All language subtitles for Session 06-WTC (Feb 11, 2019)

Hello everyone, today is February 11th
and this is our session number 6 of the

Wyckoff Trading Course.

Today we're going to jump into the
volume and price analysis.

This is something that I've been waiting
for for quite some time. Unfortunately,

we can't do this right away. We need to
be familiar with the

price structural analysis first before
we start understanding how volume

influences the price.

So this is where we are.

And today it's kind of like this
transitional class. We're going to

homework, but then we're going to go
into the new material.

Some of the notes. So usually I don't
read a lot on the comments, but I want

comment on your comments.

So if you had a chance to read this,
this is great.

Okay, so what's important here from the
comments?

Events phase analysis club with the wave
analysis logic, you discussed

indirectly, helped me identify a trade,
few Wyckoff trading ranges and 530 one

-day weekly timeframes. I have started
seeing the price chart differently now,

and that's what I wanted to get. Okay,
this right here.

I would certainly consider this as a
major breakthrough.

So this is exactly the time and this is
exactly the message that I should be

hearing now from you.

Because it's been already five sessions
that we've been together. This is the

sixth session.

So this logic, the Wyckoff logic, or the
logic that I teach you guys, should be

seen on the charts.

You should be seeing trading ranges.

You should be seeing changes of
character. You should be seeing extremes

trading range.

For instance, you know, like spring,
upthrust, those type of extremes.

You should be able to label those
extremes, label the phases with the

ranges. And therefore, when you look at
the market, when you look at the stock,

you should have a different type of way
of analyzing this. And this should come

now. So it usually happens in the second
months.

Thanks for overloading us. I need to
know this stuff.

It seems to be coming together more each
week. Yes, and that's how it's built.

It's built on layers, right? So today
we're going to go into a new big layer,

but still we're going to be a little...

building the new layers based on what
we've learned so far.

Still working on volume supply demand
tests, Tron weak hands, and

this is something that is going to come
more. So we're definitely going to go

into this material more.

Okay, what else?

Okay, so yeah, that's great.

Okay, well, everything else is kind of
thank yous. And thank you for thank

Yeah, I really appreciate this.

And thank you for the comments.

So I think that we're in a good place.
And actually, I was really impressed

the homeworks.

I think we worked really hard on
labeling.

We worked really hard with all of the
homeworks that we've done, with all of

adjustments throughout the reviews.

And now I see you guys are so good with
this. I was really impressed with this

week's homework. So thank you for
submitting your homework.

All right, let's jump into our session
for today. So

today, first we're going to review Apple
homework. So this review will be quick.

I would rather spend more time on the
new material and especially the group

exercise that we're going to have here.
This group exercise will take us

probably five, six sessions, hopefully
five.

So this is going to be a very, very big
piece of knowledge that I'm going to

give you guys for this exercise.

We're going to start on the volume today
with the volume and spread analysis.

This is an essential basic that we have
to have.

in order for us to understand the
interpretation of the relationship

price and volume.

I'm going to give you two homeworks.

Homework six, actually, why is it one?
Six and homework seven.

So homework six is going to be an easy
homework. It's going to be just one

type of homework.

And it's going to be around the volume
and spread concepts.

Then we're going to talk.

really quickly about the loss of the
supply and demand, effort versus result.

I'm going to give you my take on those.

And then we're going to start that big
group exercise.

And hopefully we're just going to kind
of like go fast through this.

Next session, session number seven.

We're going to continue with our group
exercise. We're going to talk about the

volume phase analysis.

That is what are the characteristics of
supply and demand in different phases

of accumulation and the distribution.

And then, again, the homework is going
to be a group exercise.

By the way, speaking about the homework
of the group exercise, one of the main

assignments here is going to be to watch
again

and make notes.

So I want to reiterate this from the
beginning of this exercise.

This exercise will give you a lot of
knowledge.

And this knowledge will be given to you
also on the slides as well. But

the most effective way to gain value
from this knowledge is to actually watch

the exercise again.

make notes, and think about those.

This has been a big educational tool

in this course, making notes about this
exercise.

And from cycle to cycle to cycle,
students are emailing me

and saying that when they watch the
video again,

They are catching so many things that
they did not catch during the class.

So I'm going to reiterate this many
times throughout the next five

sessions.

So you'll hear about this again.

All right, let's review the homework.

The homework was on Apple.

And here, together with the homework,
I'm always trying to give you some kind

concepts.

Today's concept for the homework review
is going to be about institutional value

zone.

And I forgot who exactly, but one
student was asking me in the email, you

when are we going to be covering the
value zone definition? And that's kind

like what's so timely as a question,
because this exercise, in a way, is kind

devoted to...

thinking about the origination of this
concept, institutional value zone.

Let's look at the trading range first
and the labeling on its own.

So some of you have figured out that
this whole

formation is a trading range.

And then some of you decided to maybe
have a different

interpretation.

and have a lot of small trading ranges
identified. So, for instance, somebody

would be looking into this area, this
area, this area, this area, this area,

this area, this area.

Both approaches are correct.

Yes, we do see a consolidation if we
would think about the climactic action,

automatic reaction, secondary test that
define phase A and the change of

character.

relative to the uptrend that we have had
in 85 to 87,

if we would have bought the stock and
then in 2004 have sold the

stock, we would not gain anything.

Meanwhile, there were quite a lot of
deviations around this mean, right? And

especially on the rally in 98, 99.

So let's just kind of think about this a
little bit.

Is it possible that maybe the trading
range was somewhere here?

And I saw this in one of the homeworks.
And I thought that was a very

interesting idea.

And actually, I kind of like this just
because I see how the texture here

was different. It was more of the
reaccumulation texture where we have a

-type action. The price comes down and
then comes back.

really quickly in a very aggressive
rally.

And here we would be thinking it's a
sign of strength.

I mean, look how everything looks so
good.

There's not a lot of supply.

There's demand that's coming up,
increasing. And then the rally has the

characteristics of a sign of strength
rally.

It's an increasing spread, increasing
demand signature, and the price commits

buff.

But it only commits above temporarily.

So this pattern fails after the price
comes back and gaps down.

Let me show you a little bit better.

So here is this gap right here.

So the first failure is to commit not
just by one close. The second failure is

the return to the trading range. The
third failure...

is the gap to the downside, and the
fourth happens on the increased supply

signature. This is not how the backing
up action would behave.

So therefore, this pattern fails, a
pattern of what we thought a

So then we're going into another pattern
here, right, or another texture. So

this looks like a distributional
formation.

And it looks like a TP formation right
here where we have urgency to sell on

gap down in activity throughout and then
a pickup in the institutional

capitulation on the way down.

So it's right here where institutional
trend followers are going to give up

their positions.

And that's going to produce this quick
move to the downside. So everybody's out

of the position.

And then because of that, Because the
CEO is out.

And at the same time, you know, we are
thinking the CEO is

out.

ITFs are out.

Professionals are out.

And public also is going to experience
some pain here with

getting into the position and then
getting out of the position, you know,

the... at the price of this triangular
formation and then on the way down.

So it just does not, this type of action
and

later capitulation does not produce a
lot of demand on the way up. And

that's why this rally fails.

So exhaustion of both sellers and buyers
at the same time.

And then we're going into the oversold
condition. I will come back to this and

will explain to you how did this come
about.

This is a little bit more volatile just
because Steve Jobs is coming back to

company. So that produced some
institutional buying. We could see out

deeply oversold condition, we are...

rallying really fast.

And then giving it all up and then
rallying even better.

So a news -driven volatility at the end
of the down move.

So what I'm saying is that I actually
kind of like this labeling too.

And the reason why is because we have a
very clear commitment to the upside

right here. We have a very clear
commitment to the upside even without

the downsloping range.

Even with the bigger range, we still
have a very, very pronounced

commitment to the upside.

And then something interesting happens.

And those are characteristics of the
major sign of strength.

Something interesting happens.

We would be expecting a backing up
action into this area. Something like

So what happens next?

Well, 2000...

and the market top.

That's what happens.

And then after that, we have the market
in the downtrend.

And the market, as I mentioned before,
has so much gravity.

It is so, you know, the sentiment of the
overall market is

going to dominate sometimes the
sentiment even of the leadership stocks.

and the leadership stocks are going to
show some kind of weakness.

Well, 2000 market was a really urgent
market to

distribute the stocks, and we had a
couple of big moves to the downside,

big legs to the downside, very volatile.

So that type of price action is going to
create a lot of following.

So therefore, a lot of the leadership
stocks are also going to go down.

not going to go down as much as the
market, but they're still going to have

pronounced move to the downside.

So sometimes in phase D, we would
observe this phenomenon.

This is the phenomenon of a shakeout
action.

And usually when we talk about the
shakeout, I want you to think about a

scenario.

long -term bullish scenario with the
short -term oversold

weakness, which is effectively a
shakeout by itself.

And that's what the shakeout is all
about.

And I believe that the current market
action happened in the same way. It was

shakeout, short -term weakness, the
price action.

in the long -term consolidation pattern,
which still suggests that the U

.S., even at this level of growth, is
going to produce a better result than

anything else in the world right now.

And therefore, it acts also as a flight
to safety, flight to quality, flight to

defense.

Even though the short -term picture, I
think going into summer and into early

fall,

we're probably going to have a reaction.

We're going to consolidate for quite
some time.

But then after that, going into 2020, if
that growth is still going to be there,

even at the current levels, we might
have a continuation of a bull run.

I've talked about this at the Market
Watchers Live this last Wednesday. If

have not caught that session, go to
StockChartsTV

YouTube channel.

And then the presentation is called 10
Questions About Current

Market Structure.

And my segment there was really small,
probably like 20, 30 minutes. So you can

watch that.

So this is just a phenomenon in phase D
that happens sometimes with

the stocks that are showing a lot of
strength on the major sign of strength.

And then the market happens, the market
weakness happens, and the stock is being

influenced. Just because the stock has
had a lot of supply, it needs some time

to retest it.

So therefore, that concludes that major
last point of support area.

So this is a very, very huge trading
range. And somebody might be thinking,

well, is it really possible from 1987 to
2004 that this is the trading range?

How could we even confirm that this was
the trading range?

Okay, well, one of the ways to confirm
this...

is to extract the PNF target from the

trading range.

So here I'm using a very old software,
which was called Bullseye.

And this software allowed to create this
type of long -term charts.

I'm not sure if you could do this in
stock charts.

I would be very curious to know.

So here we are looking at the original
trading range. Here is this major sign

strength. Here is this shakeout in 2000
that leads to the low LPF, low point of

support. Here is our phase C with the
spring.

And what we would do with the PNF count,
we would count from the right

over to the whole area of where the...

Trading range has started in phase A.

And that gave us a target of 220.

And we hit 200 and a half, I believe.

Well, I would say that's very close.

Why is this close?

20 bucks? Well, because when we are
making a decision to enter this

are in the...

a six to nine dollar range so i would
say that extreme that is very close um

for those of you who are curious this
area right here produced a confirming

account so that was also very
interesting and this whole move to

200 suggests that this whole trading
range has been an accumulation so

now

and it has been kind of like a wholesome
trading range, right? So if this is the

whole trading range, then the biggest
rally is going to be a major sign of

strength. So we're confirming that.

Then the next higher low is going to be
a last point of support.

And then whatever comes before as the
lowest point is going to be phase C. And

then before that, you know, however you
label this, everything is going to be

fine.

Well, the bias itself, obviously,

has been given to us throughout the
whole structure.

That's why I refer to the Wyckoff
analysis as a rolling over analysis.

You kind of could see how the analysis
develops, how the story is being

created. And the story is really being
created once Steve Jobs is coming back

Apple. This is where the volume starts
to pick up a lot.

And then look at the overall volume
signature on the major sign of strength.

There are buyers all the way up to this
area right here. It's only in this area

where the demand started to go down.

But diminishing demand does not mean
that there are no buyers.

Diminishing demand suggests that there
are fewer buyers.

