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A Wyckoff Student Notebook

Discussion in 'Trade Journals' started by Onepoint272, Apr 27, 2016.

  1. Onepoint272

    Onepoint272 Well-Known Member

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    Richard Wyckoff first copyrighted his course of instruction in 1931 and made available to the public the truth of how markets really work and showed how to judge the market by its own actions so that they could avoid the devastating impacts to their wealth that happened to the majority of people after the '29 crash. After that event many stocks never came back. RCA, a high flying tech stock of the time did not recover for decades. And yet to this day there are some who think that this current expansion will last forever and promote a long term investing strategy. The reality is that times change. Demographics do change and are now in the midst of a huge generational change. Consider that the average age of retirement is 64 years and here and now in 2018 the average age of a baby boomer is 64 years. I'm not saying the markets are about to crash but I think It's safe to say there is a demographic ticking time bomb out there and caution is warranted.

    As for me, I'm not about to adopt a long-term buy-and-hold attitude. That worked during the expanding consumption of the baby boomers, of which I am one, just barely, but retirees don't consume as they did and they don't buy equites, they redeem their 401Ks, they sell equities...equities which are currently at all time high valuations. As for millennials, they are competing for jobs with boomers who can't retire, and they are already strapped with college debt so they can't keep the credit bubble afloat. Changes in consumption are already apparent. Per capita gasoline consumption is declining and just look at Ford Motor Company, they intend to stop selling most of their cars in North America...who would have thought that could happen?

    Going forward, long-term, buy-and-hold, set-it-and-forget-it investing is dangerous in my opinion at least until there is a major reset. I choose to be nimble, to sell when the market is clearly trending down and buy back at lower prices. I choose to trade.

     
    #381 Onepoint272, Nov 10, 2018
    Last edited: Nov 11, 2018
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  2. Onepoint272

    Onepoint272 Well-Known Member

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    Last Fryday's sell-off was on light volume and held 2766. Expecting uptrend to continue and reach 2824.25 to 2863.75. To nullify an expectation of continuing the uptrend would take a sell-off and close under 2699.50.

    S&P E-mini futures DAILY (as of Sunday, Nov 11th, 9:10pm CST):
    upload_2018-11-11_21-12-20.png
     
    #382 Onepoint272, Nov 11, 2018
    Last edited: Nov 11, 2018
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  3. Onepoint272

    Onepoint272 Well-Known Member

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    Monday's wide ranging ES selloff was on 1.9M contracts. Tuesday had a much narrower range on 2.1M contracts...effort vs. result...increased demand came into the market as evidenced by its inability to make downside progress commensurate with Monday's action. We should see a turning point back up, but if not, a close under 2699.50 will probably lead to retest of the October low.

    If it does go up, no doubt most of the eyeballs will claim it was the inverse head & shoulders pattern. The CM of course sees it too and can use it to draw in the sheep for slaughter. However, the effort vs. result bar appears to indicate his intention is to take it back up....we'll see.

    upload_2018-11-14_0-28-56.png
     
    #383 Onepoint272, Nov 14, 2018
    Last edited: Nov 14, 2018
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  4. Onepoint272

    Onepoint272 Well-Known Member

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    Do or die today. Continued weakness will likely lead to the October low, maybe even the February low. Bulls need the ES-mini to close above yesterday's (Wednesday's) HOD= 2748.25.


    30-minute bars:
    upload_2018-11-15_8-6-58.png
     
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  5. Onepoint272

    Onepoint272 Well-Known Member

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    Quite the ride today (Thor's day). More weakness in the early going and then BAM, a firm reversal back up. We now have the best chance we've had all week to move higher. A break and close above the range and Tuesday's high of 2755.75 should lead to a test of last week's high at 2818.

