Timing the Trade the Wyckoff Way Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Timing the Trade the Wyckoff Way

Public Reply Prvt Reply Mark as Last Read File

Next 10PreviousNext

To: coferspeculator who started this subject	4/10/2004 4:14:58 PM
From: coferspeculator	Read Replies (1) of 14340

A Brief Review of the Market for the Past Year Perhaps the best place to start is to take a brief look back over the past year and see where we were and where we are today. During March of 2003 the markets became oversold and put in a LPS (last point of support). The Wyckoff principle of Cause and Effect is used to determine the possible targets (the effect or result) of the cause that was built up during a period of accumulation or distribution. Looking at the Nasdaq, the cause that was built up in the phases at the 1350 level (50 pt chart) from the LPS to the PSY (preliminary support) provided a conservative target of 2150. The Dow showed a potential target of 10900 for the first phase from the LPS to the test of the climax in October 2002. Wyckoff tells us that when approaching targets its best to be alert as there is often an ending action that takes place. During January ending actions were apparent, the most important in the form of climatic action in the Dow and Nasdaq. Since then the markets have entered a trading range. In February, a short-term potential count indicated a possible reaction for the DOW to the 10000 level. For the Nasdaq, a possible reaction to the 1890 level was indicated. As those levels were approached actions in those averages indicated a possible ending action and potential targets to the upside of 2060 and 10600 respectively were identified shortly after. At this time the markets are overbought. The Dow, Nasdaq, and the SP500 have reached their respective short-term upside targets. They have overcome a number of major obstacles during the past several weeks up move. The easiest part of the move is over. It will require a substantial increase in demand for the market to continue its upward move at this moment. If supply overcomes the demand then it is likely that a retest of the lows of March is in order. This could be a positive thing if supply is not overwhelming. The cause that would then be built up would provide for targets that would allow for a potential move through the highs set earlier in the year. If, however, supply takes control and the downside progress accelerates, the current built up of cause from the most recent highs would find the market breaking back through the first ice area for a second time and potentially falling through more important support levels that were established earlier. At this time is appears most likely the market will remain in its trading range. Wyckoff cautions that taking long positions when the market is overbought and trading at the highs in a trading range is very risky. The market at this time is overbought and trading at the highs in the trading range. Shorting stocks when the market is overbought and at the highs in a trading range often offers the best risk/reward scenario as long as a minimum ratio of 3-1 exists. Should demand overcome supply and the market were to break out through the current top, exiting the short position would be in order. Shorting is for advanced traders and anyone taking such action should have a successful track record of shorting experience. Should the market break out to the upside, new long positions could be considered on the reaction that would follow. It is always best to have an action prove itself by the testing process.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Next 10PreviousNext