But even the fewer buyers could push the
price so significantly higher than the

point of the resistance.

from phases A and B.

So therefore, we're seeing that all the
way on this rally, there is a lot of

buying that's happening.

And then obviously, the market happens
and there is a lot of capitulation

by institutional trend followers.

They capitulate at this point. At the
same time, The CO is

seeing liquidity and value, and the CO

picks it up on the way down.

And then the stock shows a lot of
relative strength until this point where

demand becomes a little bit urgent, it
increases, and that pushes the price to

the new trajectory of a new uptrend.

Now let's talk about the institutional
value zone.

So how would we define where
institutions are interested in this

stock? Well, we need to find the places
where the price stops on

what we could interpret as institutional
buy -in

because it's the stop in action and
subsequent

demand that is being shown to us in that
stop in action would produce a

suggestion that some big interests are
buying at this point of time.

As well as any type of rallies off the
lows that would have a lot of volume

characteristics.

So this is definitely where institutions
are establishing their positions.

Something like this could be observed in
the behaviors not of just the CEO, by

itself, but also by institutional trend
followers.

They will be buying on the way up.

Their buying will create the waves, the
swings that we see

on the chart.

So here are the first time where the
price fails and is being supported of

two bars.

There is some increase in the volume
signature.

So whoever was buying here on the way
up, was definitely giving up.

But somebody was also buying at the same
time.

So with that, one of the highest volume
signatures, we would be thinking that

this is where the CEO might be coming in
and buying.

And that CEO, this type of institution,
eventually will be wrong about this

position. I was making an argument with
somebody this last week.

about the CEO not necessarily being the
CEO on all of the

trades.

Can you imagine that institutions that
we think that they are CEO, like Warren

Buffett's, that they make mistakes as
well?

I mean, like if you study Warren
Buffett's trading history, you will see

has made quite a few mistakes.

So we can't really say that Warren
Buffett, was the CEO on all of his

He definitely was the CEO in a lot of
the trades, and in some, he was wrong,

he was weak hands.

And he provided liquidity, and he
capitulated on the positions. One of the

latest positions that I could think of
where he capitulated was IBM

a couple of years ago, I believe.

So we've talked about this in classes.

But somebody is buying here as well as
somebody is buying right here on the way

down because they're seeing with all of
this capitulation that some value comes

into this area.

So and then throughout this whole range,
this is where we're going to see,

again, some elements of buying.

Whenever the price goes below this
level, we would consider this an

condition. And therefore, with the
oversold condition, there is some value

institutions. And they would come in and
they would start buying. So for

instance, like a bar like this, or a bar
like this, and so on and so forth.

And we would be seeing these bars with
the increased demand signature.

And again, it's going to take some time
for institutions that...

we perceive as the CEO type of
institutions try to stop the price from

lower down and yet failing every time.
There is failure number one.

There is failure number two.

Full starts.

So here is where I don't want you to
think so linearly.

When we see a big volume signature, we
know that huge institutions are coming

and they are buying.

And we're definitely thinking that this
is the CEO type

of signature.

But we know that even those big type of
institutions could fail.

And they could produce a loss instead of
a win.

So those will become not the COO, but we
can't.

And we just need to technically identify
the areas where finally the bind by the

institutional hands is going to prevail
into the uptrend.

But we could identify the zone. Here is
the zone. And where it comes to the

oversold condition, we would be
expecting that there's going to be some

push to the upside.

And then when it...

over is is oversold again with the new
support area right here this is again

where we're going to see a quick um rise
to the upside that would suggest

that either supply is exhausted or there
are some buyers and they've seen this

as a value and therefore they are biased
on this bar then again as the price

comes down again we're seeing this
spring type action So, oversold

a true value zone will always produce
this type of definition of

how the price reacts in the B bottom,
quick recovery, quick momentum type

of buying, just because they're seeing
value right there.

All right, and then the next value.

zone spot for us is somewhere here,
where we see that a lot of institutional

followers, trend followers, have given
up.

So the CEO is definitely seeing this as
an opportunity to buy, and it's buying

exactly in this zone right here.

So we finally see that instead of going
lower and creating lower lows, the value

zone is being respected. So by itself,
it's a sign of strength.

And then we're seeing the confirmation
by the volume that there is an

institutional value buying on the short
-term liquidity and long -term value.

They're thinking that this is a short
-term event with the long -term

to the upside.

All right, let's go to the next chart.

Okay, actually a couple of questions
here.

thinking about this as a long -term
trading range and taking your phase C

labeling it a shakeout instead of a
spring.

Is this correct or is this wrong? I
think that if you will be referring to

support area that was created by the
automatic reaction, then the extent with

which the price came down into phase C
could be interpreted as a shakeout.

Having said this, this is not the first
or the last point of support that has

been developed by this trading range.

And therefore, all of this spring and
shakeout type of action will only be

to us below any of the lowest support
that we could see.

So where are the levels of the support?

First level of the support.

belongs to the automatic reaction.

The second one belongs to the secondary
test with a sign of weakness or a

localized spring.

So we're already thinking that if price
goes down below this level, this is our

oversold condition and not necessarily
this one, the upper one.

So with this logic, we're thinking,
again, here is another one, here is

one.

it gradually goes down. The shakeout
action, we really would like to see more

this quality, where there is no
laborious move to the downside.

This is not how shakeout happens, and
this is exactly what's happening in this

area, but more of kind of like a
catapult wall down, where

everything goes down.

That's a shakeout type of action.

So just the texture, the character of
this is not of the shakeout type of

quality.

So therefore, this is just a trading
range that we will label as a strain and

test.

Next question.

What is this software?

It's already discontinued, so it doesn't
really matter.

Isn't it a down move on increase?

volume bearish sign right after 1991
okay so

1991 uh down move on increased volume a
bearish sign this one right

here yeah of course but you're thinking
you're thinking more um

um that's kind of like a public here
because yes it is a bearish sign

but For some of the institutions, this
is going to be a certain value,

and they're going to be buyers at this
point.

It doesn't mean that the price will go
up from here.

No, but we're just recognizing that this
is the first time when they attempted

to buy.

So we want to see how the buying is
going to happen at this level.

And look what's happening next, right?
So, for instance, right here, this was a

very important spot.

where the buying has happened again at
the same point.

So that reconfirms that institutions are
willing and seeing the value here and

they're willing to buy.

All right.

Can we label automatic reaction as a
shakeout?

Yeah, you can definitely do this
because, again, it doesn't influence.

your trade decision right here on the
screen so this could be a shakeout

automatic reaction secondary test and
here's your phase a anyway so it

doesn't really matter that much all
right let's go to the next one so this

probably uh the hardest one so i've seen
a lot of the

Different interpretations, and I thought
that, you know, let me go through

different scenarios here. Everything
else was kind of okay, and that was so

surprising. So I thought that the
difficulty was more in the nuances, more

kind of like some details, some
variations.

Everything else, really, you guys just
did phenomenal work with the homework.

All right, so we've talked about, an
institutional value zone right so again

would we define it we want to find the
first time when they are actually buying

right so we don't see a lot of buying on
the way down so the volume signature is

not increasing here on the climactic run
and that's fine sometimes that happens

uh it's just again a variation which is
different from what we've seen let's say

somewhere here um in this case the first
buying happens and then No buying

again. This bar right here reflects
supply and suggests a move to

the downside after a local upthrust.

So we're really only seeing a buying
around this zone right here. So if we

extend it, think about what happens
next.

On the way down here, we see the volume
signature increase.

This increase in volume spike suggests
that, well, first of all, supply is

increasing a lot.

But there is also increase of the
demand.

And this increase of the demand we could
see from the daily spread.

The daily spread is actually diminishing
relative to what we've seen before,

right? So this gap down does not reflect
the volume, overnight volume. This is

only the daily volume.

So on the dimension daily spread with
the volume spike like this,

that suggests the presence of the
demand, and not only the presence, but

increase of the demand.

An increase of the demand suggests that
absorption is underway.

Plus, think about the character of this
demand. There is so much demand on this

bar, hidden from us.

that it observes the supply, and we
start thinking if the levels of demand

so high, this is probably an
institutional demand.

Where did we see demand before in this
area?

Somewhere here.

So it makes a lot of sense that they are
buying in the same zone.

Because what's happening with
institutions is that they basically

value zone for them, which...

calling it exactly like this,
institutional value zone, and they are

their traders, buy me everything between
50 and 70.

And especially I'm interested if the
price goes below 50 because as an

institutional trader, if you could get a
position at the lower

prices, that's even better.

And what happens when the price goes...

below the value zone, it usually
produces a very quick reaction from

institutional traders because they see
value and the price recovers quickly in

the spring type of manner.

So this spring is actually, you know,
this kind of like the analogy. Okay, I'm

drawing this incorrectly totally, but
it's a spring, right?

So it expands and contracts. You
could...

You could push it together and then
allow it to expand, and it will do so

quickly.

The same happens in this spot.

It really is a springing out of this
short

-term value position.

Look at the next oversold right here. It
goes down. What do we see with the

volume signature?

Right away, there is some demand that's
coming in.

Why?

Because there is value for institutions.

And this value is actually extreme
because it's on the oversold condition.

So how are they going to buy out of the
oversold? They're going to be more

aggressive because it's below their
value zone.

So here we are seeing this bind on the
way up. And this bind is going to stop

once it goes above their value zone.

So somewhere here we are seeing already
that more of weak hands are buying on

the way up.

And that produces some emergence of the
supply from

professional hands.

Because professional hands are seeing
this as a short -term overbought

condition, and they're seeing this as a
deviation from the mean.

They know that the price will come back
to the mean and probably will overthrow

it again.

So they're shorting into the weak hands
liquidity at this spot.

And then as the price goes down again,
this action repeats.

An oversold condition for institutions
below the value zone creates

a very quick pickup by institutions.

And we see that again in the volume
signature.

And then overall, we're definitely
trying to see the overall increase in

volume signature relative to what we've
seen.

in this area and in this area right here
we can see that there there are so many

more institutions that are participating
in this rally that suggest a

beginning of a trend and specifically
uptrend and not

only that um institutional participation

And again, this is where Steve Jobs came
back.

Institutional participation suggests
that this is going to be a long -term

trend.

So this type of moves out of the lows,
cyclical lows

or secular lows in the stock or in the
market, with this type of volume

signature that suggests that
institutional participation.

are the best indications for timing for
us for a very big move to the

upside that is going to be cyclical in
nature. And you could be thinking about

different tactics there, how to trade
it. You could be thinking about trading

as a long -term position. You could be
thinking about trading it as a multiple

swing position and so on and so forth.

Well, if there is an institutional value
zone, then we probably would be

thinking about some value zones for weak
hands as well. Please note that I'm

saying here weak hands just because it's
both institutions and public.

And how would we define the weak hands
value?

So obviously weak hands value zone is
going to be associated with the

distribution.

If the institutional value zone is
usually associated with accumulation,

reaccumulation, then weak hands value
zone is going to be a distribution or

redistribution. So thinking about the
concepts of the weak hands and

where, for the first time, they will be
excited

about the uptrend.

it comes on the last climactic run into
the top of the market, into the buying

climax. So we're seeing some buying on
the way up in this climactic

run, and we define this as an excitement
or the first point of excitement

by weak hands.

So this excitement by weak hands
produces...

weak hands buying into stopping action.

Well, why does this happen? Well,
because CO is not buying.

ITF are in the position.

So they're not biased either.

And they still do not provide a lot of
supply to the market.

So therefore, this is one of the spots
where weak hands

are going to do two things.

They're going to be enjoying the
profits.

They're going to be profitable on the
left leg to the upside.

And then they are going to be also

able to move the price up.

This is one of the spots where public,
or weak hands rather, can have a

big influence on the price.

So, ability to move price

up.

So these are two attributes that are
extremely important for us to remember

this spot for weak hands.

Just because this is where they see the
value.

Now think about if they saw the value on
the way up, as the price goes down and

goes below this value zone, how are they
going to view this?

