The following is opinion and thoughts only, please do not use this to base decisions on – DYOR.
The post earlier today was a blog I found awhile ago with some interesting reading if you like TA and want to gain knowledge of aspects which are behind market movement, what drives it, what shapes it, and its psyche.The blog is based on the work of Wyckoff Analysis which tells you a lot about behaviour of maggots, BEOT, instos and funds. Why is this important?
Well, it takes away fear.Do you hear that maggots – I fear you not – I will outlast you until you go to the next carcass – I almost posted to you today – only 5M by lunch time – pathetic – should go to spec savers – Blind Freddie can see there’s not much volume around – but I understand, you gotta keep sucking – depress, hoover up, hoover back down, hoover up – bores the crap outta me.But you know what I do admire your technique and tricks – learnt a lot from you and about you - quiet entertaining most days to see which playbook we all sing from for the day.At the end of the day however – you ain’t got mine – ha ha ha.
Now that I have that out of my system – the blog is written by Bruce Fraser a guru of Wyckoff Analysis and TA.At the bottom of the page is a ‘Previous’/’Next’ button to navigate through, also interesting pfd links throughout to various papers.
The more knowledge of this the better.If you understand, then fear goes away (for me anyway).
https://stockcharts.com/articles/wyckoff/2015/07/rev-up-with-reaccumulation-trading-ranges.html
The article talks about re-accumulation being a phase in a trend, a time to pause, to gather more (just like the big boys are doing – but on massive scale) to consolidate before proceeding.Could be a few re-accumulation phases before distribution happens.I have the feeling that the trend will last several years, corrections will take place (naturally through Wave Theory), there maybe unexpected catastrophes during that time – who knows.But generally, the trend upward should last a few years and undergo several of these re-accumulation phases.Remember, the maggots, BEOT, insto’s and funds have been accumulating a long time, several years, it’s still got several years to play out still as we go through the phases – this is a BIG cycle (setting aside catastrophe). Good selling and buying opportunities in the trend if you can read re-accumulation signs and behaviour, bad results and loss if you read it wrong – the double edge sword.
We are currently in (in my opinion) a re-accumulation phase – when will we come out? Who know, as long as maggots and BOET want to keep it down. End signs for me are low volume (lower than what is going through now), could be down to 4-5M on average day before they decide that its time to move again. I’m also looking for low spread per day 1-2 cent range for the day. Both of these could go on for weeks or months - remember, they are trying to piss you off, bore you to death, get you to sell if you need to sell, shake the tree to clear out stops, continual back testing to verify supply, do anything to get your shares. They won’t let up until no share supply is available.
I don’t see much happening until either of two things happen – supply dries up which will be evident in low vol 4-5M/day and we move into the 1-2 cent range/day. Or, we have some compelling event or series of events which causes a continuation of the trend upward (a squeeze/stampede of some sort). Until either of these two things happen, we will probably range trade which seems to have settled nicely into a rhythm of support/resistance. I think that when the gap at 1.15 is filled (I call it The Maggot’s Rubicon) it will be the start of the continuation.Its only a very infinitesimally small gap 0.0025 (1.15 – 1.1475) but nevertheless a gap of significance due to the range trading in the re-accumulation.
So, I can’t really tell where we are in the phase – its not as easy as looking at the diagram in the blog – each pattern is different – hard to say when it will break out – I’m just waiting for vol to dry up and narrow spread.There may be a Spring, more backtesting (for sure), and a jump across the creek if the creek forms, just needs to unfold over time.Check out Google ‘wyckoff reaccumulation phase’ there’s lots of images of patterns and more schematics. Check out the post I did a fair while ago on Wyckoff and the accumulation/distribution schematics. The mechanics of Accumulation and Re-accumulation phases are the same but in different parts of the trend. All patterns are different.
I know I keep going back to volume – ‘cos its what moves the market along – the average volume per day (based on ASX weekly volume) is dropping - each week the volume is dropping. Which is a good sign if looking for the end of reaccumulation.It has not dropped to where I think it should be for the maggots to be called off – but a good sign.
All fundaments look good and getting stronger for our company. Sector fundamentals look good also. We seem to be in-rhythm overall and not diverging greatly from other ASX lithium producers.Love JL’s comments (paraphrased) shortages will occur and get hold of quality lithium stocks.
I’d like to thank lots of HC participants for the information shared – it means a lot – not having to go and find all these things myself, lots of great points of view, and things to think about. Thanks.
Sorry, if this is long winded, but it’s been a hell of a day and my thoughts are all over the place so I hope it makes sense and may be helpful.
Cheers all
(20min delay)