Getting to Grips with DbP/Wyckoff

[kalott]

Still can't trade, but here's my thoughts on FTSE (monthly, weekly, daily)

http://www.investtech.com/main/market.php?CompanyID=99200028&product=52

 

[barjon]

Shouldn't try to trade really, but.......

 

[barjon]

Back in the fray at last. I've been looking at MKS and here's how I see it and how I will trade it.

1. Context: Monthly - price sits at the bottom of a rising channel.

2. Context: Weekly - Price sits not far above the last major swing low. It seems significant that the closing price has been within a small 10 point range despite the relatively high (but not exceptional) volume. So, buying pressure is preventing sellers move it lower?

3. Daily: Juuust broken out of that range and I think I'll trade that given the context.

4. Hourly: The main thought on the hourly is to set the trend line to be my guide. Likely to be a small opening gap tomorrow. I'll look for a retrace of that to find an entry on lower time frames. I don't want to be left behind on this one. I'll set my stop at 414 which is at 50% of the latest upmove. Probably won't let it go that far without calling quits and I'll be watching from 420.

 

[dbphoenix]

Even tho there's been no climactic low, its ability to lift so effortlessly the past few days suggests that the selling pressure is at least temporarily over. However, given the extent and length of its decline, don't be surprised if it ranges between 400 and 428 for a while. If you can buy it closer to 400, so much the better.

Db

 

[barjon]

Even tho there's been no climactic low, its ability to lift so effortlessly the past few days suggests that the selling pressure is at least temporarily over. However, given the extent and length of its decline, don't be surprised if it ranges between 400 and 428 for a while. If you can buy it closer to 400, so much the better.

Db

Thx db. I don't mind taking a couple of small losses if it dithers about for a while.

 

[barjon]

ugh, gap as expected with no attempt to close and looking strong. The oft trading quandry when the train's left the station - chase the market and jump aboard or wait for a decent retracement that might never come.

Took a bit @ 433.20 as a "insurance premium" trade in case it's so strong as to steam ahead with nary a backward look. Otherwise awaiting some retracement.

 

[barjon]

Will look to add some around 38/39 if I get the chance

 

[barjon]

Looks like there might be a decision to make on Monday (this is where SLA comes into conflict with my usual 3 bar retracement where I would still be looking retracement when less than 50%)

 

[dbphoenix]

Looks like there might be a decision to make on Monday (this is where SLA comes into conflict with my usual 3 bar retracement where I would still be looking retracement when less than 50%)

You may want to look at a daily chart of the FTSE for the past four months.

Db

 

[Gring0]

FTSE Daily.

Gringo

 

[barjon]

Hadn't escaped me.

 

[dbphoenix]

It's also worth noting the circumstances before the decline. Notice in particular the volume that accompanied the failed effort to make a higher high in October. Buyers were not exactly rushing the barricades.

It's difficult for a stock to succeed if the market is not behind it. But those which resist the pull most are also those most likely to do best and do it earlier than those which don't.

 

[jeffre4]

FTSE Daily.

Gringo

Going off the daily and monthly ftse charts it could be a big drop unless we break up

 

[dbphoenix]

Going off the daily and monthly ftse charts it could be a big drop unless we break up

The probability -- not certainty -- according to AMT is about 500pts.

Db

 

[barjon]

It's also worth noting the circumstances before the decline. Notice in particular the volume that accompanied the failed effort to make a higher high in October. Buyers were not exactly rushing the barricades.

It's difficult for a stock to succeed if the market is not behind it. But those which resist the pull most are also those most likely to do best and do it earlier than those which don't.

Don't quarrel with the analysis at all, although looks slightly different on the futures.

Price will tell us, of course, but I'm not jumping the gun

 

[dbphoenix]

Don't quarrel with the analysis at all, although looks slightly different on the futures.

Price will tell us, of course, but I'm not jumping the gun

There's no important conflict. The daily illustrates that the angle of decline has become more severe, which is one advantage of using both weekly and daily charts. And there's nothing wrong with taking a counter-trend trade as long as one understands that it is in fact counter-trend.

It would also be informative and instructive -- if one wants to apply all this to future movements -- to go back a bit farther to see how and where and when the uptrend became a downtrend in the first place.

Db

 

[barjon]

There's no important conflict. The daily illustrates that the angle of decline has become more severe, which is one advantage of using both weekly and daily charts. And there's nothing wrong with taking a counter-trend trade as long as one understands that it is in fact counter-trend.

It would also be informative and instructive -- if one wants to apply all this to future movements -- to go back a bit farther to see how and where and when the uptrend became a downtrend in the first place.

Db

ok - as well as your earlier thoughts as to action/volume at the "top"

 

[dbphoenix]

ok - as well as your earlier thoughts as to action/volume at the "top"

First, the purpose of the lines is to help the trader understand what is going on with price, that is, what is going on with traders. At some point, and that point should come rather quickly, they are no longer necessary, like getting a push to pop your clutch and start your engine.

Second, as I've been working with this for so long, I automatically take a left-to-right view, particularly in reference to how it would all look in real time.

If one marks your monthly trendlines 1-4, with 4 being the last, solid line, and further draws a parallel line -- what Wyckoff called an "overbought position line" -- to trend line -- or "support line" -- 3, he can see by fall of 2011 that there's a problem. This suspicion of trouble is strengthened by the failure of price to make a higher high in 2012, much less make it to the overbought line. By summer of 2012, after the lower high and the higher low, one can draw a hinge illustrating the efforts toward finding equilibrium. When traders break out of this in 2013, price falls back to test those last two swing highs at 6000, made in early '11 and early '12. Traders then spend the rest of '13 and most of '14 trying reach that first swing high in '13, much less make a higher one. There is, in effect, a range from 6000 to 6800 that lasts until early '15. Traders then spend four to five months trying to engineer a sustained breakout, but they ultimately fail to do so.

When one cries "uncle", much less short, is his choice. but if one has tracked the balance of supply and demand for these years, he can't claim to have been caught by surprise when traders just gave it up.

As for how far down we go, it helps to look at where traders last stepped up to the plate, even though they may not do so again. That brings us to 5600 in '12. We recently bounced there, but rather than make a higher high, we made a lower one, and until a higher high is made, 6100 or so, the downtrend is still in place.

As you can see, lines are not necessary for most of this. One can in fact easily begin trading lines rather than trade price. If one neglects to keep in mind just what the lines are for, the message of the market can whiz right past him.

Db

 

[barjon]

Thank you, Db :cheers:

 

[barjon]

Stopped out this afternoon @ 429.25 for a small loss