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Richard Wyckoff and the Straight Line Approach
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Richard Wyckoff and the Straight Line Approach

  #21 (permalink)
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sorry a lil late to the party

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Daily

1. price breaks res.

2. retests brkn res. (pokes below res.) ie. res isnt sup.

3. on a rallie attempt fails to make a new high , forms a LH


4H

1. fakeout to the upside

2. LH , increased selling pressure down below the range

3. rejection of "middle point" (weak)

15min

1. price founsd sup.

2. rallie attempt fails at 50% retr.

3. price takes out sup. ( LL )

4. lower high at arround 50% mark of recent down move

5min.


1. price found sup.

2. price rejects "mean" of indecision

3. sup broken.

1min.


1. price found sup.

2. price formes res. ( fails to take out)

3. price takes out sup.

5sec.

1. price found sup.

2. HL

3. price above res.

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  #22 (permalink)
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The whole China/Greece thing can generate a lot of confusion re decision-making. Or one can simply follow price:

It is impossible for anyone to attain any permanent success by attempting to interpret the news into stock market profits. Millions are trying to do this. Few think alike. The buying or selling of other millions who do not know the news may outweigh that of those who do. Why not judge the market by its own action? Thus you get a consensus of the actual buying and selling, however it is generated. For, while the news may influence opinion and sentiment, it is only the orders that are executed on the floor of the Exchange that actually influence prices. Observe which side possesses the greatest power; then go with that side, whether it be the bull or the bear.

--Richard D. Wyckoff


The LOLR has continued to be down. Price double-topped at 0245, trended downward until 0500, then rallied up to the halfway level of that downmove. And here we sit. Strength or weakness?

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Beyond the analysis of the major market and of stocks, Wyckoff also stressed the importance of following sectors and groups given that they work together and influence each other.

Note here the efforts made by buyers to support price on four occasions. This is called "preliminary support". Whether it is successful or not and whether or not any success lasts longer than the short-term is not as significant as the effort.


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Note also how quiet the volume has been lately. Can this signify that the selling is done? Is it time to start looking at oil stocks again?


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And a major player:


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Last edited by DbPhoenix; August 12th, 2015 at 11:58 PM.
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  #24 (permalink)
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Big Shakeout today on the daily ES.

Went down to the bottom part of the sideways trend channel then went up to the middle part of the trend channel so far.

Looks like buying pressure at the bottom of the trend channel.

 
  #25 (permalink)
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Context 13/08

Context 13/08

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Trades

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Trend line exercise (APPL)

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Last edited by lajx; August 13th, 2015 at 12:27 PM.
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  #26 (permalink)
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Hawk9 View Post
Big Shakeout today on the daily ES.

Went down to the bottom part of the sideways trend channel then went up to the middle part of the trend channel so far.

Looks like buying pressure at the bottom of the trend channel.

I wouldn't call it a shakeout as it never dropped below the range. Just AMT at work.

Both the ES and NQ are at dead center of their respective ranges, so I'll put in the time this morning, but I'm not expecting much.

 
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When I say "find the range", this is an example of what I'm talking about:


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This Simple Technique Can Reverse Negative Thoughts

Carolyn Gregoire


Depression is often described as feeling like you're stuck in a fog of negative thoughts and beliefs -- but new research suggests that a simple technique borrowed from cognitive behavioral therapy, also known as CBT, can help to clear away the mental haze.

A small study published in the journal Behaviour Research and Therapy found that Socratic questioning can help people with depression to improve their mood by challenging self-destructive thoughts.

Socratic questioning gets its name from the Greek philosopher Socrates, who used series of questions to help his students exercise critical thinking to come to a conclusion on their own, rather than being handed the answer.

Within the context of CBT, the method consists of the therapist asking a series of guided questions that help a patient to reconsider harmful perceptions of themselves and the world.

"Using Socratic questioning ... therapists teach clients how to ask themselves questions in order to develop new perspectives and solutions on their own, as opposed to therapists simply providing these solutions directly to the client," Justin Braun, a doctoral student at Ohio State University and the study's lead author, told The Huffington Post. "The therapist models the behavior and skills that we want the clients to learn and develop more fully."

Socratic questioning doesn't have to be done by a therapist -- anyone looking for relief from negative thoughts can try the technique on themselves.

A therapist might, for example, use the following line of questioning with a depressed patient who is struggling with feelings of failure in the wake of a divorce: Is everyone who experiences divorce a failure? Can you think of anyone for whom that is not true? What evidence is there that you have succeeded, and thus have not been a "total failure"?

Braun offered another example of a Socratic dialogue between therapist and client:
Client: I'm a failure.

Therapist: What makes you say that?

Client: Well, I keep missing deadlines for my reports at work.

Therapist: And how does that translate to you being a total failure?

Client: I can't even do my job right. I must be a failure.

Therapist: Are these reports your only responsibility at your job?

Client: Well, no. They are just the summary of my work.

Therapist: How do you perform with your other responsibilities at work?

Client: Actually, I do pretty well with my other responsibilities. It is really the report writing that gets me.

Therapist: OK, and what percent of your job would you say is report writing?

Client: Hmm, I would say probably 5 percent or so.

Therapist: So, your reasoning for being a failure is that you can't do your job right, but when we dig a little deeper it looks like, in fact, you do pretty well with about 95 percent of your responsibilities at work. How does this new information fit in with the idea that you can't even do your job right and are thus a failure?

Client: Well, I guess I was not thinking about it this way. I guess if I am doing 95 percent of my job right I can't be failing.

Therapist: So, how might you rephrase your initial negative beliefs to highlight this new information?

Client: When I look at the bigger picture, I guess I am actually pretty good at my job, but struggle with a very small portion.
To examine the effects of Socratic questioning, the researchers studied 55 people with depression as they underwent a 16-week course of cognitive therapy. At the beginning and end of each session, the participants answered questions about their mood and mental state.

Researchers found that after sessions in which the therapist used more Socratic questioning, the patients reported feeling greater relief from depressive symptoms.

CBT operates on the basic principle that a person's moods and sense of self are intimately linked with their thoughts, and that recognizing dysfunctional thought patterns and replacing them with healthier ones can lead to improvements in mood.

Techniques like Socratic questioning are designed for patients to be able to perform them on themselves. Ohio State University psychologist Dr. Daniel Strunk told Nature that CBT trains patients in the skills they need to "become their own therapists."

This training in self-inquiry may be one of the reasons why CBT is so successful. While it's not a blanket solution, research has shown it to be one of the most effective methods for treating depression, with up to 66 percent of patients no longer meeting diagnostic criteria for depression after a single course of treatment.

"Patients are learning this process of asking themselves questions and being skeptical of their own negative thoughts," Braun said in a written statement.

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From the Everything Old Is New Again Department:


DEAR SKEPTIC: You express doubt as to the value of any technical factors in predicting market movements under current conditions involving highly unstable currency, governmental influences, inflationary policies, etc. But you are completely overlooking the essential influences which bring about price movements of securities.

The Law of Supply and Demand never fails and it is the only safe guide under these extraordinary conditions. No one can judge the probable trend of the market from the study of fundamental statistics, economic changes or political developments, with any continued success.

Practically all knowledge which becomes public property, all discussions of current developments as they appear in the public press, and all so-called fundamental statistics are usually discounted days, weeks and months in advance. These influences, together with many important developments which never become public, are combined into a single resultant force which expresses itself in the temporary balance between supply and demand. Facts relating to this resultant force are presented from hour to hour and day to day on the ticker tape. Demand for and supply of the various securities increases and decreases. Adjustments and readjustments are disclosed in the form of price movements, volume changes and activity ratios. All these are available to anyone who will take the trouble to observe them and make the analysis that leads to their logical and proper interpretation.

--Richard D. Wyckoff

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On Tape Reading



Linda Bradford Raschke

Tape reading long ago referred to the practice of studying an old-fashioned ticker tape and monitoring prices, volume, and fluctuations in order to predict the immediate trend. [Today it is] monitoring the current price action and asking: Is the price going up or down right now? It has nothing to do with technical analysis and everything to do with keeping an open mind.

