Db,
Please review these charts and let me know if I am on the right track. I have recently finished reading Wyckoff's year long analysis you posted.
I am curious to know if the range I have identified is too wide to be considered accumulation/distribution by large interests. I see that price has failed to reach and/or breach the high of 2000/2001 (redline) and that may have induced some selling.
There are several indications of buying climaxes in the last few weeks and volume is steadily tapering off on the current rally. Having said that it has breached the 50% point of the previous downtrend.
One of the main things I took from that Wyckoff piece is that large interests tend keep prices at levels within a range when they are accumulating or distributing stock, in preparation for the next move they anticipate happening or creating. Is it worth looking out for such ranges at the end of a trend ad trying to determine what the exit from the range will be?
Thanks
First, do not commit the error of assuming/believing that "large interests" are monolithic, that all of the monied interests have the same goals and act in concert. If they did and were, trading would be much easier. But they instead compete with each other and are continuously monitoring each other's behavior (trades) in a never-ending game of oneupsmanship. Wyckoff came up with the notion of the "composite operator" in order to prevent the trader from becoming distracted over questions of who's doing what. He suggested that the trader instead view the actions on the tape as being the result of one trader's transactions. He acknowledged that there is no such entity, that it was nothing more than a conceit to enable and encourage focus, but a great many people over the decades have been persuaded of a vast Wall Street conspiracy to defraud the public. The fact is that the public defrauds itself. Thus what you see as "climaxes" is more likely a series of thrusts and parries as the monied interests play games with each other.
Second, take care to read your charts from left to right. Yes, one needs to start somewhere in order to understand how he got to his present situation. This is what Wyckoff did. He always "looked to the left" to see where he'd been but focused on the present in order to guide his choices. This was/is not so much a matter of prediction as of determining the probabilities of one course of action over another. You should pick up on this the next time you read the analysis.
Third, accumulation and distribution take place in bases. The bases look different due to the objectives of each. But a thousand points is not a base. Price reached 4700 before plunging, climaxing, testing its low, then working its way back to 4700. The Money then spent nine weeks in distribution. How do we know this? Partly due to the failure of price to break out and partly due to the two upthrusts that had no result other than to encourage the ignorant to buy. That particular base was only two hundred points wide.
Price then plunged again in January and February for whatever reasons. Whatever objectives they had for their distribution were reached and they re-entered (though they never really left) at 3900 to support price and drive it higher, and we are now in the middle of all that, at 4300, a "neutral" position.
Accumulation and distribution go on continuously, some of it more important and "market-moving" than others. The retracements that occur after range breakouts are the product of distribution. If latent demand is sufficient, price will continue its rise. If it isn't, it won't. The Money doesn't care. They already have theirs. If the demand appears to have legs, they may even buy back into the move, but that involves a different set of objectives.
Therefore, study and evaluate where you've been. This is a significant part of preparation. Then look at where you are and how you got there. Study the price movement and price position along with volume to determine the probabilities of future movement up, down, or sideways. Given the strength shown five weeks ago with the accompanying volume, I suspect Wyckoff would have exited whatever shorts he may have had and begun to re-enter on the long side, accumulating his own position, looking for signs that the move was running out of steam and getting ready to range or to reverse. So far there are no such signs in this timeframe with this bar interval, at least none that I see.
Db
