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RE: Sectors and Industry Group Question - isatrader - 2022-02-10
(2022-02-10, 12:30 AM)Texasmgax Wrote: When you're looking to "buy in the leading groups/sectors" in general, what kind of time frame are you looking at in terms of a leading sector?
Leading today or this week? Over the last month? Quarter?
Thank you in advance
I use the Relative Strength tables that I post each weekend for the members to see groups that are improving and then delve down into the individual charts within the most promising groups. So for example I start with the weeks strongest group, and then look out to longer time frames or 2 weeks, 4 weeks, 12 weeks etc. As in order to get into what will become the leading groups, you need to identify them earlier as they are improving and moving up the RS rankings. As if you wait until they are in the top 10. Then the leading stocks in the group will have already had huge moves and will be hard to buy.
But you'll also find that once a group gets into the top ten that it can stay there for a long time. But to get the best entry points in late Stage 1 or early Stage 2 in the leading stocks in the group, you need to watching from when the signs of improvement first appear. As the leaders will move into Stage 2 first.
RE: Sectors and Industry Group Question - Texasmgax - 2022-02-10
(2022-02-10, 01:53 PM)isatrader Wrote:(2022-02-10, 12:30 AM)Texasmgax Wrote: When you're looking to "buy in the leading groups/sectors" in general, what kind of time frame are you looking at in terms of a leading sector?
Leading today or this week? Over the last month? Quarter?
Thank you in advance
I use the Relative Strength tables that I post each weekend for the members to see groups that are improving and then delve down into the individual charts within the most promising groups. So for example I start with the weeks strongest group, and then look out to longer time frames or 2 weeks, 4 weeks, 12 weeks etc. As in order to get into what will become the leading groups, you need to identify them earlier as they are improving and moving up the RS rankings. As if you wait until they are in the top 10. Then the leading stocks in the group will have already had huge moves and will be hard to buy.
But you'll also find that once a group gets into the top ten that it can stay there for a long time. But to get the best entry points in late Stage 1 or early Stage 2 in the leading stocks in the group, you need to watching from when the signs of improvement first appear. As the leaders will move into Stage 2 first.
Perfect! Thank you very much for your time.
Identifying Stage 1 &3 - Texasmgax - 2022-02-11
The only part Im still a little glitched on is identifying the start of stages 1 & 3. For the most part I get it, but I'm wondering if theres a clear cut identifier for both of them.
Ive outlined the 2 from your pics where I might have called them the beginning of the stages.
Thank you
RE: Identifying Stage 1 &3 - isatrader - 2022-02-12
(2022-02-11, 11:23 PM)Texasmgax Wrote: The only part Im still a little glitched on is identifying the start of stages 1 & 3. For the most part I get it, but I'm wondering if theres a clear cut identifier for both of them.
Ive outlined the 2 from your pics where I might have called them the beginning of the stages.
Thank you
The areas that you have highlighted are the climatic action that shows a change of behaviour, which using the Wyckoff's method of Phase Analysis of base structures - marks the start of Phase A. However, in terms of Stage Analysis that doesn't necessarily mean that the stock has transitioned to Stage 3 or Stage 1 at that point. As it's only the initial part of the base. So the Stage would instead be marked with either a sub stage of Stage 2B, which means late in Stage 2, or Stage 2B-, which with the addition of the minus symbol indicates that it's late in the Stage and a technically weak pattern. Or Stage 4B, or 4B- if in a downtrend. As the initial price volatility might still resolve in the direction of the previous trend. So the transition to early Stage 3 or early Stage 1 isn't confirmed until the price action starts to move through the 30 week MA.
There are cases where a stock has gone parabolic and hence be too extended from the 30 week MA. But in the majority of cases you'll find that the stock will trade in a sideways range above and below the 30 week MA for many months, and the 10 week MA will also move through the 30 week MA in both directions a few times in most cases.
So yes you are correct in that the basing process begins at the point that you highlighted, and it may become the first part of the Stage 3 or Stage 1 base structure over time. But, initially at that point it's just a change of behaviour and hence a potential base, which the bias should start with the direction of the current trend, until you see further price and volume characteristics that contradicts the trend start to appear within the base structure.
Hence don't be too quick to suggest the Stage has changed. The change of behaviour is stopping action and the start of a potential base that needs more time and further information to confirm.
This is where the Wyckoff Phase Analysis of base structures can help a lot. So I recommend learning both methods.
RE: Identifying Stage 1 &3 - Texasmgax - 2022-02-12
(2022-02-12, 12:02 AM)isatrader Wrote:(2022-02-11, 11:23 PM)Texasmgax Wrote: The only part Im still a little glitched on is identifying the start of stages 1 & 3. For the most part I get it, but I'm wondering if theres a clear cut identifier for both of them.
