A Wyckoff Student Notebook

The ES failed to take out 2818 on Monday, after being run up Sunday night, when instead supply emerged Monday. Tuesday, a ton of supply came in to the market and it is never good to see volume off the top. Now there is a threat that the October low could be taken out down at 2603.25. The market was closed Wednesday for HW's funeral and the mark-down continued in earnest in this Wednesday night session. If 2671.25 can hold then we could potentially get a bounce. Currently the count gives an upside potential to 2710 but by morning perhaps enough cause could be built to extend that to the 2748.75 area. As for the downside there is already enough cause to reach 2620, 17 points from the October low.

S&P E-mini futures: 2-hour bars as of about 12:30am central:

 

Thursday, 30 minutes into the regular session there is enough cause now to bounce to 2745 or drop to 2485, below the 2603 October low.

 

Yep, I did, good eye! Actually though, later in the morning I corrected the downside count, corrected where I was taking the count, but could not post it. The objective from the updated count hit real close. From here it looks like it needs to build more cause.

 

Between 10 and 11am central the ES printed an "Effort vs Result" bar. The lack of follow thru on the continued high volume and the high-end close indicated demand coming into the market, i.e., sellers were being absorbed by demand. That bar also marked shortening of thrust of the down wave; it was unable to get to the demand line of the reverse downtrend channel. It'll probably re-test lower and develop a trading range in here.

1-hour bars:

 

Okay, so the ES did retest lower (all the way down to the October low) and it did develop a trading range. It is now in the process of testing the October low for a second time. Comparing to the first test of the October low, it appears supply (of stock for sale) is drying up. The penultimate bar, 2:00 cst to 3:00 cst, exhibited effort versus result, an increase in trading volume without commensurate price result, which would indicate buyers absorbing the asks. (However, the roll-over in contracts may still be affecting the volume on this continuous chart, not sure.) Price has reached the oversold line of the down-trending channel...so we could see a bounce.

However, with the FOMC announcement looming for Wednesday afternoon we could see a lot of nothing until that circus leaves town. A test of the yearly low just below at 2529 is a constant threat until it can close above last week's high at 2690.50 (point #9).

Hourly bars as of Fryday's close:

 

Well I'm not sure I can make anything of a comparison like that. I like to compare to volumes in the vicinity and to historical volumes at the same price levels. But in general, I think I know where you are going with that, that there is something wrong with the wide price spread this month on such low volume. It seems to indicate that there are no "quality" sellers. On the other hand, the ease of movement is down and it was oversold (oops, meant overbought, thanks 3eyes) most of 2018, that is, price had bulged above the long-term uptrend channel, so technically it needed correction. It did hold 2400 today, a key level I believe. Further weakness would likely next get supported by the 2015 highs in the 2100 area I suppose. Santa is on his way though and we'll see what he has in his bag next week. What are you seeing for levels?

Monthly bars:

 

Thanks @Three Eyes, I did mean "overbought".

The S&P futures tested 2401 so far tonight, and the price position on the demand line of the short-term downtrend channel on the weekly chart seems to indicate a good chance for a bounce back to test the levels of last week's break-down between 2529 and 2603.

Weekly as of about 10:15 pm CST Sunday night:

 

Well we got a bounce after slipping slightly lower last Monday. Tuesday was Christmas. Wednesday and Thursday showed late session rallies although the thrust was obviously shortening (unable to reach the supply line of the uptrend channel). However, the flat action on Friday did manage to hold the high ground and it came to within 6 points of testing the February low of 2529. If we don't see any upside follow-thru into the area between the February low (2529) and the October low (2603) then it'll likely head back down to 2401.

Hourly bars as of Sunday night about 10pm:

 

My 2x3 point-and-figure objective is nearly met on AAPL, i.e., it appears to have reached a bottom and should begin trading in a range to build more cause.

Weekly HLC bars:

 

The 3x3 Point & Figure for WDAY gives a price projection above $300.

 

SBUX looks sweet. It has been building cause since October of 2015. The P&F price objective is $150.

Weekly HLC bars:

 

I remember when IBD started promoting ResMed back in the early 2000s....some kind of crazy new sleep-aid anti-snore Borg technology from Australia. I probably traded it a few times. Probably should've just put some of its stock certificates in the mattress...oh well.

When I first saw your chart and you said there was cause for 28% upside, I had to check it, it just didn't look like it has been re-accumulating long enough. But you are right, it has. With a 2x3 I'm getting $140 so far. Maybe it'll build more cause. But of course as you said, it has met its previous cause so it could be in distribution...but the trend is up, so it'll need to show a sign of weakness to prove that. Good one to watch closely for a buy I think.

Weekly HLC bars:

 

I legged into SBUX near the close today. Weekly chart is above a few frames. Below are the 130-minute sticks. If it prints a lower low in that time frame I'm out and I'll try again lower. I'm thinking though there is no supply in here and any sellers are being absorbed.

The 50-cent-box by 1-box-reversal Point & Figure is somewhat reliable and points to $66.50 in the short term (2nd chart below). But of course long term its going to $150.

130-min HLC bars:


50-cent-box by 1-box reversal point & figure:

 

Roman and Bruce discuss the Markets - January 2nd, 2019. The meat starts at about 11 minutes in.