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    67 Does Lightening Strike Twice?

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    67 Does Lightening Strike Twice?

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    wyckoff

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    wyckoff

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    130 views4 pages

    67 Does Lightening Strike Twice?

    Uploaded by

    ACasey101
    wyckoff

    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    of 4

    Does Lightening Strike Twice?

    Bruce Fraser | October 22, 2016 at 08:00 AM


    The Wyckoff Method is a trend following and trend management system. It
    seeks to identify the pre-conditions to the emergence of a rising (or falling)
    trend, with the intention of participating in that trend for the duration of it.
    The Method is timeless and is often used for other means, such as trading
    range scalping and option trading. In keeping with the prior post, we will
    scale out to the larger timeframe and discuss the value of Wyckoff context
    and how one timeframe can speak to what is happening in others.
    Every bull market has a mega-leadership theme. In the current cycle, an
    epic uptrend took place in biotech (we will study the IBB as a proxy for the
    biotechnology industry group). Can Wyckoff help us find these large trends
    and help us manage such trends? The big returns reside in the big trends
    and the Composite Operator fully understands this principle.

    (click on chart for active version)


    A 10 year Accumulation leads to a 6 year trend. The principle of the
    Point and Figure (you are encouraged to generate and count the PnF

    objectives discussed here) horizontal counting method is illustrated here.


    Proportionality of the Accumulation phase informs the magnitude of the
    subsequent bull market uptrend. Absorption of shares of the important
    biotech stocks went on for a decade. These shares were strongly held and
    became very, very scarce by the conclusion of the Accumulation. PnF
    attempts to estimate the Cause and Effect of this phenomena in the form of
    a price objective.
    Note how the stride of the uptrend is set very early on. This apprises us of
    the rate at which IBB intends to advance for the foreseeable future. Study
    this uptrend and rehearse how you would participate. Also, keep in mind
    that this trend, most trends, persist much longer than anyone expects. This
    persistency is why the trend is your friend. And when speculating in
    markets it is good to have friends (an edge). Once a legendary trend like
    this comes to an end, it is over, really over. It is a work of art to watch the
    C.O. extract themselves from the trend, which is the process of
    Distribution. The result is the emergence of a long-term downtrend. A stair
    stepping decline that can last a long, long time. It is not common for a
    dominant secular uptrend to resume after it has been broken and failed.
    Consider the dilemma of many institutions. During the uptrend they have
    become over-exposed, over-committed to the biotech theme because it has
    contributed to their performance (for years). Once the downtrend asserts
    itself, over-performance becomes under-performance. Some institutions
    will leave the biotech theme quickly, while many will wait. The resulting
    effect of all of this is continual selling that produces a condition where a
    new uptrend is unlikely. Any attempt at a rally will be met with supply
    from late sellers.
    As Wyckoffians we choose to jump on the uptrend train, and we are quick
    to leave when Distribution arrives. There will always be other trends to
    discover and participate in.

    (click on chart for active version)


    Distribution forms quickly. Distribution is sneaky. Notice how the Buying
    Climax (BCLX) and the Upthrust (UT) form in the final stages of the
    uptrend. Only after the Sign of Weakness (SOW) does the structure of the
    Distribution become evident. Wyckoffian mastery is learning to see the
    attributes of Distribution forming while the uptrend is concluding. This
    will come with time and practice.
    Secular bull market themes are virtuous, glorious and fun. When they are
    over not so much! When the trend is over Wyckoffians dont hang
    around. For some earlier chart work on the biotech theme go here and
    here.
    All the Best,
    Bruce

    Back by popular demand! Roman Bogomazov and I are


    offering a two part webinar series on Setting Price
    Targets Using Wyckoff Point-and-Figure Charts
    starting November 3, 2016. These live interactive
    classes will be 2 hours each. Take advantage of this

    opportunity to sharpen your Wyckoff PnF skills. Please


    click here for more information and to register!
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