --> 02:59:19,620
specific scenario, and you have to dig
in and to know exactly what's going on

2320
02:59:19,620 --> 02:59:20,620
those situations.

2321
02:59:20,980 --> 02:59:24,960
And the more you learn about them, the
more comfortable you're going to feel

2322
02:59:24,960 --> 02:59:28,080
when it actually unfolds. All right,
good class.

2323
02:59:28,680 --> 02:59:31,380
Thank you all, and I'll see you in the
week.

2324
02:59:31,660 --> 02:59:33,360
Thank you, guys, and bye -bye.