For anyone interested in some genuine TA chat, to commence the new week I've done up something a little different,
a bit of food for thought possibly for some
also speaking about the week, it was obviously a good finish to last up abt 9% with a price spread of over 30cents, once again on high volume
TA chat, absolutely no FA is taken into account
For the professional trader the business of accumulating a stock is like any other campaign. It requires planning, good judgement, effort, concentration,
trading skill and money to buy stock in very large amounts without putting the price up against their own buying.
Nailing market tops and bottoms is impossible, but there are signs for us the 'average joe', that increase the probabilities of becoming aware
during relatively shorter timeframes or trends to isolate high reward, low risk buying opportunities.
You will notice that single bars are evaluated as clues, multiple bars reveal tactics, but the campaign comes in waves of accumulation and distribution
based on the levels of supply and demand. During these waves are the phases of Mark Up or Mark Down which tend to run as Trends.
a nice Clue was offered the other day
Now if we look at the chart below, those 4bars marked (SC) could possibly be what is referred to as a stage that has the similar effect of a
The Selling Climax (SC) imo 21-26Sept
Here the news will definitely be 'bad' this, together with the pain of previous falls will panic the market into selling.
This will give the Professional the opportunity to place substantial amounts of money into the market at bargain prices.
ULTRA WIDE spreads down, with exceptionally HIGH VOLUME, usually closing on or near the highs of the day.
If the price action does not close on the highs BUT on the lows and the NEXT DAY is up closing on the HIGH (1),
this can be regarded as similar action. Add more bullishness if the news is really bad
The classic characteristics of the selling climax phase:
Abnormally large volume, (over 500M shares in 5days)
Wide spreads
An acceleration of the downtrend, (40% fall in 4days, I call that a downtread)
Wyckoff: "Abnormally large and swift volume expansion marks a turning point."
Automatic rally (AR) imo 28Sept
Following the Selling Climax one of two things may happen: an AR or a LATERAL move.
This is then followed again by one or two things either a Secondary Test (ST) of the SC or a continuation of the DOWN MOVE.
To understand this better lets go back to what happens during the Selling Climax: The SC is caused by panicky liquidation, panicky selling.
The price is driven down too far and this creates a vacuum and as soon as the down move has been stopped the stock should begin to rally.
We call this the AR because it occurs automatically. Generally the AR lasts for only a few days to about a week.
The rally may be weak or strong. It may be however, so weak and the supply presses on the market so strongly that instead of being able to rally well
the price simply moves sideways for a couple of days, or perhaps for as much as a couple of weeks and a lateral move will then continue the downtrend.
If there is a simple lateral move the stock is far more likely to CONTINUE the downtrend then if there is a good rally.
Secondary Test (ST) imo 04Oct
Will immediately follow the Automatic Reaction. There should be less selling THAN on the Selling Climax.
Evidenced by the decreased price weakness, the NARROWING of the Spread and especially by the Decreased Volume.
At that point the down move has been stopped. The stock MAY go through redistribution, accumulation, OR a trading range in which NOTHING of importance is going on.
There may be REPEATED secondary tests depending upon the ability of the professionals to absorb the supply and the continued existence of that supply.
You MAY see Springs or Shakeouts occur, normally though these will be seen late in the development of the trading range (TR)
and they enable the professional to gauge the present of supply, etc etc blah blah
A successful ST should stop around the same price level as the SC. The lows of the ST and SC and the high of the AR will help define the boundries of the TR,
and we can also draw horizontal lines in, to help focus attention of the bounded market action.
End of part1.....
(20min delay)