A Wyckoff Student Notebook

Okay, before I have to go, the 30-minute on NVTA looks good to me. The cumulative volume on that back-up was lighter than the advances and although I find it hard usually to make sense of closes, it did hold the highs at the close, absorption perhaps.

Edit: LOL, now I see your post, I guess you're saying stopping action into the close. Hmmm, I will have to consider more, but have to go now...later.
Edit2: Okay, I think you are saying SONC (not NVTA) "back-tested and appears to have put in some stopping action on the daily chart." Got it.

 

I got stopped out of BABA in early August and have been waiting to get back in. At this point, on the daily, I'd like to see it test lower in the vicinity of the recent low to prove there's no more supply available. I agree though, it's looking really close to being ready.

Daily:

 

Welcome Moss and thanks but as for me, I'd say its half luck really. The rest is recognizing when the Composite Man (CM), aka Composite Operator (CO), the aggregate of the big money market participants, is done accumulating his line. Rock has a good eye for that.

 

Here's another one for the flagpole, LPX. Of course they make housing materials which will be needed for the hurricane season, but they've been building cause in this re-accumulation range for going on a year now. This looks like a back-up to the creek to me. Last week it broke above the range and then the correction can't seem to get any traction. The base count projection is $54 and this stepping stone count is now giving $59. I think this is it. I may have to step in.

 

Campbell Soup is hmm, hmm, good. You're probably too young to remember those TV commercials. Anyway they've been beat down to a pulp and it does look good since they are down to a multi-decade-long stride line, except the weekly chart seems to indicate it may need a lot more cause for the bigger move.

 

Took my bread off the table on ALGN. The ease of movement down concerned me. Will be watching closely for a lower re-entry...hopefully.

 

Some of the wisdom of Richard Wyckoff:

JUDGING THE MARKET BY ITS OWN ACTION

The business of Wall Street is to finance corporations and to sell the
securities — stocks and bonds — which result from this financing. Some securities
are good; others not so good. Those who manufacture and sell them to the
public know their value best. The public has comparatively little idea of their
real value, except seasoned securities — those which have been on the market
for a long time and which, therefore, have established earning power and intrinsic
value.

In every case the banker who does the financing and the dealers who help
him distribute, have paid for their securities either in cash or in services, or
underwritten them. The object is to market these stocks and bonds at as high
prices as possible. This marketing is done through distributing houses and syndicates,
by private sale, by public offering, and by means of listing on the stock
exchanges.

In the latter case, the stock is advertised by making it active on the tape.
If the price be advanced, and the transactions made large, the activity attracts
buyers, and those who are handling the stock are thus able to dispose of their
shares.

Sponsorship is continued after the market is thus made for a company’s
shares. The bankers operate for themselves, or others operate for them. After a
stock is floated, its sponsors try to create a stable market and support the price
as well as they can without taking back too much stock. When it is thoroughly
distributed and enough people are interested in the stock to make a market which
takes care of itself, under ordinary conditions, the original banker, syndicate or
sponsor may discontinue operations and turn attention to some other which
affords a new opportunity for money-making.

Other interests may begin operations in that stock. Generally speaking,
there are usually one or more sponsors or large operators working in every
stock. Sometimes there are many. These interests see opportunities for profit,
accumulate a line, mark up the price when conditions are favorable, and then
sell out. Or they may sell short, depress the price and cover.

No one can deny that in Wall Street the, big fish eat the little ones.
Large operators could not operate successfully without the large number of
people making up the public; that is, if there were only ten big interests in the
market and no public, these ten could only make a profit by dealing with each
other. It would be difficult for one crowd to deceive any of the nine others. But
when the public enters the stock market, the large operator's game becomes
easier for him.

Tape Reading and Chart Reading, enable one to detect and profit by
these inside operations or manipulation; to judge the future course of stocks,
by weighing the relation of supply and demand. This sometimes can be done
from price movement alone, but if you consider also the volume of the
transactions you gain an additional and vitally important helpful factor.

By accurately judging this supply and demand, you are able to decide
the trend of the whole market and of certain stocks; also which stocks to buy
or sell, and, what is even more important, when to do so.

You always aim to select the most promising opportunities; that is, the
stocks which are likely to move soonest, fastest and farthest. You make no
commitments without sound reasons, and you avoid undue risks.

Whenever you study the tape or a chart, consider what you see there
as an expression of the forces that lift and depress prices. Study your charts
not with an eye to comparing the shapes of the formations, but from the
viewpoint of the behavior of the stock; the motives of those who are dominant
in it; and the successes and failures of the buyers and sellers as they struggle
for mastery on every move.

The struggle is continuous. The tape shows all this in detail. The charts
enable you to pick the market apart and study whatever portion or phase of it
you choose.

Supply and demand may be studied on the tape of the stock ticker, and
to even better advantage from charts.

The tape is like a moving picture film. Every minute of the day it is
demonstrating whether supply or demand is the greater. Prices are constantly
showing strength or weakness: strength when buyers predominate and
weakness when the offerings overpower the buyers. All the various phases
from dullness to activity; from strength to weakness; from depression to
boom, and from the top of the market down to the bottom — all these are
faithfully recorded on the tape. All these movements, small or great,
demonstrate the workings of the law of supply and demand. By transferring to
the charts portions of what appears on the tape, for study and forecasting
purposes, one is more readily enabled to make deductions with accuracy.

And now that you are undertaking to learn this Method it is best that
you prepare your mind for it by discarding most of the factors that you have
heretofore employed in forming your judgment and making your decisions,
such as: tips, rumors, news items, newspaper and magazine articles, analyses,
reports, dividend rates, politics and fundamental statistics; and especially the
half-baked trading theories which are expounded in boardrooms and popular
books on the stock market.

It is not necessary for you to consider any of these factors because the
effect of all of them is boiled down for you on the tape. Thus the tape does for
you what you are unable to do for yourself: it concentrates all these elements
(that other people use as a basis for their stock market actions) into the combined
effect of their buying and selling. You draw from the tape or from your
charts the comparatively few facts which you require for your purpose. These
facts are: (l) price movement, (2) volume, or the intensity of the trading, (3)
the relationships between price movement and volume and (4) the time required
for all the movements to run their respective courses.

You are thus far better equipped than the man who is supplied with all
the financial news, statistics, etc. from the whole world.

I, therefore, claim that:
You need never read anything on the financial page of your newspaper
except the table of stock prices and volumes.
You need pay no attention to the news, earnings, dividend rates or
statements of corporations.
You need never study the financial or the business situation.
You need not understand railroad or industrial statistics, the money
market, the crop situation, the bank statements, foreign trade or the political
situation.
You can absolutely ignore all the thousands of tips, rumors, reports and
especially the so-called inside information that flood Wall Street.
You can discard all of these completely and finally.

UNLESS YOU DO THIS YOU WILL BE UNABLE TO GET THE BEST RESULTS
FROM YOUR MARKET OPERATIONS.
​

 

I added 2 longs today, SONC and LPX.

Daily:


Daily: