Upthrust (UT): An Upthrust is a sharp price movement ABOVE a prior supply level which does NOT HOLD, but immediately reacts below that previous level. Usually on the Upthrust the spread will be narrow and the volume will be increased, this is evidence of the supply overcoming demand. Suppose a stock moves up from $50.00 to $51.00 and it takes 10,000 shares to do it and then moves to $52.00 and it takes 20,000 shares to do it. The volume, the supply has increased in strength relative to demand. If the volume doubles the price progress should be double and when it does not the inference maybe drawn that the SUPPLY is OVERCOMING the DEMAND. Suppose a stock moves up one point on 10,000 shares and then moves up a ½ point on 20,000 shares, here the narrowing of the spread and the supply coming in to overcome the demand is much more emphatic. This usually is what occurs on a Upthrust. The confirmation that it is an Upthrust is in the promptness and in the manner in which it reacts, it should react promptly to show that the attempt to leave the T/R on the Upside has failed and generally it will react with either a lack of demand or with the pressure of supply coming in on the downside. The Upthrust itself is the sign of weakness (SOW) and the Last Point of Supply (LPSY) all in the same action. It is normally followed by a more important (SOW) and a (LPSY).
Spring: a spring is a refinement of Mr. Wyckoff ‘ s concept of a Terminal Shake-Out and grew out of that concept. A spring is a penetration below a previous support area which enables one to judge that quality and quantity of that supply on that penetration. The CRITICAL thing that is shown by the SPRING or the TERMINAL SHAKEOUT is the AMOUNT of SUPPLY that COMES OUT on the DRIVE to NEW LOW GROUND and HOW WELL that SUPPLY IS ABSORBED. Remember this vital point, it is important. The main difference between the spring and the terminal shake-out is how far it penetrates into new low ground. Example: in a $50 dollar stock if the drive into new low ground is 4 or 5 points and then it turns around, we would call that a terminal shake-out. However, if it reacted or penetrated ¾ or a point, a point or a point and a ½ or a much shorter penetration we would call this a spring. Additional definitions: As the stock goes into new low ground one of two things will happen. Either overwhelming supply will come in or no supply. Overwhelming supply is a 1-spring, it is evidenced by a wide open break in price action and very heavy volume. A 3-spring is with no significant price weakness and low volume on the penetration into new low ground. There is a very large area between these two extremes. We call these number 2-springs and a 2-spring is very similar to a terminal shake-out in that both have supply and both must be tested by a secondary test. It is VERY IMPORTANT to understand that there is NO CLEAR CUT LINE of demarcation between a #1 spring and a #2 spring, a #2 spring and a #3 spring. The CRITICAL FACTOR is NOT the TERMINOLOGY, the CRITICAL FACTOR is YOUR UNDERSTANDING of the relationship of SUPPLY to DEMAND in the BASE area and on the SPRING.
The following 3 users say Thank You to supermht for this post:
Hello Everyone, This is my first post of my personal journal that I just started. Im a novice trader interested in Wyckoff.
As a novice, Im still struggling with the psychology side of trading. Please take a look at my chart with annotations. Any comments or corrections are appreciated! Thank you.
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I think you answered your own questions in the chart. Structure was saying short. Prior days low broken with supply.
Recognize you have these feelings or emotions like you recognize cars on the road. You know they are there, but they don't make you react. Focus on the chart and structure. Acknowledging the feelings and then focusing back on the chart is being mindful of the process and what is important. Being mindful is consciously getting yourself to move away from dwelling on the feelings and towards the chart. I know, easier said than done.
In establishing new positions great help to me are 9 buying/selling tests (already discussed in this thread). These tests are summary of main Wyckoff principles. After some time this check list becomes your second nature in doing analysis and it is guiding you through trading on rational basis, avoiding emotions.
hope it helps,
Last edited by siks; September 23rd, 2013 at 04:23 AM.
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