Ive outlined the 2 from your pics where I might have called them the beginning of the stages.
Thank you
The areas that you have highlighted are the climatic action that shows a change of behaviour, which using the Wyckoff's method of Phase Analysis of base structures - marks the start of Phase A. However, in terms of Stage Analysis that doesn't necessarily mean that the stock has transitioned to Stage 3 or Stage 1 at that point. As it's only the initial part of the base. So the Stage would instead be marked with either a sub stage of Stage 2B, which means late in Stage 2, or Stage 2B-, which with the addition of the minus symbol indicates that it's late in the Stage and a technically weak pattern. Or Stage 4B, or 4B- if in a downtrend. As the initial price volatility might still resolve in the direction of the previous trend. So the transition to early Stage 3 or early Stage 1 isn't confirmed until the price action starts to move through the 30 week MA.
There are cases where a stock has gone parabolic and hence be too extended from the 30 week MA. But in the majority of cases you'll find that the stock will trade in a sideways range above and below the 30 week MA for many months, and the 10 week MA will also move through the 30 week MA in both directions a few times in most cases.
So yes you are correct in that the basing process begins at the point that you highlighted, and it may become the first part of the Stage 3 or Stage 1 base structure over time. But, initially at that point it's just a change of behaviour and hence a potential base, which the bias should start with the direction of the current trend, until you see further price and volume characteristics that contradicts the trend start to appear within the base structure.
Hence don't be too quick to suggest the Stage has changed. The change of behaviour is stopping action and the start of a potential base that needs more time and further information to confirm.
This is where the Wyckoff Phase Analysis of base structures can help a lot. So I recommend learning both methods.
Awesome! Thank you so much for the detailed explanation. I appreciate you.
BP Trend/Channel and cumulative ADL - z_CharlieMiller - 2022-02-12
I'm still learning my way around stockcharts.com but have begun to assemble a view of breadth that gives a high level (perhaps only useful for long term trends) perspective. The metrics I'm charting are pretty standard stuff. Old brother Stan talked a lot about ADL in his book and seemed to be saying that you really want ADL in an uptrend and as long as that's true it is a good sign that an ongoing bull trend should continue. The corollary being that when ADL starts to flatten on you or go the wrong way, that's a sign to be on high alert, start pulling stops in tight, etc... I've drawn some trend and channel lines around ADL and BP lines, and would like to share those and hear thoughts from the group regarding meaning and interpretation related to the current environment.
The trend lines I've drawn are certainly up for debate but what I take from these charts and those trend lines is that:
- The Nasdaq ADL turned the wrong way about a year ago, and kicked into a much higher rate of deterioration more recently (early Dec 2021)
- The Nasdaq BP seems to have formed a channel, and it is currently near the upper end of this channel, so I figure it'll be interesting to see in the next week or two whether it breaks out of that channel, or rolls back over to stay in it.
- NYSE ADL and BP are similar to the Nasdaq although for NYSE both the ADL and BP rolled over quite a bit more gently (very flat top of about 4-5 months duration), and only became clearly discernible as downtrends more recently (say, Nov 2021 or so vs Feb 2021 for Nasdaq ADL breaking trend). Yet the overall slope and dimension of the current/recent NYSE BP channel is not very different from that of the Nasdaq BP.
My take on all this is that despite an overall negative environment recently (since say Dec) it has recently (past few weeks) been possible to make money long in some pockets ( setting aside for the moment energy and to some degree life insurance where that opportunity has been fairly robust). The current position of both NYSE and Nasdaq BP in their respective channels makes me wonder: Was that recent opportunity simply a countertrend move, or does it have legs? I figure the success or failure of the BP lines to break out of their channels might be useful in sussing that out.
Along this same line, in recent months (since about Nov or so) the VIX and BP trends seem to be correlated. In the chart below I've hand-drawn what I imagine to be a reasonable approximation to a regression line for the Vix and the BP metrics. Supposing for the moment that the correlation is not coincidental over the span of months, it seems natural to wonder if the fact that the vix had been trending down from late Jan to a couple days ago is connected with the the movement of BP metrics to the upper end of their channels in that same time frame. If so, does the uptick in the vix the past couple days tilt the odds in favor of the BP lines staying in their channel vs. breaking out?
Of course we don't know what the future holds, but this seemed an interesting question to me, from the point of view of probabilities.
Thoughts?