They're probably going to view this

as an oversold condition and a point of
value to them.

So what are they going to do? They're
going to buy at this spot.

So we can't.

And they're going to say that, oh my
gosh, this stock has been so good in

uptrend and I'm going to load up more.

And if they have not been in that
position by this time, this could be the

time when they get in.

Now think about what has happened on the
way down.

A change of character suggested that the
CO is selling.

And also ITFs also identifying this as a
trend failure, so they are selling as

well.

So the weak hands is effectively buying
the supply from strong hands.

And for a moment, there is a balance and
absorption of supply and

uh that suggests the reaction to the
upside

which follows

and in this whole reaction right here

to the upside counter to the change of
character move

we don't see a lot of the institutional
signature, and yet the price goes up.

So that suggests that this type of
signature is weak -hand signature, and

institutions were active or actively
selling on the way up, on the way down,

then they are inactive.

This inactivity produces a failed
upthrust, which we could label as a

tax.

It's an attempt to upthrust above a
buying climax, but we can't even do

So here is a failed upthrust.

And then there is some further
capitulation by institutions,

probably just ITFs.

They are not seeing the trend, the
stock, for quite some time.

multiple quarters is not producing the
result, absolute result.

And we'll have to think about what the
market was doing at this time and to see

what the stock is doing. I would say
that it's probably still outperforming

market at this point, maybe. That's just
my guess.

And then weak hands are still seeing
this stop in action here as a value

And look at their signature.

It's kind of mediocre just because weak
hands do not have a huge signature,

volume signature.

And then there is another failed up
thrust, which we will label as an LPSY

because this is phase C. Phase C
actually has two LPSs. One of them is

failed up thrust. Another one, LPS as a
test.

Then out of that, we see in the TP
formation or in the apex formation,

a quick move to the downside, and then
on the increasing volume signature. So

that suggests a late institutional
capitulation. Usually this volume

will move us away from the trading range
that we have had.

Now think about, again, the weak hands
value zone.

As the price comes back to this value
zone, what do you think?

um you know weak hands are doing they're
getting more and more excited right

because this is where they bought before
in their minds if i bought there before

and the price was able from the lows to
come back to this level this is very

bullish so i'm going to be buying again
so uh into this buying

by weekends and we see an excitement
with each of the rally with each of the

thrusts to the upside so multiple up
thrust situations one two three

into the weak hands value zone and every
time it happens institutions

are selling on that excitement of
weekends so there is increase of the

here increase of the supply here

increase of the supply going into this
area right here as well.

And institutions know that for them the
bias is to the downside. And they

know that at this point of time, this is
an overbought condition.

And they are looking for short -term
liquidity, which is being created by

weekends.

by the excitement of weekends, and they
just sell into this excitement.

So that produces more selling and so on
and so forth.

All right, let's go to the questions on
this.

So trading range, phase C, not as

spring as a question. Well, I don't know
if you guys could see this, but this

low is just ever slightly.

a higher low and it's not a lower low so
with the higher low we definitely would

put left point of support rather than
the spring we could label this secondary

test as a sign of weakness as the spring
type action we could do that

we could label this whole thing as a c
phase c sometimes phase c would have

type of you know spring and then the
test and I'm thinking about this. I

probably relabel this now.

I would probably just label it like
this, phase C. So then a spring and

a cuff.

But this one right here is a high -low.

All right, first trading range, phase C,
failed upthrust, not upthrust of the

distribution.

Okay, guys, so this is one of the things
that I want to talk to you about. So

it's very interesting. For some reason,
this group was like this.

So what I really would like you to do is
to make

sure that you go and you study all of
the concepts that, you know, I taught

guys. Because sometimes I feel that
Something that was taught and we're

back to the same question because people
just don't kind of like go and study

this material.

This is awfully inefficient.

So I would really urge you to study all
of the Wyckoff events, the sequence of

those events, how they come and the
characteristics.

So a question about the upthrust of the
distribution.

So think about...

the question itself right so we're
saying that there is an up thrust after

distribution so just after distribution
part is definitely okay but the up

thrust is not why well because we don't
really have an up thrust here right how

do we define the up thrust we define the
up thrust as the price overcoming the

resistance

temporarily committing to the upside or
attempting to commit, and then falling

back into the trading range.

Do we see this type of action on this
high?

No.

We are failing. That's why the label in
here is a failed upthrust.

Do we do this on the next high?

No, it's a lower high. So again, we
cannot overcome it. So we can't really

this.

an upthrust of the distribution just
because definitionally it's incorrect.

So I would urge you to make sure that
you understand in what kind of,

very simplistically, if this is going to
be a higher high in

phase C for the distribution, this is
going to be upthrust of the

If this is a lower high, then it's
always going to be a less point of

You can remember it like this. But I
want you to remember because this is the

second session where I kind of see this
tendency.

And I definitely want to go away from
this.

First rally into the buying climax.

How do we know that CEO is not buying?

So I'm assuming probably right here,
right?

So how do we know volume signature by
itself?

Not that big, right?

We also would be thinking if this is a
sign of strength.

So we want to see some kind of urgent
buying by the seal and

something maybe like this, right, where
the signature is still consistently

increasing and there is some urgency to
get into this position.

This is more of the technical rally
where the volume does not fully

confirm what the price is doing.

And that would be our first guess. But
then we could just say that, well, maybe

they are buying. And then we can only
know that they were not probably on the

next change of character that falls into
the range.

So we could make a mistake there, you
know, an interpretation that would be

erroneous, but I think this mistake you
could quickly correct on the next

reaction because you would be thinking,
why is it that the volume signature

increases so substantially over what we
thought the institutional bias?

That should produce some kind of
hesitation and thought there.

All right.

Okay, so from Eric.

Let me see. I'm on in the second.

I'm trying to see the whole question.

Okay, here we go. In the second
redistribution, trading range in

1995.

We have an upthrust of the distribution
below the resistance line. Bruce Frazier

in StockShare defined FAC with LPSY in
one of his distribution schematics when

price does not go up. Why label upthrust
of the distribution instead of LPSY

as Bruce?

Well, I think that you are misreading
what Bruce is saying.

There are two types of...

Again, we're kind of repeating this, but
okay, let's just stay here. Let's just

stay in this space.

So two types of phase C that could
happen.

So you have to be extremely careful how
you refer to Bruce's work, because I'm

sure that Bruce would agree here with
me. Phase C, as a lower high,

is going to be labeled left point of
supply.

like we've labeled it here and here.

In a different distributional pattern,
where we're going to have an upthrust of

the distribution, and this is going to
be a higher

high. A higher high is going to be
labeled as an upthrust, but because this

distribution of the distribution, this
is a legacy name, as I mentioned to you.

before so these are the two types and
these are the only labeling

that the method has presented to you so
i'm sure that you know you're probably

looking into one of the other schematics
um which bruce has shown so

eric please come back to that particular
blog by bruce and reread it i'm sure

you just you know

remembering it incorrectly and if you
find it with the different type of

labeling you know just email me the link
and we'll be very curious to see if

that's true okay um all right let's kind
of go away

from all of this um i'm feeling that um
we need to speed up a little bit okay

so next chart this is also you know one
nuance here for this particular chart.

You could take the whole formation here
and just say that this is our phase C,

this is our phase A, this is our phase
B, and then we have a very prolonged

phase D.

That would be acceptable, absolutely.

You could also think about two trading
ranges, first trading range and then a

second trading range. And I forgot who
it was, but a couple of people actually.

did it exactly this way.

So that makes a lot of sense to me. Why?
Because I see that the texture here is

somewhat different.

This is a leadership stock that is being
distributed on the way up.

And then after a major sign of weakness,
we're seeing that the texture is

somewhat different.

Let's talk about Opsros here so that we
would not confuse again, you know, the

labeling.

So we are definitely showing an upthrust
here, right, because we are overcoming

the resistance and then we are coming
back into the trading range. So this is

upthrust because this is a distribution.

This is an upthrust of the distribution.

The same thing here. We're seeing a
higher high.

A higher high will be labeled in the
distribution or redistribution as an

upthrust of the distribution.

a lower high will be labeled as a last
point of supply if we would have had

a lower low let's say after this up
thrust right here and we would have

something like akin to this then this
point would be labeled as last point of

supply if we would have had a failed up
thrust that does not

overcome the point of the resistance and
this becomes the lower high, then we

are definitely labeling this as our last
point of supply.

So Eric and Philip, please make sure
that you come back to the material,

it, and understand why we are labeling
it this way.

Okay, so another point right here, you
know, was the question of why such a big

gap.

Eric, but yes, I see that you got it.

I understand that you got it. But my
point is not that.

My point as a teacher, I want you to
learn the stuff that I'm giving you and

to re -ask the same question.

So that's kind of like a point that I'm
trying to make. So hopefully you'll kind

of like appreciate the thought behind
this because it influences the whole

class.

The question of why such a big gap?

So let's think about what is happening
here.

And I know that a lot of you are going
to say, yes, it's an institutional

capitulation and liquidation of their
position.

But the question is not about why
institutions are capitulating or why the

has happened.

The question is more of why a big gap?

So I wonder what you think about this. I
think that I've given you enough logic

already throughout this, you know, five,
six sessions.

So write it down. Write down your
thoughts, guys.

Let's kind of speculate here.

Why do we have such a big gap?

And big is, you know, is kind of like
what I want to hear from you for

the reasons of why.

While you're thinking about this, Let me
go really quickly through the weak

hands value zone.

So thinking about that this is a
distribution, we would be thinking about

hands seeing some kind of value zone and
being buyers,

right?

So where would they be excited for the
first time?

Into the climactic run, right? So all of
this movement.

is going to be weak hands first point of
excitement.

And we could see that weak hands operate
here.

Why? Because of the volume signature.

It's insignificant and yet the price
runs up. So it tells us that the CO is

still holding on to the position and
does not provide...

a huge supply to stop the price from
going further up.

And weak hands are in control of this
market.

Institutional trend followers, hence,
they're still in the position, they're

enjoying the run, they're making more
money, but they're not distributing

because the definition of the trend was
not violated.

So we see from the volume signature that
this is definitely weak hands operating

at this point of time.

So therefore, their value zone is going
to be somewhere on the last run into the

buying climax where we see some kind of
not substantial buying.

And it happens with all of these bars
right here.

And then throughout...

this structure right here that looks
like a reaccumulation in the

we're going to notice how the casting is
going to be done and

how the bind is going to occur also at
the specific spots.

And we want to catch this bind as a
value zone as well.

And then extend this value zone
throughout this whole zone.

So thinking about the value zone, we
obviously will be thinking about the

overbought condition and the oversold
condition.

So every time we're going to go into the
overbought condition, the

behavior of the institutions and the
composite men are going to change.

The composite men is going to start
selling.

That will produce a reaction.

On this reaction, we could see some kind
of violation of the trend.

With this violation of the trend, we
will see capitulation by institutional

trend followers.

And this capitulation is going to be
early capitulation.

And it's going to be not substantial.

They're going to capitulate around this
area right here.

But we have seen from the volume
signature, how much did they capitulate?

Did they sell a lot?

Probably not.

At this point of time, Apple is a very
hot commodity.

It went up, I think, times five, if I'm
not mistaken, off the

lows in 96, even probably more.

We could look at this on the first
slide.

So what do you think institutions are
doing here? They are unwilling sellers

here, and they are probably just
slightly scaling out.

So we don't see a lot of institutional
selling.

And that happens throughout this whole
trading range.

Look at the volume signature.

Obviously, because of this spike right
here, we can't really see a lot, but we

could distinct that this was the area of
where selling has happened on the way

down. This is probably just early
institutional trend fall and

has been selling throughout.

Once the price comes back close to

the overbought condition, what happens?

We're going down. We're going down.

Now back to the question of why such a
big gap.

Well, usually CO and institutional trend
followers are going to start selling

in a kind of...

sequential way, right? So they will sell
into the buying climax. They will sell

into the change of character. They will
sell into the height of phase B. They

will sell into the phase C. They will
sell on the major sign of weakness.

