charts week beginning 14/11/2011 , page-30

Hi piotrvip,

I'll have a go at the crossing the creek story, (why not, lol)

The Crossing the Creek Story

When Wyckoff talked about the Creek, he depicted the creek as a wiggly line, just above the shareprice action.

It was a creek full of "Supply", wide, broad and difficult to cross.

I know we usually show it as a straight line, but that is just because it is easier with the current charting packages.

Anyway,

When Hank Pruden took over the Wyckoff course at the Stock Market Institute (SMI), he described crossing the creek in his "folksy manner", remember this was in the 1960's.

He spoke of a "boy scout" who wanted/needed to get to the other side of a creek, so he could get to where he wanted to go.

But the creek was very wide and very strong (filled with supply) and was going to be hard to cross.

The boy scout tried to cross the creek at a number of points along the way, but it was too wide and too strong for him to get across.

So he followed the creek along waiting for the right time, when he would be able to safely get across to the other side.

At some point when he is feeling strong & the creek appears to the boy scout to have narrowed somewhat, he come's right up to the creeks edge, then he moves back a little so he can take a good run up, and J U M P S across the creek, which then allows hime to get to where he wants to go (up the chart).


Sometimes we see the initial "Jump" as a "Gap Up" on the chart.



Tom Williams then added to the story, when he called this Potential Absorption Volume.

Tom explained why the jumping of the creek was needed and what was actually happening.

Tom said that people were buying stock "long" all the way throughout the downtrend, and as the shareprice continued to come off further, most held onto their stock, even thoughthey were in a losing position, in the hope that the price would come back and they could get out at least for breakeven.

So when the Pro's "jump the creek", some of these locked in holders sell their stock as soon as they can, and the Pro's buy this supply up (absorption volume), to keep the shareprice moving higher.

But as the shareprice moves higher, some of the "locked in" holders now find they are actually showing a profit, and may choose to continue to hold (which is what the pro's want, as that means less stock they have to absorb).

In our modern computerised markets, this jumping across the creek attract's some attention, from day traders, momentum traders etc., who through their buying, help the pro's absorb this supply.

Remember the pro's do not want to buy this stock if they can help it, they bought at lower prices and this supply is just "in the way" (so to speak) of higher prices, so if they can attract some help through the general market, they will.

Then at some point after crossing the creek, the pro's begin a minor distribution, where they lock in the new buyers (that helped them absorb supply previously), the stock comes off a bit, and the pro's attempt to shakeout these holders as they Re-accumulate, getting ready for the next leg up.



This is the "classic case" of Accumulation (building a cause), jumping the creek, distribution, re-accumulation, then distribution at the top, it does not always work out perfectly like this, but you get the general idea, I'm Sure.



Jumping the Creek
Note- Wyckoff showed "the Creek" as a wiggly line just above the shareprice.
(A Creek Filled with Supply)
The last two Blue bars at the end of the chart show the "run up" and "jump" over the creek.





sorry if I got a bit carried away writing so much, but that is the "Jumping the Creek" story, as I understand it.

cheers