:: actio-et-reactio ::
amg's market charts and blather
The stock market of the 1920s left modern market enthusiasts a rich legacy not only of stories and lore, but analysis methods that continue to inspire emulation. Perhaps the greatest legacy are the people themselves, the major players of that era. The near mythical actions of Jesse Livermore, Bernard Baruch, and WD Gann were fortunately recorded by journalists of the time. One journalist, Charles Dow, would become known not only by the "little paper" he would found, now known as the Wall Street Journal, but also his market theories, one of which was the idea that markets move up in three swings and correct by 3/8ths. That does sound a bit like Elliott theory, which of course was made far more complicated, er, complex. Readers of my site already know of another simple idea, that of actio-reactio, which was propounded by Roger Babson in regards to the stock market, and itself made more complicated, er, complex, by men such as Gann and later, Alan Andrews. But I digress.
While less well known, no less important are the ideas of Richard D. Wyckoff, who also worked in the finacial markets in the early 1900s. In fact, like Jesse Livermore, he was a day trader! And like Livermore, Wyckoff was also a student of the tape, of price action, and importantly, of volume. While his ideas are more complex than the three tenets listed below, the three are enough to perhaps make you look at price and volume with a fresh and simple view.
The three principles which are the core of Wyckoff are
1) Effort vs Result (Volume vs Price Action)
2) Cause vs Effect (Time in Trading Range relates to How Powerful the Move out of it)
3) Demand vs Supply (Buying vs Selling)
click to open larger
What a week it has been! Loads of technical carnage, signalling at best a robust consolidation and at worst a shift towards an even stronger decline. I'll go with the later as there is evidence of sufficient oversoldness for a bounce, perhaps after the touch of 1096. We'll be watching it.
Do look at the last chart: Price Relative VIX, which I now include on the daily chart. It has proved one of the most interesting observations. Note too that small caps have remained bouyant, a sign of lack of real fear.
After over three years and 1000+ days of continuous updates, amg's Studies and Commentary, my free daily market charts and commentary at stockcharts.com, went offline as of Sunday evening, 14 March.
The very best part of posting my charts there for readers and users of stockcharts.com has been the wonderful feedback from visitors, who have come from all over the world and ranged from hedge fund managers to discretionary traders to young folks just learning analysis. My warm appreciation to Chip Anderson who continues to improve an already amazing product, and to all who have sent notes of appreciation and encouragment. Thanks for visiting and the very best to you in your trading and investing!
The irregular posting of my doodles, market blather, and meanders will continue in the same ad hoc way here at themysterybox.com.
[ed. 24 Mar 04 to link to archive page]
|
moon phases |
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Content: amg
Basis: glish & bluerobot
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