And then they're going to repeat this
process over and over.

But there is not really a lot of selling
here just because the price stays up.

Think about also what's happening in
this area in the market.

So the market had topped in March.

And then it had a very big decline into
August, September.

So think about how Apple is being seen
in this moment of the market history.

it's definitely seen as a defensive
stock.

Why defensive stock?

Well, because it doesn't lose value and
it doesn't lose relative

value. The market is going down, so
relative to the market and to the peers

to a lot of the stocks, Apple is at...

the point of value for a lot of
institutions.

They are not giving up this position.

So when the price starts to capitulate,
and obviously that could happen on

some earnings and on some events, this
is where they're going to capitulate.

But because of how quickly from the
value zone for a lot of the

institutions that became weak hands by
holding the stock, And it drops so much.

What do you think they're going to do?

They're going to capitulate. This is the
event where they're saying like, okay,

I'm done.

I'm going to go away.

So take me out at any price.

And that's why the price drops so much
because the demand to sell is so huge

among institutions overnight. It opens
up with the gap.

so much selling that is happening at the
same time during the day. Now, somebody

is already buying.

There are buyers on the way down all the
way because they are thinking at this

price, relative to where it was, this is
what, you know,

50 % down, if not more.

If the stock looked so great at this
level, why wouldn't it for the value

investor look great at this level?

Obviously, this is not our trade because
we are technical traders.

What we need to do is we need to figure
out how the emergence of the supply will

be tested.

And until we actually break the
downtrend and create some kind of change

character, we can't really make any
assessment of this.

All right, let's look at some questions.
Let's look at what you guys wrote.

Okay, COO distributed its position.

Yes, so CO, ITF, weak hands, everybody
capitulates right

here. So this looks more like even a
general capitulation rather than

just like CO or ITF.

Everybody is capitulating at the end of
the time, at the end of the point.

Jury is making a comment, end of the
quarter, yes, also one of the things in

bad market.

Yeah, so I think it's the market, it's
just that the stock, you have to think

within the context of what's happening,
right? So right away, I'm giving you all

of the data for the market on this
chart, even though the market is not

I'm giving you the time you should
remember what has happened during this

period, and then you can create the
whole story as to why this gap happens

this, why it's such a big gap.

Okay, from Noesh.

I marked these charts with two upsloping
trading ranges as well, but my

boundaries are slightly different. I
often get confused around which points

connect for slope and trading range to
mark boundaries.

Is it more visual range or precisely
connecting specific points?

This is a good question. So we
definitely want to identify the

resistance points in phase A, which will
be a buying climax.

and phase C, which will be as a higher
high in the upsloping structure,

right? We are only discussing the
upsloping structure.

We always will have higher high in phase
C.

Or maybe we'll have a lower high and
then, you know, a higher high in phase

something like this. So we're always
looking for these three points.

Points of resistance in phases A, B, and
C.

And then we are trying to connect them.
And only after that, we're looking at

the automatic reaction and any type of
sign of witnesses in phase B to

extend the parallel line.

So that's what I did here.

You could potentially also identify, you
know, maybe this height as well.

But as you could see, this is just
another parallel line to the one that

created. out of the bind climax and up
thrust right here um so um this is just

another level of resistance another
level of support and then the second one

i'm taking here phase a and phase c
please know how phase b has

this up thrust action above this
resistance why i did it like this again

is extremely important low right here
And also, obviously, yes, there is some

kind of visual attempt to fit

the definition as well. And I think that
you have to understand to what

reasonable extent you can do this. What
is that reasonable extent?

Well, seeing the significance of this
height, connecting on the same level,

then seeing the significance of this
low.

oversold condition, and then look at how
there is a commitment and then attempt

to rally to the same level.

So quite a lot of concepts that fit
together in this upsloping range.

And then obviously the upthrust action
is just an upthrust in phase B.

All right.

Good question.

All right. Let's go even faster.

So here, a couple of things that we need
to discuss. Obviously, institutional

value zone, we just looked at this
range.

We looked at how the buy -in came on the
daily chart right here.

This is definitely a lot of value on a
short -term basis, a lot of liquidity.

Again, coming out of this zone, now the
price is cheaper, and there is

a lot of value for institutions.

Please note that every time...

It went below the value zone into the
oversold condition. The price recovered

really fast, really fast.

And only in phase C, this is where we
see that the demand is

inactive.

And until it starts to emerge again and
there is some

kind of institutional accumulation on
the way up,

and we see this from the volume
signature, only then the price will

up because this demand emergence

will produce buying, and

buying obviously will produce the
momentum up, and that will push the

And again, we are talking about the
concept of emergence of the volume

specifically increase of the demand,
with the

movement of price up. So we're kind of
seeing how the result to the upside

is following the demand signature.

So that's the first condition.

So this, the absorption and this
movement of the price,

obviously will be shown on the increase
of the momentum.

The price will start moving and it will
start moving faster

to the upside.

That will show a relative
outperformance.

So it's very interesting.

to observe how institutional clients are
always talking about this thing, the

third one. And in effect, I mean, we're
teaching you the same thing, guys,

right? Because relative strength is
extremely important as a subject. It

identifies, you know, the
outperformance, so it suggests

behind it.

But if you think about the origination
of the relative outperformance, it

comes... once the momentum is increasing
and it comes after the emergence of the

volume signature, that would suggest
that the demand absorbs the supply and

capable of pushing the price up.

Only when the effort and the results are
synced, that's when everything

else is going to happen.

So kind of interesting how it's being
all interpreted.

What else?

There were quite a few labelings like
this with phase C right here. I don't

any problems with that either.

Because if you're taking the position in
this area, you're still profitable for

many years ahead.

The only thing that I would mention is
that this area right here has its own

texture. So look at the price, how it
behaves. Look at the...

volume signature as well everything is
kind of like of the same type of the

texture we have a stop in action and
then we have the volume on the way out

sometimes this type of volume activities
define the ending of a

downtrend and the beginning of the
uptrend or they define the boundaries of

whole trading range you could also think
about this in much larger terms look at

this volume signature right here defines
the beginning of the trading range look

at this volume signature here defines
the beginning of an uptrend so the

signature emerges sometimes at the
points where either where there is a

aggressive absorption in the points of
the liquidity where everyone's panic is

panicking or where there is now um

a shift in sentiment from bearish to
bullish.

And a lot of the institutions are trying
to get into this position as soon as

possible and the urgent volume signature
or the urgent demand signature occurs.

All right, here's the same trading range
only on the daily. This is that big

phase C that I've labeled. So let's look
into this really quickly.

We're seeing that there is a lot of
buying here as a stopping action. Then

is a lot of buying here on the way down.

So that kind of defines that value zone
where institutions are buyers. Look at

every time it has a pop -up like this, a
spring type of action once

we go into the oversold condition.

Isn't it great to understand what spring
is all about?

And then once you see that, you know
that every time, if this is a true

accumulation, then every time you have
an oversold condition, you have some

of attempt of the price to come back and
to return to the trading range,

return to the area of the resistance.

And hopefully on one of those rallies,
like this one right here, the price not

only will come back to the trading
range, but overshoot it, overshoot the

zone, commit to the upside, and then
react into this area of the support.

Now something even more significant has
happened here. There are two things that

we could see from this area where,
excuse me.

Sorry about that.

All right, I'm back. So there are two
ways of how institutions bind in

this particular area.

They are buying on the way down. We
could see this from the volume

This volume signature increase suggests
that, yes, supply is increasing and

supply is still dominant over the
demand.

But at the same time, we already see
that Demand is behind this volume

as well. And demand is not only present,
but it's increasing.

Therefore, it's not only the increasing
demand, but we

see from what has happened afterwards,
it's a stopping demand.

And therefore, we're concluding that
this could be an institutional demand.

And then we see a different type of
institutional demand.

It's the demand that produces this type
of move on the way up where demand

signature is extremely high, volume
signature is extremely high. That

an urgent institutional accumulation on
the way up. And think about the urgency.

What does it really even mean?

Urgent demand.

That probably means that institutions
are seeing so much value currently that

they want to get in into this position
and just stay in this position.

And they want to get in at the lowest
price.

So that's why, because a lot of them are
trying to get in as they see this value

proposition, valuation of the stock
somewhere higher in multiple years.

They're trying to get in at any price.
They don't really care.

Okay, so what else here?

One of the interesting things is just
the phase C definition.

So the thing about this is it could be
interpreted in

so many ways. I mean, I could see that
somebody would be saying that this is a

bind climax here because there is a
climactic run.

I wouldn't argue with that whatsoever.

But I also could see a climactic run
here.

And obviously, I'm looking at this
reaction right here and comparing it to

of the previous reactions.

And this looks like a change of
character. If this is a change of

then this is phase A, and we are in the
trading range.

So therefore, the next move up may be
just a definition of a strength that

suggests a reaccumulation rather than a
distribution.

But we still would be thinking that this
is an attempt to retest the previous

high as a secondary test of thrust
action just because we overcame,

then came back.

So then think about the number of tests,
right? So test number one, test number

two, test number three. And test number
three happens as a higher low.

Could phase C have this type of
characteristics?

Yes. What should happen after phase C?
Well, we should commit above the

resistance that was created in phases A
and B, and now everything should click

at this point.

And commit it in a specific way. We want
to see sign of strength

characteristics.

What are those?

Increasing volume signature, increasing
spread.

And we see both of those.

And relative to the previous rallies,
it's definitely much, much better.

Plus, on the major sign of strength, we
are committing above, and then we are

reacting exactly to the area of the
support.

So phase C might not be seen right away
as phase C.

The tendency is going to be to label
this as phase C.

And even that is going to be sufficient.

just because if you think that this is
phase c your point of interest are going

to be all around this area which is the
area of where we want to come in and

establish the position

all right uh

let's come back to questions um second
trading range late december marked as a

spring um can it be um right here i'm
assuming

Again, if you think that this is phase
C, then yes, the proper labeling would

a sprint.

Now, in this case, because I'm labeling
this as phase B, in phase B, we are

going to have sprint type actions, but
not sprints.

But this is just relative to this
formation, to the local formation, you

label it as a sprint.

relative to the whole trading range,
then this action in phase B is going to

interpreted as a secondary attempt to
retest the previous low as an

automatic reaction.

All right.

Let's kind of see what else is
interesting here.

Yes, on this chart, a

lot of you, Put phase C right here.

So this is a little bit difficult here
just because this is

an apex formation.

It's not your usual horizontal range.

But you have to apply concepts.

And that's why I ask you guys, please go
to the schematic.

Please go to the explanation of all of
the Wyckoff events with the

characteristics. And think conceptually.

How would we do that?

And move to the upside, it should end
somehow and somewhere, right?

Where is that stop in action?

Well, probably here.

Why? Well, because we experienced the
biggest reaction after that.

So most likely, this is a change of
character.

If this is a change of character, this
is phase A. If this is phase A, then

is an automatic reaction.

Then the next attempt to go up is going
to be a secondary test.

It commits above by one close.

So an element of an upthrust.

But because of the character, of the
change of character, right? So it's not

that robust to the downside.

It does not retrace more than, you know,
it doesn't go to one half of the

previous move.

It looks very bullish. So therefore,
upthrust action, because we're thinking

that this is still a reaccumulation.

Plus, it also happens at the level of
the previous more significant climactic

action. So we're thinking this could be
a major sign of strength and then a

major backing up action.

So as we've defined phase A with all of
those elements, then we want maybe to

think about either the number of tests,
which is one, two,

and then three. And then think about
other concepts.

In apex formation, we will never see a
very prolonged backing up

action. We will never see also a very...

long major sign of strength.

It's going to look exactly like this.

It's just a slight commitment to the
upside, quick retest, and then off we go

the races, just because of the apex
formation and the characteristic of that

apex formation.

Usually in the apex formation, a lot of
the volatility is going to be in phase A

or early phase B.