Even the most novice observer has the ability to see that prices are moving higher or lower at any particular moment or, for that matter, when prices seem to be going nowhere or sideways. (Markets do not always have to be going somewhere!) It is also fairly easy to watch a price go up and then tell when it stops going up - even if it turns out to be only a momentary pause.

I've known hundreds of professional traders throughout my career. I don't want to disappoint you, but I know of only two who where able to make a steady living for themselves with a mechanical system. (I am not counting the well-capitalized CTA's who are running a money-management program with "OPM" - other people's money.) All those other traders used some type of discretion that invariably involved watching the price action at some moment - even if just to move a stop up or down.

If you can learn to follow the price action, you will be two steps ahead of the game because price is faster than any derivative. You may have heard the saying, "The only truth is the current PRICE." Your job as a trader will become ten times easier once you accept this. This means ignoring news, opinions, and personal biases.

Watching price action can actually be very confusing if you go about it like a ship without her sails up in an ocean squall. You will get tossed back and forth with no sense of direction and no sense of purpose. There are two main tricks to monitoring price action. The first is to watch the price relative to another "reference point" such as a swing high or the day's opening price. These will have much more significance than those points involving some type of calculation. I like to concentrate on points that the whole market can see. When watching price, we want to know the following: how fast, how far, and in which direction. It takes two points to measure these things. One will always be the current price, the other a reference point.

"The study of responses ... is an almost unerring guide to the technical position of the market."

-Richard Wyckoff, 1910

The second main trick to monitoring price action is to watch for the market's response to a particular condition, in other words, anticipating a particular behavior. Do not watch price for the sake of watching price. Watch price with the intent to do something or to anticipate a certain response! For example, if the market has been at a very low volatility point and just begins breaking out of it's particular trading range, one might anticipate that the price would begin to accelerate in an impulsive manner and not run into immediate resistance. Or, on a directional play, if the price is moving in an impulsive manner in a trending market and then pauses to catch its breath on a mild reaction, one would expect it then to continue on in the direction of the trend. When there is a particular behavior to anticipate, it is easier to watch the price to see if it acts according to one's expectations.

Tape reading is not watching every trade that passes by (a monotonous task) but rather keeping an eye out for unusual impulsive action, unusual volume, or just observing the way the price trades at significant levels. Each price swing has forecasting value as to what the next most immediate move should be. We then follow the price action to see if that move plays out.

Tape reading is at the heart of swing trading. When looking for short-term moves, price-based derivative indicators will be too late to be of value. Ultimately, traders should feel a great sense of freedom when they can rely on simple charts to formulate a game plan or a conceptual roadmap in their heads - and the movement on the tape to tell them their game plan is correct.


Vad Graifer

The importance of tape reading is its ability to save us from making market predictions and arbitrary egotistical assumptions about the value of a commodity. What is important is where the shift of supply and demand for a particular issue in any time frame moves price.

The market talks to us in its original language of price, volume and pace.

We are not concerned with creating certainties in the market because the market is too unpredictable to achieve any kind of certainty. We are concerned with putting the probabilities on our side. An understanding of true market reality increases our chances for success. There is no Holy Grail of trading, but there is a window of truth into the market, and our tape-reading principles can allow this window to be wide open for your domination of the trading arena.


Lawrence Chan

By reading the tape properly, a trader can tell if the market is weak or strong. If you can identify the strength of the market, you will trade correctly 90% of the time.


Alan Farley

It's time for a rude awakening. The years you spent studying technical analysis may not make you a good trader, and all that hard work may not yield a decent return. So what did you miss when learning to play the game? You forgot to master the art of tape reading.

Traders get a lot of mileage by studying the charts. But to carry your game further and trade like a pro, you have no choice but to master the ticker tape. And it's not easy, because there's no definitive book or formula on the subject. The reason is sobering: Reading the tape must be learned through personal experience and long observation. Accomplished tape readers spend hours staring at the numbers and watching the tempo of the market day.


Richard Wyckoff

But if we study the action of prices; the responses; the speed of the ticker, indicating urgency or the contrary; the intensity of the buying or selling, as indicated by the volumes; and the intervals when the volume is heavy or light -- all these in relation to each other -- then we gain insight or the design and the purposes of those who are dominant in the market situation for the time being.

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