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Created on: 5/9/2011 3:28:52 AM Last Update: 5/9/2011 6:33:34 AM Posted by: RTT
WARNING: This entry is 5572 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.
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A indicator that Richard Wyckoff would add to his tool chest.
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 If Richard Wyckoff was alive in the computer era what further tools would he offered us. In Wyckoff time charts were done by pen and paper, live prices came over a ticker wire and communications was delayed considerably. What could Wyckoff conjure up to further show off price and volume relationships if he had access to a computer?
If a stock price is to move from $50 to $100 you are almost guaranteed to see bars that have the close very near to the high of the bar, be wider in range than normal, and supported by good volume (ie not low, or extreme volume), this is a Wyckoff 'mark up' bar (or the more obvious term 'up bar'). This mark up bar is a demonstration of demand overcoming supply. Wyckoff defined many bar scenarios to determine the ebb and flow of demand and supply. Each represents different aspects of the battle between market players.
Reference, some are explained in more detail here : Glossary of Wyckoff Terms
Wyckoffian Bullish Bars:
- Mark up bar, up bar
- Automatic rally
- Selling Climax
- Jumping the creek
- Sign of strength
- Bullish Test
- Bullish Shakeout
- Spring
- No supply
Wyckoffian Bearish Bars:
- Mark down bar, down bar
- Buying Climax
- Breaking the ice
- Sign of weakness
- Bearish Test
- Bearish Shakeout
- UpThrust
- No demand
In any stock price trend you will get any amount of permutations of the above, however in a bullish trend you will have the Wyckoff bullish bars out numbering the Wyckoff bearish bars, and vice versa for a bearish trend. To formulate an indicator that represents Wyckoffian logic we have to find common ground between the Wyckoffian bullish and bearish bars. The common ground we like are:
- Demand pressure will be recognised by bars having increased volume with closes that are high within the bars range.
- Supply pressure will be recognised by bars having increased volume with closes that are low within the bars range.
- If price change is supported by good volume then the indicator must move faster than when price change is not supported by volume.
We believe RTT TrendPower satisfies the above specifications. Follow the link to learn more.
In the chart below we apply the RTT TrendStatus and RTT TrendPower to the USD dollar bullish Etf UUP. NOTE: We do not look at these indicators in isolation, see previous posts on the euro and US Dollar below.
In this chart we note the important mark up periods with (A), (B) and (C). The first two precluded the UUP trend reversal in late 2009, the latter is showing the UUP maybe starting a trend reversal process once again. The US Dollar has suffered under a heavy bearish sentiment, and to turn this market up it requires a bullish statement equal to the task. To us, it looks like we are getting it, the next few weeks should confirm a change in trend for the US Dollar and this will be clearly confirmed by the RTT TrendPower indicator.
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More on the US Dollar
Euro approaching another cycle top
This is the contrarian investors next big winner
NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.
Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net
Investing Quote...
...“After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this: It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!”...
Jesse Livermore
..."There is no difference between communism and socialism, except in the means of achieving the same ultimate end: communism proposes to enslave men by force, socialism - by vote. It is merely the difference between murder and suicide"...
Ayn Rand
..“It is much harder to sell stocks correctly than to buy them correctly.” Because of the emotional aspect of trading, if a “stock went up, the average investor would hold because he wants more gains – he’s exhibiting greed. If the stock declines, he also holds on and hopes the stock will come back so he can at least sell and break even – he’s hoping against hope”..
Bernard Baruch
.."If past history was all there was to the game, the richest people would be librarians"..
Warren Buffett
.."More money has been lost trying to avoid bear markets than during the bear market itself"...
Peter Lynch
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We at readtheticker.com hold the view that a mix of stock chart technical analysis, Richard Wyckoff, William Gann and Jim Hurst methods plus market fundamentals allows the investor to formulate a very sound market opinion. These attributes are mutually inclusive and must be weighted equally before investing or trading in any Stock, ETF, Currency, Bond, Commodity, CFD or Mutual Fund
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