This is where the institutional rotation
will happen.

With this institutional rotation, we are
going to see the exchange of shares

between strong institutional hands and
weak institutional hands.

And then after that, into the apex
formation, the volume signature is going

diminish significantly.

this is where SEO is inactive.

And this is where trend followers are
inactive as well.

And this is where also weak hands are
somewhat inactive too. So we have that

diminishing volume signature.

And it's only on the breakout, this is
where some of the institutions are going

to see again some value, probably on
some event.

and they're coming back in and that
creates that momentum that push that

the price out of the apex formation in
here uh let's just

quickly look at the value zone look at
this trading range so there's some

uh institutional pickup on the way down
there's definitely a lot of buying here

and then on the way up So this defines
this whole value zone. And then as we go

down, this looks more like a shakeout.

It should not be labeled as a sprain.
It's labeled as a sprain just because of

the downslope. But if we're looking at
the horizontal range, like this one

here, this is definitely the character
of the shakeout where we have multiple

closes committing to the downside.

It's a significant move to the downside.

What else we don't see here is that you
know, the volume signature has not

increased that significantly. So that
could make it an argument for the

But then an oversold condition where it
quickly comes

back to the value zone and then
overcomes it.

And those value zones, they change,
right? So from one level, they go to the

next level where we see a lot of
institutional volume.

And, again, in the range where we go
into overbought condition, what's going

happen? Professionals are going to sell.

Where we go into the overbought
condition, there's going to be an

sell.

Where we are, well, we don't have an
oversold condition here, but here was an

oversold.

So, a quick recovery.

Okay, quick questions.

Second trading range,

late December.

Oh, I think it was a different, it was a
previous slide. Okay.

Second trading range.

Secondary test has been up thrust
action.

It has price action and volume signature
as buying climax.

I understand you're just curious.

Yeah, it has those characteristics.

But this type of characteristics are not
just necessarily going to be present at

the buy -in climax.

You can have different other spots that
would have expending spread signature,

expending volume signature.

Excuse me. So my logic here was just
based on interpretation of the change of

character and the stop in action of the
buy -in climax.

But if you would put it here, buying
climax, as I mentioned before, you could

label it in a different way. You could
probably think that this is phase A

here, and then this is B, and then this
is C again, and that would be okay.

Again, the labeling does not really
matter if you're making a profitable

That's the whole purpose of everything
that we do here.

All right, so what do we have on time? I
was kind of thinking that we're going

to go into 6 o 'clock today, so we still
have some time. Okay.

All right, so this one was somewhat
easy.

A lot of you guys just kind of like
nailed it everywhere.

I like that a lot of you put here phase
C right here. Again, we are talking

about an attempt to upthrust.

And just because...

It creates a lower high.

That's why we label this as a last point
of supply and couple of tests into

that last point of supply.

Major sign of weakness. Look how in the
downsloping distributional range, we are

seeing a commitment to the downside and
then attempt to...

come back into the trading range, and it
comes exactly to the point of the

resistance that acted before as the
sloping down support.

So all of the concepts are there.
They're all correct.

Okay, well, it is definitely a very
interesting Wyckoff story here, but I

that maybe we'll skip this for today.

Look at this value zone where we are
seeing that a lot of institutional

buying has happened in this area.

So where is the price?

It's right here in this zone. So that
defines that institutional value zone

us. Anything below this is oversold and
will be quickly bought in

by institutions.

Look at this.

Look into this. And we kind of could see
how...

These three points are creating a sprint
type of action

just slightly below that institutional
value zone. So that's

kind of like a true definition of a
sprint to me.

It's an oversold condition below an
institutional value zone

that produces a quick...

absorption of the available supply below
this zone, and that brings the price

back into that zone very fast.

And that's exactly what we're seeing
here.

Another interesting thought here is that
look at the volume signature.

Once institutions are in this position,
they just basically don't buy.

They consumed, absorbed all of the
supply available, and they're just

So as the price retests the lows, every
time in the

oversold condition, there is some kind
of small pickup of the supply, and that

absorbs and kind of concludes the
absorption process. That absorbs

left.

to what they already have bought, and
they have bought so much, that at some

point, supply is no longer available,
and even an inactivity by

the CEO produces a move up, just because
supply is

so low.

So this is a very important point. We
will come back to that on other slides.

All right, here.

Okay, guys, I think that what you'll do
here is let's just do

this on your own. So let's do a self
-review.

So this slide.

Okay, so this one is interesting.

And a really good question from Nilesh.

Let's go first through the
distributional weak hands value zone.

So again, we know into the buying
climax, the first point of excitement is

to be by weak hands. It's going to be on
the climactic run, which is this.

And we see that from the demand
signature.

And we define the zone throughout this
whole range.

Now the question...

that was asked by Nilesh is, at what
point do we need to consider this as an

upward slope in trading range?

Because originally, this is what we
would be thinking. And originally,

how I labeled this range when we had
this change of character that was well

-defined with the increase in volume
signature and the biggest reaction in

upswing that we have seen.

That suggested... a non -consolidating
environment a trading range and uh the

question that now is asking is very
important at which point would we be

thinking about up sloping structure
rather than more of the horizontal

and i think that we would be thinking
here and i think this was another

from somebody or maybe in this question
we could see this Would we be

biased here?

I think that without thinking too deeply
about this, and by deep thinking, I

would be thinking about what were our
original targets.

And actually, their original targets
suggested exactly the stop in action

somewhere in this area.

And those type of PNF targets

were off 2000,

8 2009 trading range so that's a big
trading range right there um

uh so if we are in the vicinity of this
targets we should be extremely careful

and we should be uh stopping listening
watching as to what

the price and the volume is showing us
and telling us having said this

It seems that this area has the texture
of the reaccumulation.

We see multiple tests on the diminution
volume signature, the tests that are

higher lows, and we have higher highs,
local higher highs.

So that looks constructive and bullish.

This reaction right here that has some
volume signature does not produce a big

result to the downside.

It's diminution as a result, which is
bullish.

short -term bullish on such a big effort
signature.

Also, it stops exactly at the first
point of the first automatic reaction.

So that's also a good symmetry, bullish
symmetry for us to see.

So I wouldn't mind actually

having a position or thinking about
establishing a position at this spot.

So somewhere here on the breakout,
that's another possibility.

And then once you are in this trading
range, you're probably going to close

this position here. This will be your
exit.

So you guys kind of could see that my
strategy is not necessarily to be

every time. My strategy is to be sure
that I'm going to

see the opportunity and I'm going to use
this opportunity.

Obviously, on a much deeper level of
thinking, I mentioned the target zone

here, and I mentioned this really
briefly. But this was a very consistent

selling right here.

have produced some kind of hesitation.

But the actual recognition of this
pattern came right here. And the reason

it came here, you know, on this reaction
or on this failure is because we're

still talking about a leadership stock
that has a structure

of the distributional structure of
higher highs, higher lows.

And those are going to have a lot of
reaccumulation characteristics in phase

So it's extremely hard to figure this
out until it actually shows

itself on a change of character out of
the trading range.

But if you train your eye to recognize
this failure, so there is no

up, there is a failure.

then somewhere here in this zone, you
could change your bias.

And that's what I do with a lot of
stocks. And I've shown you guys with

just recently where Navadir has been
such a leadership stock.

I've tried to short Apple in this
campaign to the downside and kind of

picked up just, you know, what's correct
on the bias was.

you know, premature to exit.

But the concepts are the same.
Leadership stocks are going to be

a different way.

And you have to sometimes change your
bias on the change of character after a

new high. And sometimes it's extremely
difficult to do just because mentally

it's hard to do.

Now look what happens with the weak
hands value zone as the price falls.

and comes into the oversold condition,
first of all, the recovery is very

That suggests that still there is some
kind of value to some of the weak hands

at this point of time.

And then look at the second rally. It
comes exactly to the point of where weak

hands were starting buying.

It excites buyers because they are
thinking that this is an oversold

And then institutions are just selling
into that excitement.

Both of the rallies have that excitement
characteristics behind it in the way

how the price moved.

And then on the way down, we're seeing
that

late institutional capitulation, it
coincides with the institutional

value buying on short -term liquidity
and long -term value.

So in other words, why is it so
confusing?

Why are we using institutional in both
cases?

Well, the drop to the downside kind of
suggests in the volume signature that

institutions are present.

They are sellers at this point of time.
Or rather, I should say, specific

institutions are sellers.

And then other institutions at the same
time are buyers because they are seeing

some value. And they are saying that
even so early on in the process of

establishing the new low, establishing
the new accumulation range, we are

willing to come in and to buy because
there is so many stock shares that are

available at this point of time.

So they will do exactly that. And this
is where we would put that first initial

value zone.

And then every time we go below that
oversold condition, we quickly recover.

Go below that oversold condition,
quickly recover.

Go below, quickly recover.

And on the recovery that takes us
throughout the whole trading range,

when we are identifying a major sign of
strength, changing of the environment

from a trading range to the emerging
uptrend thing. And we only need the

confirmation by the backing up action.
Now look how the price...

comes back into the value zone.

And again, that creates what? An
oversold condition, but now an oversold

relative to the price that is above the
value zone.

And again, it acts as a screen type of
price

action where the price goes below the
support and then quickly recovers. Why?

Well, because somebody sees value and
picks it up.

somebody was seeing value here and then
seeing more value even lower.

And that should kind of trigger your
thinking about,

actually not there, sorry, here and
here.

This type of the decline into the value
zone and the way how it recovers so

quickly, you should be thinking that the
volume increase

suggested that there is a lot of demand
that's coming in. First demand was

absorbing the supply, and then the
second demand was absorbing whatever was

left. And because supply has diminished,
the absorption was faster, and the

price recovered pretty fast.

So think about that type of logic.

If you are thinking this way, then you
might be even coming in into this

position here.

Because you might be thinking that if
this is an oversold in the backing up

action, this could be the lowest low in
that backing up action, which it was.

So, and it could create some kind of
like maybe apex formation and this low

going to be the lowest low.

So, we want to start thinking this way.

Okay.

All right. So, this one is going to be
for your home review.

Let's do that.

All right. So now let's talk about the
volume and spread analysis. And we are

to 5. Okay, great.

I want you right away to concentrate on
one idea and one idea only.

When you are looking at the volume and
spread analysis, and you probably have

seen it from different sources,
different software sources.

So the biggest mistake that I see
students do with this material is that

see the signal. They could interpret the
signal, but they do not

look into the context of where the
signal occurs.

In other words, you need to understand
the environment that we are in and then

look into the VSA signal and interpret.

this signal relative to that environment
so let's look at that and we're going

to start with basics and this comes
actually from one of the ink students

blythe he is an md and jerry has taken
hanks

classes uh many decades ago and he has
created this kind of like uh you know a

small

spreadsheet references to the volume and
spread and the way how they behave.

So I'm using this first slide just to
give the credit to Jerry and also to

go through some general considerations
about the spread and the volume. So

look into this.

So under the spread, the increase in
spread would suggest that there is a

resistance to the price progress.

Decreasing spread would say the
opposite, some resistance to price

then the average is going to just
express the normal trend of price

Volume is going to be much more
difficult.

General considerations.

Usually volume is going to be associated
with the force behind the power.

So we usually would think about the
effort behind it.

Volume usually expresses the quality of
supply and demand, and we'll talk a lot

about this because we will be creating
those volume equations with the supply

and demand.

Increasing volume in general is going to
be usually suggesting

supply.

That's number one in a lot of cases.

but then also it will, in some cases,
will

show the emergence of the demand.

And we will just need to be aware in
which environments, in which contexts

we are interpreting that signal between
the volume and the price.

A very heavy volume usually is all about
the supply, but sometimes...

there's going to be an urgency to
accumulate, and that's going to be an

absorption on the way up on the major
sign of strength.

And we've seen that.

A massive volume signature usually will
indicate the climactic action.

Decreasing volume signature would
always, we'd be thinking about lessening

the force.

