Welcome to session three.

So in this session of the Wacoff recession survival

course, we're going to start analyzing the first of our hundred price structures.
So this is what it's going to look like on the first slide for each security we
look at. So it's going to be invariably on a weekly log scaling chart. So you can
see we've got the FTSE 100 shown by the ISF ETF. So what I've done by showing this
red line to the bottom is just showing the decline. So it declined 43 percent. And
then what I've done is from the green line to the peak is just give you an idea
that the return that you could have achieved. So plus 58 percent. And where I've
indicated this green line starts from is if we applied the Wacoff methodology, you
could have been entering the trade around that time, if not earlier, actually
subject to the optimal entries that I spoke about previously. So let's jump into
it. So this is the first one. I just want to talk a little bit more about how I've
laid the chart out. So what I'll do is put the name of the security here, as well
as up at the top here is the heading. And this is the ticker symbol. And with the
pound sign, it's going to be UK listed dollar sign. It'll be a US listed security,
the type of scaling. And then what you can see is we have labeled the phase
analysis. So phase A, phase B, phase C, phase D, and then into phase E for this
distribution structure. We've also then got the labeling. So if you refer to your
labeling definitions, if you're new to the Wacoff methodology and haven't learnt
them off by heart yet, you can then refer back to them to note what each point
means, such as the upthrust in phase B, the LP, LP, S, Y in phase C, sign of
weakness, major sign of weakness, so on and so forth. I've then done some
annotations at the bottom as well. So we'll work through these in a minute and
obviously read them in terms of number one, two, three, four, five, and six, and
then their respective arrows as well that point to the volume bars to help back up
or enforce the point that I'm making. So let's start just talking through the FTSE
100 distributional structure. So you can see in phase A, we've got preliminary
supply coming to the market as noted, and I can also draw which is good as noted by
the increasing volume signature here. We then have the largest reaction within the
previous uptrend on increasing volume. So that indicates the change of character.
So we're talking about this bit here, this bit here. So it's this decline that we
see into the automatic rally, which acts as a change of character. So what are we
expecting, those of you that study the Wyckoff methodology, and those of you that
are new to it and following this course, change of character means we're expecting
some form of trading range to develop. So we go from the trending environment to
the non trending environment. So then it's our job as Wyckoffians to analyze the
structure as it unfolds, to determine whether it's distribution or potentially a
reaccumulation or accumulation structure or redistribution structure. So then we
move into phase B. So what we see in phase B is a large reaction on increased
volume after price briefly overcame the buying climax. That's so the strong hands,
the CO are selling off of the top. So as the price reached this up thrust here,
you can see the sharp decline that happens on the increasing volume. So it's the CO
selling off the top. So now point number three, and this is going to be a bit of a
learning curve as well, for those of you that have studied it too, is note how the
texture and volatility increase in the second half of the trading range. So what I
mean by texture, and I don't really like to talk about that look and feel, but
that's the best way of describing it. You see from phase C onwards after the up
thrust after distribution, just note how the volatility and the texture of the
structure. So we're looking at this region in here afterwards compares to that
previous first region. Do you note how much more volatile the structure has been
becoming? So it's got more distributional characteristics. And as we analyze the
hundred different distributional structures, you're going to note this increasing
volatility the majority of time, the further throughout the trading range we get
is one of the kind of common characteristics. So let's just delete that. So number
four again, so in phase C we see selling off the top with consistent higher than
average volume. So it's this part here in particular we're looking at after the
distribution. So again, it's the CO selling off the top. So each time price tries
to make new highs, we see the CO selling off the top with increasing volume
signature. We see that again too, to an extent after the first LPS. And then point
number five, demand increases yet price fails to return to the trend channel. So
we're looking at this bar here in particular, which would be associated with this
volume bar here. And you can see that there's a very large demand tail, but this
comes back to one of the three laws, which is effort versus result. We've
obviously got substantial effort on this bar, yet what is the result? Is the
intention fulfilled? No, it's not. So therefore it's actually a negative result.
So even though this could look very bullish to the untrained eye, actually it's
quite negative. Granted there's a quick return to the trading range on the next two
bars, but what happens after that? We see price collapse again, and then the rally
into the LPS up here, as you can see, comes on diminishing. So demand, if I do a
D, that will mean demand and the downwards arrow. Obviously demand is very weak as
we come into this LPS rally. And then what do we see at point number six?