    Hourly bars (as of about 9:00pm CST):

    upload_2018-11-15_21-7-52.png
     
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  6. Jrich

    Jrich Well-Known Member

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    Expanding my horizons a little bit... Been keeping my eye open for quick swing trades after getting burned a couple times trying to time the market, reiterating that ya cant hit em all out of the park..... So here's BURL appearing on a larger time scale to be entering a SSR (stepping stone re-accumulation), and on a shorter time scale printing 3 bearish bars in a row, giving me an opportunity to place a tight stop above yesterdays close, and set sights on a secondary test of the $149 support... Went short this morning just off the high of the day ($163.99), so looking at a potential ~10% gain vs ~2.5% potential loss


    burl short.png
     
  7. Onepoint272

    Onepoint272 Well-Known Member

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    I always liked that candlestick-world analogy, "3-black-crows".

    I haven't been doing much lately but I did, like you, shorten my time frame. My last trade was to go long the SPXL, a 3X SPX-following ETF, but as you can see it went against me initially, but I think things are looking up. By the way, the SPXS is an inverse 3X ETF that provides a way to play the short side in an IRA. Also, both the SPXL and SPXS provide a way to use leverage in an IRA. However, next time I go long, I may just buy 3 times as much SPY because these 2x and 3X instruments don't fully realize the full 2X or 3X effect when you hold them longer than a day in a choppy market. As long as the market trends your way they do fine, but the other issue is that you have to be quicker on the trigger.

    SPXL - Hourly
    upload_2018-11-18_16-16-6.png
     
    #387 Onepoint272, Nov 18, 2018
    Last edited: Nov 18, 2018
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  8. Onepoint272

    Onepoint272 Well-Known Member

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    AMAT was the canary in the coal mine of the semiconductors. AMAT makes the machines that make semiconductor products and led NVDA by about 5 to 7 months.

    Weekly NVDA in black, AMAT in peach
    upload_2018-11-18_18-24-7.png
     
    #388 Onepoint272, Nov 18, 2018
    Last edited: Nov 18, 2018
  9. Onepoint272

    Onepoint272 Well-Known Member

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    I recommend sitting down before you watch this guy's insight into the future.

     
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  10. Onepoint272

    Onepoint272 Well-Known Member

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    Monday's action erased Friday's optimism. Sure looks like a setup for a potential waterfall in the near term. A bounce is not out of the question but I don't expect much given resistance in the 2712~2720 area. Longer term this is bearish until we see a a close above this month's high @ 2818.

    upload_2018-11-20_0-11-18.png
     
    #390 Onepoint272, Nov 20, 2018
    Last edited: Nov 20, 2018
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  11. Jrich

    Jrich Well-Known Member

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    Looks like i nailed that target... But silly me, i took profits yesterday... I should change my screen name to "J leave it on the table"

    Screenshot_2018-11-20-09-05-18.png
     
  12. Onepoint272

    Onepoint272 Well-Known Member

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    It made sense @Jrich to take profits in this environment.

    We did get the meltdown on Tuesday as expected and now today we're getting a corrective bounce. As of about 11:25 CST we've reached the first level of resistance, 2670, but maybe could reach 2712 before the bounce is exhausted. I'm still holding that SPXL.

    upload_2018-11-21_11-35-25.png
     
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  13. Onepoint272

    Onepoint272 Well-Known Member

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    Roman Bogomazov gives a lesson focusing on Effort versus Result using a past trade in UAA back in 2017.



    Remember that the 3 Wyckoff principles are:
    1. Supply vs. Demand
    2. Cause vs. Effect
    3. Effort vs. Result
     
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  14. Onepoint272

    Onepoint272 Well-Known Member

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    The ES traded narrowly on Thursday upthrusting the 2748.50 level and stayed well above the 2719 area. If it fall below 2719 then where price broke higher on Wednesday in the 2698 area will likely get tested. An up day on Fryday should reach 2764.50.

    4-Hour (240 min) bars:
    upload_2018-11-29_23-31-40.png
     
    #394 Onepoint272, Nov 30, 2018
    Last edited: Nov 30, 2018
  15. Onepoint272

    Onepoint272 Well-Known Member

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    Who says, "the markets cannot be timed"? The uninformed.