And then a very light supply signature
is going to indicate,

and I think I should take this down.
This is actually not necessarily

Okay, so let's just keep it like this.
Increasing, heavy, massive, and

decreasing. So those are general
considerations about the price and the

Now let's look at specific scenarios.

And I've created this slide for you
guys.

so that you would print it out.

And this is when I say print this out,
put this in your library, I mean study

it, have it in front of you as a
reference so that

we would be on the same page.

So one of the things here about volume
and spread analysis

that I keep repeating is the context.

The context...

is going to be the definition of the
environment that we're currently in

so the context uptrend and we have
different scenarios where let's say

increasing and then at the same time we
see that the volume signature is

increasing on the same bar so both both
uh result is

increasing and effort is increasing how
would they how would it look on the

volume equation right so volume is
increasing demand is increasing probably

than supply and we would be thinking
that with the expansion of the price

on the healthy increase of the volume
signature supply might be actually going

uh lower it's still present but it's
diminishing and demand is not only

but it's increasing

So effort is increasing and result is
increasing.

It's a bullish activity and we should
expect a continuation of the uptrend.

Second scenario.

This is where a spread is decreasing and
it still happens on

the increased volume signature.

So what does it mean?

We have a decreasing spread, which means
a decreasing result.

And we have an increase in volume, which
shows us an increase in effort to push

the price up.

So in other words, there is an increased
effort to push the price up, and yet it

can't do so.

Why would that happen? Why would there
be some kind of stopping of this

progress? Well, it only can happen with
the emergence of the supply.

So we know that supply...

is increasing and demand is still
winning because this is an up bar the

this bar is higher than the previous bar
close so demand is still dominant over

supply but because supply is increasing
it suggests that supply wants to

stop the uptrend from going further up
so therefore short term we will

this as a potential bearish implication

And short term, we might be expecting
some kind of reaction out of this area.

Third scenario in the advancing markets.
Spread is decreasing.

And with the decreasing spread, we have
a decreasing volume signature.

So this is an opposite of the volume
signature that we had in scenario number

two.

So how would we interpret this?

Decreasing spread.

means decreasing result to the upside.

And that happens on the decreasing
effort.

And here we might be thinking that
demand is actually decreasing on the

decreasing volume signature.

And we probably would be correct. There
is a lot of increase of the demand on

the previous bar.

And then after that, the demand is
exhausted.

And it's not as much as on the previous
bar. So it's going to be shown in the

volume signature and it's going to be
shown in the result, in the spread.

With the supply, this is a little bit
difficult here for us to say from the

volume signature.

Our natural inclination is going to be
that supply is decreasing as well, which

is because the volume is decreasing.

And I think that regularly this is what
I would go for.

But I also could see how supply could
stay at the same level.

And that also would suggest some kind of
bearish behavior.

And also supply could slightly increase
from the day when the, let's

say we had the day like this, where
demand is increasing and supply is

decreasing. So imagine that the volume
signature is even lower.

So this could mean that supply also is
decreasing.

Well, one way or another, what is
happening here is that Demand is

and that suggests some kind of
vulnerability to the reaction.

So it's interesting how in both cases
number two and three, we

are suggesting that the reaction should
come.

But yet, there is a subtle difference
here. And hopefully, guys, you already

know what it is.

And that subtle difference is in the
emergence of the supply on the volume

signature that is increasing.

This is more bearish

than the

scenario where the volume decreases and
supply might be decreasing as well with

it. Because that would suggest that,
yes, demand is exhausted.

But at the same time, there are no
selling. In case number two, demand

there, but supply is definitely present
and it's increasing. So somebody's

selling. And that's kind of like that
subtle difference between number two and

number three.

Number four, increasing spread and
decreasing volume signature.

So it's different than scenario number
one.

How do we interpret this?

Increasing result in the uptrend. We're
having a big spread to the upside on

the decreasing effort.

So the decreasing effort suggests a
decrease of the demand

together with the decrease of the
supply.

And it's this decrease of the supply
that makes it a bullish scenario because

it basically tells us that There is no
one selling at this point, and therefore

supply is not available, and demand is
also decreasing, but there is no need

a lot of demand to push the price up.

We would refer to this type of action as
an ease of movement, and we'll talk

more about this.

Ease of movement suggests a progression
of the price in the direction of a

current trend.

decreasing effort where the opposite
force whether

it's a supply or demand is decreasing as
well last

one number five spread is increasing
volume is increasing and it's increasing

massively so there is a massive volume
signature and that represents a

massive effort to push the price up.

And usually we would see this on the
chart as like a big, big volume spike.

And we would be talking about the volume
spike as the massive increase in volume

that suggests that the demand is still
there and it's increasing as well.

But at the same time, supply is
increasing too.

It's not only present and it's not only
increasing.

Relative to the previous examples that
we've seen where a supply might

we are seeing that here an increase of
the supply is substantial.

And that suggests institutional selling.

And with institutional selling, the
short -term scenario is always going to

bearish. And usually that's what kind of
produces those stopping actions as

buying climaxes.

This is where a lot of exchange of
shares is going to happen.

This could be a terminal buying climax.
This could be intermediate buying

climax.

Usually it would happen into the
overbought, overthrown condition.

That's kind of like a preferred
scenario.

It also could have, we could also see it
in the trading range.

maybe a climactic type of action into
the point of the resistance.

And then this could act maybe as an
upthrust in that structure.

So that's a possibility as well.

So let's see if we have any questions on
this before we move on.

Questions, comments?

This should be probably...

Easy to grab as an idea.

The only thing here is that I want you
to concentrate on is, and obviously I

want you to go through this as you go
through your homework.

I definitely want you to remember this
scenario.

All right, so now Lesha's asking, how do
open and close levels impact?

these interpretations?

I think we're going to answer this
question a little bit later on, but this

good one, so let's keep that in mind.

For now, we just want to concentrate on
the spread and volume in that

relationship.

Okay, let's look at the next one.

In the declining market, where the
context is the downtrend, let's look at

all of these scenarios again.

They're going to be just a mirror image
of the ones that we looked for the

advancing market.

Spread is increasing, volume is
increasing.

It's an increasing result with the
increasing effort.

And when the volume signature is normal,
this is just a normal activity in the

downtrend action.

This is where supply is going to
increase and it's going to still

demand. Demand could be very easily
decreasing at this point of time. The

-term bias for this interpretation is
going to be bearish and a continuation

the downside.

Next one, in scenario number seven,
decreasing spread and increasing volume

signature. So we're seeing that the
spread has decreased significantly, and

the volume signature still is going up.
So we have a case of the decreasing

result,

happening on the increasing effort,
where supply is still increasing,

but we already see some emergence of the
demand.

And this demand attempts to stop the
downtrend.

That's the intention.

Just because the volume signature is so
high, that suggests that this emergence

of the demand could stop the trend from
going further.

further down. And by the way, when I say
that stop the trend, it could be even a

temporary stopping. It could produce
just a temporary short -term rally and

continue with the downtrend. Or it could
produce a more meaningful move to the

upside. It's all contextual. We will
have to look at where exactly it

But for the short -term buys, we're
always going to be thinking bullish in

scenario. We would be thinking that
Demand is there. It's emerging. It's

increasing. It's absorbing the supply.

So the downtrend is vulnerable at this
point of time.

The same would happen on the diminishing
spread and the diminishing volume

signature.

We would be thinking that demand is
diminishing at this point.

Now, the only difference between this
and the previous scenario, scenario

seven, is that in scenario number eight,
supply is decreasing as well. The

overall signature, volume signature, is
going down.

So most likely, we're going to have
diminished supply and diminished demand

the same time.

Now, that's actually still preferable to

the bearish scenario, just because
demand is

not there.

Demand is poor.

diminishing supply could push the price
further down.

Okay, and this is where I see the
mistake. So this would be, oh no,

that's fine.

Okay, so next one, number nine,
increasing spread and decreasing

volume signature.

So if we would compare it to number six.

That would be a good comparison. I
probably need to shift them a little bit

here. Okay, so what do we see on the
results? Obviously, increasing results

this type of spread.

And then it happens on the decrease in
effort.

Volume signature goes down. So that
suggests both decrease of the supply and

decrease of the demand.

And that suggests, again, and ease of
movement, as the price could move

lower on diminishing demand signature,
and therefore it is a short -term

bearish interpretation.

I see the mistake right here. It should
be bullish here.

Decreasing result, decreasing effort.

Decreasing demand.

Just a continuation.

What did I do on the previous slide?

I see.

Okay. I think this is the one that
should be bullish.

Apologies for that.

So vulnerable to rally. So yes, bullish.

I was thinking like, I'm going to make a
mistake somewhere. So this is it.

Okay, so ease of movement. And then the
last one is the climactic one, right? So

selling climax with the massive volume
signature, massive effort behind it.

Supply is increasing a lot because of
the panic he is selling by weekends.

But demand is increasing at a much
faster rate than anything that we've

before on the demand increase.

So therefore, we're concluding that this
is an institutional demand, and

therefore, it's bullish.

A stop in action, reversal, and

attempt to rally.

Okay, yeah, thank you, Philip. That's
great. I like the fact that you like the

slides. Yeah, we're trying to make them
simple, but yet very informative.

These are the slides that I want you
guys to print out. Again, you know, in

case right here.

Let me just correct this right away.

So here it's actually bullish.

All right, guys, so something to think
about, study, print those out, go

through, because we're going to use
those a lot in our group exercise.

Speaking of homework, so this is the
first homework from this class. We are

going to look into the volume and spread
analysis, and what I want you to do is

to visualize all concepts from previous
two slides, number 19 and 20.

on any of the charts.

So take all of these 10 scenarios, 1, 2,
3, 4, 5, 6, 7, 8, 9, 10, all of them,

and find

examples on preferably

one chart. I am not expecting you to
send me 10 charts for different

I want you to find maybe like one chart
that would contain If not all of them,

then the majority of them. And just send
this slide to me or chart

and identify all of these 10 scenarios.

All right, so that's homework number
one.

Now let's talk about the laws of supply
and demand and effort versus result.

So as you know, Wyckoff Method has three
laws.

The first one is...

the law of supply and demand.

And on a very basic level, it just
basically says that if you

have more demand than supply, then the
price will go up. When you have more

supply than demand, then the price will
fall. And sometimes I think we

overcomplicate our volume and price
analysis and we forget about this simple

interpretation of the supply and demand.

and what it means.

So I want to point your attention to
that.

Now, the biggest law for me in the whole
methodology is

the law of effort versus result.

Because effort versus result encompasses
both a situation where a supply is

larger than demand and the price goes
down.

and when demand is larger than supply
and the price goes up easily.

But it also suggests a different
scenario.

It suggests that when we have an
increase in effort

and decrease in the result,

we are going to have an opposite

counter to the general observation of
the increased effort conclusion.

We will basically say that the price is
going to do an opposite thing.

And that's what we need to learn. And
that's why the law of effort versus

is so important.

So how would we measure the effort?
Well, obviously we're going to look at

volume signature and we're going to say
that volume is just the representation

of the effort.

But we're going to be a little bit more
specific about the effort.

And to me, effort is either increase or
decrease in the volume signature.

It's not just the volume signature
itself.

It's the way with which the volume
changes right so we usually would say

see an increased volume signature that
would mean that the effort

to push the price down has increased a
lot

and what do we see we see some
progression but we also see some kind of

action that suggests that behind this
increasing the volume signature there is

some demand signature

and there are some buyers.

Because of the extreme volume signature,
it's an institutional buyer.

And actually, we know exactly who was
buying Goldman Sachs in 2008

in September. There was some news that
came out during that month that Warren

Buffett was buying the stock through
warrants at a price of $120.

Please note that the price went below
$60.

And he still held on to that position,
obviously because of the warrants. I

understand that.

But the CEO type of institutions are
thinking in a different

way than we do.

And our task is obviously to understand
how they think and how they behave.

So, and this is what we're studying in
this course. And you could see from this

example, if he's buying, you know, the
price goes up and then it

observes a lot of available supply at
this level.