Consistent selling after weak rally attempt. So note the consistency of this rally
down here. It's the most consistent rally that we've seen within the structure
previously. So when you start adding all these points together, that we see the CO
selling off of the top, we see the increasing volatility, we see large effort, but
yet price isn't able to come in a meaningful way back into the trading range and
commit there and stay there. We then see after the LPS Y attempt that comes kind
of halfway into the trending environment, if we were to draw a line halfway. So
what then happens afterwards is we see a very consistent rally, sorry, a very
consistent decline that happens again, a weak rally attempt into this last LPS Y as
the downtrend then emerges and continues. So hopefully that's going to give you a
good flavor about how we're going to talk about these distribution structures. And
then afterwards, what we're going to do right now is then go on to the
reaccumulation structure. So at the bottom, and then talk through that in some
detail. So this is what the accumulation structures are going to look like when we
talk about them. Again, it's going to have, so this is a daily log chart, it's
going to show you the security we're looking at here and also up here. It's got
the structural phase analysis, as well as the labeling, the volume, and also my
notes as well to help enforce the points as we are discussing it. So let's start
off. So number one, from the second half of phase B onwards, note how volatility
diminishes. So note from the second half of phase B onwards, throughout this whole
structure, if we're comparing that with this area in here, it's the opposite. So
when we were just talking about the distribution structure, I said that volatility
was increasing throughout the structure. But now what we're seeing in the
reaccumulation or accumulation structures is actually as we progress further
through the trading range, volatility in terms of price and often volume as well
is diminishing. So that's going to be one of the key characteristics, common
characteristics you see as we analyze these structures. So working from left to
right, we've discussed point number one from the second half of phase B onwards,
note how volatility diminishes. Number two is supply significantly decreases on
the secondary test, suggesting quick rally possible. So as we come into the lows,
and you can note the demand tails as well down here, and we see as that green arrow
shows, we see supply significantly decreasing. So potentially a very early
opportunity to enter a trade there for a swing trade. But again, if we're trying
to take longer term positions, like I said previously, in other sessions, we want
to be taking the trade the most optimal times in phase C and phase D when we have
more data points. So number three is we see increased volume after the up thrust
after distribution suggests further testing action and absorption of supply
likely. So we're looking at this decline here. And this area here because of that
increased supply coming to the market, we're expecting some further testing and
absorption action having to go through. So number four, we see increased volume
into the spring suggests further test likely note the key reversal bar. So you can
see here as we go into the spring is shown by my red arrow, that supply is
increasing, but there's a lot of demand there, we don't commit too much below the
previous areas of support at the secondary test and the selling climax. And
there's a quick reversal and note the very large volume bar. And where I've labeled
the key reversal bar. So note how many prior closes the reversal bar overcomes.
Also the significant effort on the bar prior and the lack of downward result
suggests supply is being absorbed. So the bar before this large green bar that you
see, so this red bar and don't get caught too caught up by the colors. The color
of the bar is more the supply and demand effort versus result that we're trying to
establish and understand. So note that there's
a very significant effort on the bar prior to the reversal bar, see the demand
tail there as well. And just note that there's a lot of effort, but not much
commitment to the downside. So especially in the context, and this is what we're
trying to do contextualize what's happening in the context of what's happening
here. That's very bullish characteristic. And then what we see six final testers
diminished volume absorption complete. So in this area here, okay, we can see a
few demand tails in there as well. But just note how supply has now been absorbed.
And afterwards, we have this increasing demand as well. So we can label that as
well. So suggesting that supply has been absorbed in the prior phases, phase A,
phase B, and earlier on in phase C. So now demand will prevail over supply. And you
can see the emergence of this uptrend in phase B and phase E. So hopefully that's
been a good kind of introduction of everything we're going to cover the depth that
we're going to go into on all of these examples that we're going to look at within
the course. So next up is the S&P 500 through the SPI ETF. And I would urge you to
go and undertake the analysis yourself for these structures in the printout that
I've put in as an appendix to this that doesn't have my labeling or annotations.