    4-hour (240 min) bars: High 2764.75, close 2764.00.
    upload_2018-11-30_21-40-6.png
     
    #395 Onepoint272, Nov 30, 2018
    Last edited: Dec 1, 2018
  16. Onepoint272

    Onepoint272 Well-Known Member

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    The words of Richard Wyckoff published in 1931:

    Charts have actual forecasting value because they indicate supply and
    demand (pressure and support), the volume of trading and the time factor.
    They form a concrete record of the forces lifting and depressing prices. There
    is nothing so good for this purpose as charts. All the large interests in the
    Street for decades back have kept records of the market and of individual stocks
    in chart form. Whenever anyone says it is foolish to keep charts, or to use them
    in judging the market, you may put that person down as uninformed and either
    unwilling to learn or incapable of interpreting chart records intelligently.


    Most of the popular prejudice against charts undoubtedly is due to the fact
    that many people mistakenly attempt to use charts mechanically — without
    judgment. They endeavor to draw diagrams or imaginary geometrical patterns on
    their charts, or apply arbitrary rules or systems such as “oscillators” and other
    impractical notions. Such methods are wrong. They lead only to errors, losses
    and discouragement. Therefore, you must remember this:- When you study charts
    look for the motive behind the action which the chart portrays. Aim to interpret
    the behavior of the market and of stocks not the fanciful patterns ("gaps,"
    "horns," "flags," "pennants," etc.) which the charts may accidentally form.

    One who understands how to interpret charts correctly can usually decide
    whether the whole market, or any single stock, or group of stocks, is most likely
    to advance, decline or stand still. Every market and every stock is always in a
    bullish, bearish or neutral position (Sect. 18M, Pg. 4, Par. 3). The person who
    can determine, with a high percentage of accuracy, the position in which the
    market, or a group, or a certain stock stands, holds the key to success in trading
    and investing.
     
    #396 Onepoint272, Nov 30, 2018
    Last edited: Dec 1, 2018
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  17. Onepoint272

    Onepoint272 Well-Known Member

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    It's another month-end so I did some point and figure work on the S&P E-mini futures and came up with this. The chart shows the current upside and downside projections. If however, we had another downdraft followed by an upside breakout, the projection would be 3750, matching the less-conservative base-count projection of 3750. Whether the bullish or bearish scenario plays out must be judged from the vertical (bar) chart. However, the trend is up and trend trumps until proven otherwise.

    Monthly P&F with $50 box and 3-box reversal:
    upload_2018-12-2_15-56-27.png
     
    #397 Onepoint272, Dec 1, 2018
    Last edited: Dec 2, 2018
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  18. Onepoint272

    Onepoint272 Well-Known Member

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    Comparing to the P&F using monthly data, this chart uses weekly data and gives the same downside projection for the current TR but shows a slightly higher stepping-stone upside target of 3850. Also, the base-count projection increased significantly to 4350.

    Weekly P&F with $50 box and 3-box reversal:
    upload_2018-12-2_15-49-42.png
     
    #398 Onepoint272, Dec 2, 2018
    Last edited: Dec 2, 2018
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  19. Onepoint272

    Onepoint272 Well-Known Member

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    Finally, using daily data with the $50-box and 3-box-reversal, shows the same base-count objective as the weekly, 4350. However, the current TR gives a lower downside objective and a higher upside objective, 1450 and 4150, respectively. I'm inclined to go with this higher resolution version, I'll have to remember to check back to this case study.

    Daily P&F with $50 box and 3-box reversal:
    upload_2018-12-2_16-3-33.png
     
    #399 Onepoint272, Dec 2, 2018
    Last edited: Dec 2, 2018
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  20. Three Eyes

    Three Eyes Well-Known Member

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    Good stuff. Really interesting!
     

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