So then the next time the price goes
down, supply is going down and someone

is buying.

And then all of the other times,

Again, supply is going down. So there is
absorption process that is underway

that has started with Warren Buffett
purchases here.

And then whatever he observed is no
longer available in the market or

whatever other institutions observed at
this point of time. And therefore,

supply is still going to be relatively
high to the averages.

relative to the previous spikes is going
to be smaller just because absorption

has happened.

So what we want to see from the effort
is the increase or the decrease of

effort.

And then obviously when we're going to
have an extreme increase in effort, that

usually is going to be associated with
gaps, with stopping actions, with

momentum type of bars, and so on and so
forth.

We need to understand how we will judge
the result, how we would assess the

result. Obviously, results will either
increase or decrease as well.

So I've developed specific measurements,
and those are just for our

WTC course.

I want us to look into the increase or
the decrease of a spread or a

true range.

And we'll talk about this in the next
class.

We're also going to look into the close.
And we will be thinking about two ways

of how to address the close.

And the question from Nilesh was
previously about how would

the close or the closes influence our
interpretation

of the result.

So we will look into the close from two
perspectives.

Relative to the daily spread or a true
range, right? So we would be looking at

how do we close relative to the

actual height

of the spread, right?

If we're closing in the upper part above
one half of the spread, we're going to

interpret this as bullish.

If we're closing below one half, we are
going to interpret it as bearish close.

And then we're also going to look at the
closes from the perspective of the

previous close. So we're going to look
at the previous close, and then we're

going to make a judgment as to...

the next close, and we're going to look
at the progression of close to close.

Because think about closes as the
commitment of institutional

traders in the direction of the current
swing or current trend.

So it's going to be extremely important
for us to see what's the progress

between one close to another.

And then the third one is going to be
extremely important.

And it's going to be somewhat difficult
for

us to remember that this is something
that we will be looking at. It's the

intention. And the intention behind the
bar is always going to be overcoming

some kind of commitment line. It could
be a resistance.

It could be the previous day bar high.

And if we see that commitment above,
we're going to say that the intention

fulfilled. If we're going to have a bar
that comes close to that, maybe

even attempts to commit, but then comes
back, we're going to say that the

intention to commit above the commitment
line or the specific resistance line

has failed. So therefore...

As a result, we're going to say that
intention has failed. We're going to say

no. And that would mean that the result
is diminishing.

And that's a very, very important point.

Volume spikes.

Well, we kind of discussed those in the
previous two slides, but still again, up

spike is going to be on the up bar where
demand still dominates the supply, but

supply is already increasing.

and it's producing some selling.

The down spike is going to be where
supply is going to dominate the demand,

demand is already increasing as well,
and it's absorbing the supply at that

point of time. It's adjusting the stop
in action and the reversal.

So, again,

this is something that I want you to
remember by heart.

What do we look at in the effort? What
do we look at in the result?

Especially how do we measure the result?
That's extremely important.

Then I also want you to understand that
in some cases, for instance, in the case

of this latest reaction, we are going to
have an increased volume signature

that would suggest or equal an increased
downward pressure.

to the downside is increasing.

And we're gonna look at this reaction
and we're gonna say this reaction is

actually not that big.

It's actually in line with the previous
reaction and it's less than the

reactions that we've seen before at the
beginning of the move. So therefore,

we're gonna say that the result to the
downside has decreased.

So what's interesting is that Here,
there is an opposite

trajectory for effort and the result.

The effort is trying to stay up and is
trying to increase and

to push the price up. So the effort to
push the price up increases while the

result is somewhat mediocre.

And this is where this law of effort
versus result is so valuable.

That increased effort on the increased
volume signature and inability to push

the price down would suggest that
something is interfering.

Something is stopping the

selling from pushing the price further
down.

What could it be?

Only one thing.

Buying.

Or demand?

Well, not just a regular demand,
probably institutional demand, just

the volume went up so high and the
public cannot have that type of volume

signature.

And that's why this law is so important.

Out of all of the three laws, if you
will remember one, remember this one.

Remember the effort versus result.

Okay, next question. Should the increase
or decrease in volume be compared to

local volume signature or meet long
-term levels as well?

Now, again, really good questions. I
like that.

It's just that they're a little bit
ahead of where we are. So we'll

discuss that during our exercise, and
we'll definitely discuss both, the more

local increase and more.

long -term increase, and we'll just go
through this material.

Okay, now the exciting part.

Okay, so we are starting our group
exercise, and I will need a volunteer at

point. So think about this for a second.

Meanwhile, our exercise is going to be
devoted to both volume and price

and price structural analysis.

This is the exercise where we are going
to combine

the knowledge that we got on the price
structure, and the new information that

I'm going to still keep giving you
through all of the five classes that

going to have on volume and price.

The assignment for this exercise is to
identify what is dominant, supply or

demand. And we're going to dissect this
either with the single bar analysis or

with the SWIN analysis.

We, as I mentioned, are going to combine
the price structural analysis with

volume analysis.

I want you to make your call on what
kind of most probable

price action we will have after the
point of discussion on

the chart that we're going to look at.

I'm also going to ask you for labeling
of WICA phases and events.

of any of the trading ranges that you
see.

And most important task as a homework
task is going to be

to watch the video of this exercise
again and to

make some notes.

And then I want you to email these notes
to me.

So that's the assignment for this
exercise.

Now let's look at the

at the chart.

So this chart is going to be presented
to you like this.

There is no reference to the stock that
it is. There is no reference to the

time. And I've learned that this is only
just a distraction for students when I

give this type of information.

So it came to the point that I even
forgot what the stock is.

I do not know the name. I do not know
the symbol. Please don't ask me.

But what I'm really, really concerned
about here with this exercise is the

way how we're going to analyze this.

This is going to be such a foundational
exercise. This is something that I want

you to be extremely serious about.

I want you to be uncomfortable about
this exercise because there will be a

of concepts that we're going to combine.

And it's first time.

It just might, you know, see as kind of
like a, you know, a difficult thing to

do. But then something will click and
the understanding will come to you. It

will emerge in your mind.

And that's what we're trying to do with
this exercise.

To combine the volume and price with the
price structure and to start

talking about...

the logic of the analysis, how it flows,
how do we analyze it. And because of

this logic, I'm trying to create a
specific way of how we would be thinking

about this analysis.

So I want you to think about a bar
analysis first.

And each bar, not each bar, but each
significant bar that I want us to

has some kind of number assigned to it.

And then...

And we're going to discuss it from the
point of view of the effort and the

result, exactly what we went through
just now.

And then we're going to discuss a swing
analysis.

So we're going to look at the current
swing, so let's say swing number three,

and we're going to discuss, well,
relative to this swing, the previous

the downside, what characteristics we
see, and then the previous counter

like this one right here. So we're
basically going to compare a swing to a

swing. We also will talk about the
market behavioral analysis, and that is

behavior between strong and weak hands.
We're going to try to define for each

type of the market participant, what are
they doing at that spot?

And that will create a better
understanding for you as to what is

right now.

And then obviously we need final
deductions.

or rather inductions.

Those are going to be on the bias, on
the timing, and on the character.

And we'll talk about this more as we go
through this exercise.

But for now, I want you to do two
things.

We still have maybe half an hour to go.

So I want you to, for a couple of
minutes, maybe two or three minutes, and

mute myself, and I'll go grab some tea.

I want you to look at this chart and to
analyze the first maybe

three swings.

And we'll talk about this and hopefully
we'll be able to cover even more today

in this 30 minutes.

But if not, then let's just concentrate
on the swing number one, swing number

two, and swing number three.

And secondly, I want you to say yes if
you would like to volunteer

and to go.

with me through this analysis.

Thirdly, for the homework, this is the
type of the

structure, analytical structure that I
want you to have.

And I want you, as you analyze, and the
homework is going to be to analyze the

rest.

I want you to analyze all of the bars
and all of the swings. You don't have to

do it.

all at the same time. You could do this
at your own pace.

I don't know where exactly we're going
to stop today. I don't know where we're

going to stop next week.

So therefore, just go at your own pace
and then compare your analysis to the

analysis that's going to be presented in
the class.

And we'll kind of see how that is going
to develop.

All right, so for now, two minutes break
for me, two break.

Meanwhile... I want you to think about
the analysis of the first three to five

swings and the analysis of the bars that
are being mentioned.

And also say yes if you'd like to
volunteer.

And we'll go from there. Thank you,
guys.

All right, guys, volunteers, maybe
someone new.

And obviously, I'm here to help, so
we're going to go through this together.

Okay, one, two, all right.

Okay, Nilesh, how are you doing today?

I'm doing good. How are you?

Good, good, good. Yeah, I just feel like
my throat hurts a little bit.

I had to stop at many spots, guys,
today, so I apologize for that.

All right, so let's start our analysis,
and let's start with bar number one,

right here.

This seems like a conclusion of SWIN
number one, and let's kind of discuss

this bar a little bit.

What do we see behind this bar for the
result and for the effort?

So the volume is slightly up compared to
the earlier close.

So the effort has increased.

So slightly increased, I would agree. So
there's not like a huge effort, right?

Because we're seeing it at Barnabas 1 as
the conclusion of the swing to the

downside, right?

But there is not a lot of increase.
There is some increase in the volume

signature that suggests What?

Demand is up slightly, and supply is
also,

I would say, still present.

Yeah, supply probably is still present.

It could be increasing at the same time.
I mean, this is such a bad reference

for us on the volume signature, but
you're right. It's at the highest point

the volume here.

We see it here, we see it here, we see
it here, slightly here. So it's one of

the highest increases.

But relative to what we see afterwards,
of course, this is just not relevant

that much. So what do you think is
dominating as an effort, supply or

I think demand is...

slightly dominating, just going by the
close of this candle.

Yeah, I think so too. Going by the
close, this is usually, it's going to be

defining factor for dominating effort.

So it closes exactly on the close of the
previous bar.

But the fact that it traveled up so
much, you know, and closed out of

kind of like a spring type of situation,
right?

where we might be thinking that this is
just a trading range right here, and

then the price goes below, and then it
recovers on the same day. So it's a

spring type of action.

So that suggests, yes, that demand
dominates over supply.

Okay, so what about the result?

what is the most kind of like obvious
result thing that we see? And I don't

think that for this particular bar,
we're going to go into a lot of the

but still, you mentioned the close,
right?

The close to the spread is in the upper
part, so that's bullish.

That's increasing.

Close to close, kind of the same. The
intention, what was the intention for

bar? What do you think?

To stop the downward movement. Okay,
yes. And also overcoming some kind

of commitment level. Where is the
commitment level for us?

The close of earlier candle, maybe?

Just all of these bars that are touching
this line, right? The support line. So

support line acts as that commitment
line for us, and we're closing above

So the intention was to go up and to
close above the commitment line, which

acted as a support, and we did exactly
that. So yes, bullish.

And it seems that we could say that the
effort

to the upside increased slightly, and
then the result to the upside

also increased.

Bullish or bearish?

Bullish. Bullish. So short -term
bullish.

And we could expect some kind of rally
out of this.

Okay. Well, the rally happens. It goes
into bar number two. And this is where

the whole story starts to unfold for

this area. So let's think about bar
number two analysis.

Okay.

So what is happening with effort?

Increased by a huge margin as compared
to the earlier ones. Okay, so effort is

increased a lot. Volume is increased a
lot.

Demand, is demand increasing?

I would say yes, but the supply too is
increased.

Okay, so demand has increased.

What is the dominating force?

Demand. Yeah, demand still dominates the
supply because the price has moved up,

closed up.

Okay, great.

And then what did you say about the
supply? Is supply going up or down?

Up. Up.

More than demand?

No, not more than demand. Not more than
demand, but it's going up.

So basically we have volume increase,
volume spike,

with the supply increase, I'm sorry,
with the demand increase, because demand

still dominant, and with the supply
increase as well, but it's not as

as the demand.