So this is the SPI weekly log chart. So the decline from the top down to the bottom
here was minus 57%. So would you really sat for a 57% decline? Or would you have
capitulated? And if you did capitulate, when would you have bought back in? And
again, this is what we're trying to answer with this course. So here, this would
have been a Wyckoff entry point, and you could have had an 82% gain by the middle
of 2013 from there. So this is what the distribution structure looks like. And as
I'm filming this, I think there's many common characteristics between this
structure and the current SPI ETF structure. So go and analyze them yourself. And
obviously, this video is going to be timestamped. So analyze them yourself and see
if you note the similarities as well. So we've got the first signs of distribution
by the CO as noted by the increasing volume signature, which is here. And you can
see that by the decline at the preliminary supply. We then have increasing supply
on reactions, which suggests more CO distribution. And just note how the
volatility going into the buying climax, this region here before the change of
character is greatly increasing. We've got supply increasing as well. The texture
of the structure is starting to change. We then obviously have the change of
character. And we have the largest and most volatile reaction seen yet on
significant volume. So that's the CO distributing. We know it's the CO because of
the size of this volume signature. OK, that's not retail, it's not weak hands.
That must be the CO. So those of most influence that have the most money to invest.
So we have that going into the automatic reaction. We then have a weak hands rally
that follows that you can see into the up for us after distribution. So that's this
rally here. Then what do we see again? It's going to be a common characteristic of
distribution structures. We see selling off the top at the up for us after
distribution as noted by point five. We then have relatively weak attempts to
rally. There's some demand and effort there. But yet note how price is making
lower highs on each of them. OK, structurally weak as well, another lower high. So
as we then come into our major sign of weakness, note the significant supply as
price breaks major support level. And this is the CO capitulating and selling
their remaining shares or the early kind of CO. There'll still be some
capitulation later on. We then have afterwards a weak attempt to rally from the
major sign of weakness into the LPS, as noted by this weak volume signature down
here. And then what do we see on the decline after this LPS fails to make it
really back into the trading range? And note that supply shoot supply shoots I'm
just going to refer to as SS. Note the supply shoot here as well as price tries to
commit back into the trading range and fail. We then have a decline coming down
here, which would have been into another major sign of weakness on increasing. On
increase supply on decline, as you can see by point A, followed by another weak
rally here. You can see that by the volume signature there. So when we start going
into the depth like we are now, hopefully you can start seeing the common
characteristics and that the Wyckoff method is a repeatable framework and process
that can be relied upon. So let's look at the accumulation structure now formed
for the S&P 500. So on the downtrend here, you can see this increase in demand,
which suggests that the this is the first signs of absorption by the CEO just
because of the size of the volume signature. One thing to note, and it's going to
be a common characteristic as well is when we have the selling climax followed by
the rally into the AR, this the vast majority of the time is going to be the
largest rally that we've seen. And it's going to come on quite climactic high
volume. So this is going to suggest a change of character. So a change of
character from the trending environment means we're now expecting a non-trending
environment trading range to unfold. Indeed, that is what happens. So number
three, we can see the supply decreases for the secondary tests. You can see that
by this green arrow here. And then what I want you to do is number four, know how
in the second half of phase B and onwards volatility decreases. So this would be
our first half and just note the volatility compared to what happens in the rest
of the structure. So again, common characteristic that we're going to see is
volatility is going to be decreasing throughout the structure and into phase C and
phase D, where we'd be looking to enter our trade when we've got those data
points. So number five, we've got long term supply decreases for spring and test
as shown by this long green arrow here going into the spring and the test. So this
is going to be a common characteristic as we see for accumulation structures that
actually we want to see that decreasing and diminishing supply and volume
characteristic. And we also want to see decreasing flash diminishing volatility as
we go into the spring and test, followed by that quick reversal back into the
trading range and demand coming through as well, because demand can now prevail
over supply because of that prior absorption. So number six, we've got supply
continues to diminish for the backing up action, which is here. So supply has been
absorbed. So what we can see is we have this rally into our sign of strength and
then the backing up action. And just note how volume and volatility have
decreased. So supply has been absorbed into the backing up action. And another
thing you're going to see as a common characteristic is you're going to see
reaccumulation structures such as the one here in phase E develop. And these are
normally going to form within phase D and maybe crossing into phase E as well, or
they might just happen in phase E. But it's being aware of when these
reaccumulation structures form, because we don't want to take advantage of them.
So knowing the optimal entries, we'd know that a phase C LPS or spring type action
is going to be an optimal entry point. So then we'd be looking to enter trades
there as well. So hopefully that's going to be very informative for you, just
giving you a flavor of the first two. This is what we're going to do for the
remaining 98. So that's the end of session three. In session four, we're going to
kickstart with looking at the Germany EWG ETF. So I look forward to seeing you at
session four.