RE: Members Discussion - z_CharlieMiller - 2022-02-14
TexasmgaxHey Folks,
Brand new here and (and pretty new to Wyckoff) had a question about fundamentals. I've been a CANSLIM investor for years, which as Im sure you know takes into account a decent amount of fundamentals.
Here, I don't see too much discussion around them.
Does Wyckoff technique ignore them for the most part and focus solely on TA?
Thank YOu
**************
Welcome!
I'm new to Wyckoff myself and would recommend the book by Pruden as a solid introduction:
https://www.amazon.com/gp/product/0470050632/ref=ppx_yo_dt_b_asin_title_o03_s00?ie=UTF8&psc=1
There are good examples and a lot of detail about the characteristics of each phase. It's true that 2/3 of the book is NOT about Wyckoff but other topics related to trading, so if all you wanted was the Wyckoff information, that's perhaps an expensive way to get it. But having read the whole book once now (and probably still need to go back and re-read the Wyckoff sections another 2 times before I've really internalized it) I personally deem that to have been a very worthwhile investment of funds and effort.
If you're coming from CANSLIM, and have not read Stan's book, I'd say that's definitely worth a read too.
https://www.amazon.com/Stan-Weinsteins-Secrets-Profiting-Markets/dp/1556236832/ref=sr_1_3?crid=1752G5PTVETT2&keywords=weinstein&qid=1644845299&s=books&sprefix=wein%2Cstripbooks%2C273&sr=1-3
Stan's book for me was a much easier read than Pruden's and if you hadn't read either one, I'd start with Stan's book. I read Stan's book back in 2009 or so, and for me that was a very refreshing perspective I had not heard before, and was the first step in my long journey of eventually divorcing myself from fundamental considerations altogether in my investing. I don't think one HAS to ignore fundamental to practice Stan's method, but for me personally I've never looked back. I'm sure plenty of people are successful with CANSLIM and I still do check in on the Leaderboard from time to time to see what they have to say - more info never hurts. For me though back (like 20 years ago) when I was mainlining CANSLIM I couldn't shake the feeling that I was very frequently the last one to arrive at the party on many really great stocks.
Anyway - welcome to the group! Hope some of that is helpful.
-Charlie
RE: Members Discussion - Texasmgax - 2022-02-15
(2022-02-14, 02:44 PM)z_CharlieMiller Wrote: TexasmgaxHey Folks,
Brand new here and (and pretty new to Wyckoff) had a question about fundamentals. I've been a CANSLIM investor for years, which as Im sure you know takes into account a decent amount of fundamentals.
Here, I don't see too much discussion around them.
Does Wyckoff technique ignore them for the most part and focus solely on TA?
Thank YOu
**************
Welcome!
I'm new to Wyckoff myself and would recommend the book by Pruden as a solid introduction:
https://www.amazon.com/gp/product/0470050632/ref=ppx_yo_dt_b_asin_title_o03_s00?ie=UTF8&psc=1
There are good examples and a lot of detail about the characteristics of each phase. It's true that 2/3 of the book is NOT about Wyckoff but other topics related to trading, so if all you wanted was the Wyckoff information, that's perhaps an expensive way to get it. But having read the whole book once now (and probably still need to go back and re-read the Wyckoff sections another 2 times before I've really internalized it) I personally deem that to have been a very worthwhile investment of funds and effort.
If you're coming from CANSLIM, and have not read Stan's book, I'd say that's definitely worth a read too.
https://www.amazon.com/Stan-Weinsteins-Secrets-Profiting-Markets/dp/1556236832/ref=sr_1_3?crid=1752G5PTVETT2&keywords=weinstein&qid=1644845299&s=books&sprefix=wein%2Cstripbooks%2C273&sr=1-3
Stan's book for me was a much easier read than Pruden's and if you hadn't read either one, I'd start with Stan's book. I read Stan's book back in 2009 or so, and for me that was a very refreshing perspective I had not heard before, and was the first step in my long journey of eventually divorcing myself from fundamental considerations altogether in my investing. I don't think one HAS to ignore fundamental to practice Stan's method, but for me personally I've never looked back. I'm sure plenty of people are successful with CANSLIM and I still do check in on the Leaderboard from time to time to see what they have to say - more info never hurts. For me though back (like 20 years ago) when I was mainlining CANSLIM I couldn't shake the feeling that I was very frequently the last one to arrive at the party on many really great stocks.
Anyway - welcome to the group! Hope some of that is helpful.
-Charlie
Thank You Charlie,
I have read Weinstein's book just recently, I'm sure I'll go back to it another couple of times. I'm at a stage where IM sort of blending the two (still applying some CANSLIM characteristics to stage 1/2 patterns.)
Thank you for the other book recommendation.