But this emergence of the supply
suggests that institutions are doing

Institutions are selling.

Why? Well, because we see two things,
what happens. In hindsight,

we see that the price went down.

So they're definitely selling into the
strength of weak hands.

And then what would be the second most
important?

identification that supplies of
institutional quality?

And that's the question for everyone.

I think the signature is too large to be
public.

Yeah, we know that. We know that there
is an institutional volume signature,

right? We're just trying to define
institutions are selling on this bar or

buying.

And by institutions, I obviously mean
strong hands.

What about, let's go further through the
list. What about the spread, the

result? Now let's discuss the result.

Spread has gone up.

Okay, so spread has increased
tremendously. Okay, so close relative to

spread.

Is bullish.

Bullish, because we are closing on the
spread in the...

upper part of the whole spread okay
close to close

so from this close to this close

bullish as well yes absolutely

yeah nothing to think about here because
we are just from close to close we're

traveling the biggest distance than
anything that we've seen before right so

close to close

Close to close and so on and so forth.

Okay, what about the intention?

Intention was to overcome the
resistance,

but I think it kind of failed because
such a huge increase in volume, but it

could not overcome the earlier
resistance.

Oh my gosh, yeah.

That's exactly where we want to go with
this.

Look at this resistance level.

And look at the bar in question. Huge
effort.

Think about all of this buying power
behind this bar.

And yet, if the intention was to
overcome the level of the resistance

created by these two highs right here,
where do we close? Because we're

closing below that level.

We just touch that level and then close
below it. What does that suggest?

Institutions are selling, probably.

Yeah,

most likely as the price goes into that
resistance level, institutions are

selling into the strength of weak hands.

And that's what's producing that
stopping action before that resistance

pushes the close below that level of the
resistance.

So now we know that institutions are
selling and the intention was not

fulfilled. So even though spread is
increasing, close to spread is bullish,

close to close is bullish, but because
of the intention and how it has failed

to materialize, we are going to say that
the result is actually diminishing.

effort result signature is going to look
like this up effort is increasing

a lot and then up result is actually
failing diminishing

so how would we interpret this as a
bullish short term or is it bearish

term bearish bearish yeah so what's
happening here

is lots of effort to put the price above
the commitment level, and

yet we cannot do this despite of all of
the bullish characteristics of the

spread. So therefore, we would be
thinking that institutions are selling.

And Philip is asking, we always care
about the intentions of the CEO or the

hands also.

Yeah, we care about different...

strong and weak hands, right? So we want
to understand where all of these market

participants are going to come in into
the market and how they're going to

behave. So from this perspective,
Barnabas, too, we would be thinking that

professionals are probably doing mean
reversion trade, right?

CEO is not participating at this point.

And then ITFs are not participating in
active.

And public, Nilesh, what do you think
public is doing here?

I think they are participating, they are
buying.

Yeah, they are buyers, exactly.

So they are on this particular bar.

Okay, so the next thing that happens is
bar number three.

And bar number three acts as a
confirmation for the selling pressure

come on bar number two.

Why is that, Nilesh?

Because it opened and closed, I think,
below the

earlier close.

Okay, so close and then open. Right away
we see some kind of gap.

So that's bearish by itself.

Okay. But more importantly, and Doug is
asking here, isn't it too early to make

that judgment about bar number two?

Wouldn't we just have to wait for the
next bar?

And usually on a bar like this, Doug
would be extremely accurate in stating

this, because we would be thinking that
this is some kind of momentum type of

bar, and usually...

that momentum bar on that type of volume
signature is going to have the increase

of the supply, and therefore we need
some kind of retest.

And we want the retest of that type of
action to have specific characteristics.

We want the spread, which is the down
spread, to diminish.

We want the supply to diminish as well.

And we don't want to see any violation
of the open, low,

And we see it right here. So what does
that suggest, Naresh?

That violation of the law?

Right. Sorry, I was on mute.

Yeah.

That violation of law suggests that
there

is no demand.

Yeah. that the demand that was here on
bar number two that is hidden

on this volume spike, it's of poor
quality. And we kind of already

there is some institutional selling
coming in. Then the next day, there is

continuation.

So that confirms that whatever supply
has come on bar number two is of

institutional quality and that we are
just continuing with the same bias.

on bar number three there are no more
buyers at this point and there are no

sellers bar number two combined both of
them the sellers

and the buyers both of the camps and
everything was done on bar number two

everybody positions themselves and bar
number three is just a test the

resolution bar that just tells us that
sellers have won so therefore

as sellers have won now lash where do
you think the bars are going to have

stop losses stop loss

i'm going to suggest a couple of places

how about this one right right below
this flow right below this flow and then

how about this one right here right
below this flow

So what's going to happen when the stop
losses are going to

be hit?

So we can

stop, I'm sorry, we can point of entry
that bar.

And then we can,

Stop losses.

Two levels.

So when the price is going to go
through, that stop loss is going to

market order and it's going to be
executed.

And that's going to be a sale.

Therefore, that's going to increase the
level of supply and the volume signature

should go up.

So look at the first stop loss level.

We definitely see that the volume has
increased.

And look at the...

Bar number five, which is the second
level. So this is where the majority of

stop losses were.

And that's why the volume signature
increases here on stop losses.

They're becoming the market orders.
They've been hit, becoming market

And there is a capitulation by weekends.

So right away, notice what happens
afterwards.

Bar number five is that heating up the
stop losses and increasing the volume

signature. Now, Lash, what does that
suggest for the swing to the downside?

Continuation?

Yes. Okay, but bar number five is also
very interesting.

Let's go through bar number five.

The volume definitely has increased.

Do we see an increase in supply just
because the first move was to the

Yes. So supply has increased.

Do we see an increase in demand?

I would say yes.

Demand has also increased.

Yeah, absolutely.

What is dominating as an effort?

Still supply is dominating.

Probably supply still is dominating
demand at this point of time.

Some demand came in. We see this from
the tail, right? So let's quickly go

through the results.

So the spread is what? Maybe it's
slightly decreasing

relative to spread number four or maybe
the same.

Closed is what?

Closed is bearish.

It closes in the upper part of the
spread.

Look at this whole spread.

In the context, yes, it's bullish.

Look at one half, so yes, a bullish
spread, so some counter.

Okay, close to close.

Bearish. Bearish, closes below.

Okay, and then the intention was to
overcome what?

The support.

Yeah, some kind of support level. So it
kind of closes right on the support

level. And if you would take some kind
of cluster from this support, from this

resistance, we still have not really
closed even into that cluster, right? So

we're going to say no.

So that's on the bullish side.

So a very interesting picture here where
there are some bullish characteristics

that fail.

And that is happening on still increased
level of the supply and increased

volume signature and increased effort.

So the downward effort has increased a
lot, whereas the downward result

has suggested some

buying, but

basically failed as well because the
intention was to overcome the point of

commitment, the point of resistance, and
it just closed on the level of the

resistance. It didn't really close
significantly above that.

So that still suggests a bearish
picture.

Am I correct, Naresh?

Yes.

And bearish pictures suggest a
continuation.

of a decline, which we do.

And then we go into bar number six.

So let's analyze bar number six.

Volume. What is volume doing?

Volume is up, but not less than still
for bar number

five. Yeah, this is an interesting
picture because bar number two,

Bar number five and bar number six, all
of them have the same intention.

What does that mean?

To get the price down?

To push the price up, right?

Push the price up. Yeah, price up. So
the bar number two is the most

successful out of the three.

Again, it doesn't overcome the point of
the resistance.

Bar number five is slightly better on
the commitment. It's almost there, but

really.

And then, you know, the volume signature
goes down. And bar number six

is not really committing above the
resistance that we have

there either.

But all three bars have the same
intention.

They are trying to push the price up.

Now, for us to understand how demand is
functioning on those three bars, I think

we need to talk about the supply first.

So what is happening with the supply
signature from bar number two to bar

five to bar number six?

I think supply is decreasing.

Yeah, supply is decreasing.

And supply is decreasing on the way
down.

So as supply decreasing on the way down,
we also see that some demand is

emerging, right? And we could say that
maybe demand is also decreasing in a

But yet, let's look at the progress here
that we see. If we would take bar

number five and bar number six and
compare them.

So we're comparing number five and
comparing number six.

So what could we say about,

let's say, the travel of the price from
the low

to the close?

It's above the same, I would say.

So from the low.

to the close, it's somewhat the same.

And yet, so this is the result.

And yet, what do we see on the

effort of the demand?

So we've seen that the demand has
diminished from bond number five to

six, right? Do we see that, guys?

We're looking at the volume signature,
and we see that the volume is going

So that suggests that both supply and
demand are diminishing at the same time.

Supply is still somewhat dominant, but
demand is going down as

well, and supply is going down.

So the distance then...

that the bar number five and bar number
six travel from the low to the close

happens

on

diminishing effort to the upside.

So the question is, is this rally from
the low to the close

on bar number six an easier move to the
upside than on bar number five.

Yes.

Do you guys see that? I want some kind
of feedback from all of you guys. Just

say something. Yes, I see it. Yes.

So we're talking about the distance from
the low of bar

number five to the close and then from
the low of bar number six to the close.

We're saying that from the low to the
close on both bar number 5 and 6, we

of have this similar result.

Yet there is a subtle difference in the
way how the volume behaves.

The volume goes down, which suggests
that both supply goes down and demand

down. So now we're thinking like, okay,
the same result for bar number 5 and

then bar number 6, and yet it happens on
diminishing demand signature.

So it means what?

It means that it's easier to

advance the price.

And if it's easier to advance the price,
we would be thinking about maybe like

an ease of movement where demand is
diminishing and yet the price is going

Is it bullish -nullish or bearish?

Bullish. It's bullish, at least short
term.

And therefore, we could expect some kind
of rally out of this spot.

Okay. Well, here's the rally. It's to
the point number seven.

And I think that we're going to stop
here.

Sure. Thank you so much.

I hear a young boy coughing there on the
background.

We definitely love that.

Okay, so we've discussed it up to bar
number

six, swing number three.

So what I want you guys to do is to kind
of play around with this.

My general assignment here for you is
just to go through the whole chart and

just to analyze it, bar by bar, swing by
swing.

Again, you don't have to do everything.

Probably in the next class, we're going
to stop somewhere here or maybe here.

I don't know exactly where we're going
to stop. It all depends on how the class

is going to unfold.

So therefore, just go at your own pace.

Maybe as a point of reference, let's do
everything until point number 25, and

that would be fair.

I don't want to overwhelm you as well.

But I want you to analyze, yes, I want
you to analyze all of these bars, all of

these swings.

I want you to think about the market
behavioral analysis. I want you to

deduct something as to like at bar
number nine, what is happening that

concludes,

let's say, this environment and suggest
that we're going to go up. I want to

hear your reasoning. I want to
understand how your mind thinks on this.

So, and you will be ready, you know, to
discuss all of this. And it's just going

to go a little bit faster.

You can use this format. Please do so.

And you could send me, you know,
different slides on, let's say,

different slings, and so on and so
forth.

But not necessary. You could just show
me what you...

in any other different ways that you
want to show how you analyze all of the

bars and all of the swings, I would
definitely accept that. I'm just giving

maybe an example of how you could do
that.

All right, and this is going to be the
exercise for the next five sessions or

so.

Again, this is a very important
exercise. We didn't have a lot of time

but even those 30 minutes for this
exercise, please listen to this again.

Make your notes. Send those to me.

So quite a few homework assignments.

Again, I'm not insisting on everybody
going through their homework.

So just do it at your own pace and
prioritize. I would say that the

this exercise, obviously.

But if you have time to do the volume
and spread exercise, do that as well.

All right, guys.

Good class, a lot of material today.

I'm glad that we are kind of like
getting on with this exercise.

Sorry and apologies that I was not
feeling that well today.

I think I'm feeling better now by the
end of the class, surprisingly.

So I'll see you all next week and, you
know, have fun with the homework.

Thank you, guys, and bye -bye.