A Wyckoff Student Notebook

Hey Adam, I took the liberty of adding some lines (yellow) and commonly accepted nomenclature for classic Wyckoff (white) to your weekly chart of HSBC; not sure where you are at in your studies of Wyckoff. Since this is coming from a downtrend there can be preliminary support (PS) so I went ahead and added that. It is useful for identifying an axis line through the TR and for later identifying the Last Point of Support (LPS) or Last Point of Supply (LPSY). If this had been an accumulation TR then you'd see a Last Point of Support (LPS) on the right hand side of the TR at about the same price as the PS. However, this appears to be a re-distribution TR so there should be a Last Point of Supply (LPSY) instead of an LPS. Also, the opposite of a spring is an upthrust (UT), which like a spring, returns to the TR. If you turn the chart upside down, then it would be a spring and bullish too.

The other possibility to a break down is that the move under the range is a spring, but there is weakness in the background and the volume although lighter than the SC is still a lot of supply. Even if it turns out to be a spring (springs back into the range) the general rule is that springs fail in downtrends. So I think you may be right, it's broken. The best place to go short would have been on confirmation of the UT, at the LPSY, and on the way down to the bottom of the range.

 

I had a whopper last week on the road, the first in years. Dang, it was pretty good. I don't know if I'm ready for soylent green (Charleton Heston movie from the 70s for the benefit of the younger crowd).

 

Yeah, I'm currently not in, but I'd wait if looking to buy, given the low end close on Friday. Wednesday showed sellers into the close and there hasn't yet been any follow thru to Wednesday morning's strength. But it is holding the highs; it held 26.03 support.

EDIT: I found the daily volatility difficult to deal with and ended up holding thru some downdrafts. I'm thinking there are easier stocks to trade.

Daily bars:

 

I don't use PnF (horizontal) charts for signals. I use bar (vertical) charts for that and to analyze the structure. Once I know the structure then I use PnFs to compute a target. So looking at the NWS weekly bar chart it appears there may be some upthrust action that could eventually send the price back into the trading range (TR)...or...the Last Point of Support was printed, although it seems early, but it could be. However this TR came from a downtrend (weakness) therefore it should need to prove demand (commitment of the heavy hitters) with a sign of strength (SOS), large up bar with heavy volume. This past week's volume doesn't really do it for me but maybe the daily chart shows an SOS. But let's go ahead and do a count on the PnF. We will take the count along the LPS price line back to the selling climax (the purple line).

NWS - Weekly bars:


So using the vertical chart we locate the TR and its components on a P&F chart. Generally I use the Average True Range (ATR) setting first to establish the box size then I switch back to traditional and round the box size to a nice round number. As you can see from the P&F below, there are 9 columns between the LPS and the SC. 9 columns x the box size x the reversal amount equals the expected move. That is added to the LPS price to get the projected price of 19.75.

25-cent-box by 3-box-reversal P&F using daily data:

 

The more I look at NVTA the more I agree with you, that it needs to build cause, that there is a TR set-up, and it is headed back down to the AR. That BC to AR to ST action on the 2-hour chart is for sure a change of change of character even for this volatile stock.

Also, it has that pattern that we all learn, thru the school of hard knocks, to identify as a bad omen, the tall selling-tail bar followed by a failure to retest the high. I've heard it referred to as the dreaded "h" pattern. However, you can find examples where it does not break down and that's why we shy away from "patterns". But also, accepting that it has now set up a TR, then it is in Phase B which is trendless and unpredictable and perhaps one could wait on the sidelines for a spring and/or LPS.

130 minute (~2 hr) bars:

 

Your stock/chart selection is not the best for learning, however I'll make a few comments on it:

• Your BC is a BC, a buying climax. You started out correctly!
• What you show as "Distribution" is not, it is an Automatic Reaction to the buying climax, we would label the low reached as "AR"
• What you show as a UTAD is really the "Secondary Test" of the BC and we'd label the top of that move as the "ST"
• What you show as "Redistribution" is actually Mark-Down.
• You got the SC right
• You show a line as "Re-accumulation" . First of all, re-accumulation occurs throughout a trading range. The trading range is where the Composite Man (CM) operates, and if he is accumulating he is buying at the low of the range and defending the top of the range by selling some off to depress the price and then buying more at the bottom of the range. Throughout the range he is NET buying by this process. Secondly this latest trading range can't be "re-accumulation since it came from a downtrend. It would have to be just straight up accumulation or re-distribution.
• JAC refers to a Jump Above the Creek, aka Jump Over the Creek, JOC. Perhaps what you have shown is an attempt to identify the creek. The creek though, a concept developed by a Wyckoff protégé` is really a wavy line that follows along the tops of the peaks.

You should probably watch part 1 of 3 of what I posted earlier starting at about 6:45.

 

I get what your are saying and its akin to something I've been thinking about recently also...about choosing the appropriate time frame based on the stock. NVTA had a beautiful accumulation trading range and looking at a weekly chart it is performing just fine, but the swings are HUGE and maybe it should be played shorter term, as you say, to maximize/protect profits.

Weekly bars:

 

Found this on @bigbear0083 's "Earning Results" thread and I posted there:

POLA, just above, never heard of them but they beat earnings by 500% and revenues by 32% with positive guidance. It went public in December 2016 opening at 7.55 and went as high as 11.50 in March 2017, but then in April 2017 fell into a trading range between $4 and $7 where it has been asleep till now. The chart looks like it has been quietly accumulated. Thanks for this thread @bigbear0083.

They reported after the close today and I expect this may show a sign of strength tomorrow confirming Phase C (a change of character from the trendless Phase B to the trending Phase D).

Weekly Chart:

 

Based on your active price by volume, that $6 area may prove to be the LPS, but being just very slightly conservative I used 5.50 and get a projection to 21.25. I'm sure it would have to consolidate a number of times before reaching that number, if it does. This could be a flying pig, but I may give POLA a shot but keep the position small since it is not very liquid...and sell into strength.

25-cent-box by 3-box-reversal:

 

This just out from my favorite bear site, Real Vision.