IT IS IMPORTANT TO UNDERSTAND-- The relation of The technical position to the trend and
The difference between the technical position and the trend. So as a small help , some quotes that circle around this issue which I hope will give an all round ( but not exhaustive ) view, suggestive of ways to proceed.
It is how turning points are identified and confirmed that is key . Such clear understanding will also help reveal HOW and WHAT to MEASURE and WHEN ( in turn).
Successful tape reading is a study of force; it requires ability to judge which side has the greatest pulling power and one must have the courage to go with that side. There are critical points which occur in each swing, just as in the life of a business or of an individual. At these junctures it seems as though a feather's weight on either side would determine the immediate critical trend. Any one who can spot these points has much to win and little to lose, for he can always play with a stop placed close behind the turning point or "point of resistance".(RDW)
THE TECHNICAL POSITION is a STUDY of HISTORY. It is "The markets latent ability to withstand change" . TREND is for the FORECASTER and is "meaningless unless qualified as to TYPE.
Position is defined in terms of Strong and Weak hands. ( more on this later )
To all lines of business YOU MUST buy cheap(er) and sell dear(er) ..Then I remembered how my former employer had got his start. he was a travelling salesman, and in jumping from town to town occasionally ran across concerns which were in financial difficulties. They simply had to have money.
His first opportunity came when a small dealer whose stock of hardware inventoried at $3,000 offered to sell out for $1,500 cash. "The boss" bid him $1,000 , wired east for a loan of that amount, got it, bought out the hardware man, and within a week turned the stock over to another for $1,800.
He bought while the hardware man was in a state of panic RDW
He bought When the TIME HORIZON was almost "YESTERDAY" , When the TECHNICAL POSITION was WEAK . He sold When the TECHNICAL POSITION WAS STRONG and THE TIME HORIZON had become LONG.
The CHANGE OF HANDS, of WEAK to STRONG, -->ALONE, CHANGED EVERYTHING.
THE TECHNICAL POSITION is a STUDY of HISTORY. It is "The markets latent ability to withstand change" .
This is why the great body of opinion appears to be bullish at the top and bearish at the bottom. The multitude of small traders must be, as a plain necessity, long when prices are at the top, and short or out of the market at the bottom. G C Seldon
(consider that carefully ...It must be so . They are the SAME THINGS..)
It starts with a common sense idea that when the total number of shareholders change then the new share holders bring different expectations to market activity. This can lead to powerful changes in the direction of the trend. ( Float Analysis- Steve Woods, He relates this to Gann , But it is really Wyckoff. note the New Book in the Reading list ! very good for some ideas ;-) )
To be able to say when these turning points are occurring at the bottom of a bear market, or at any important rallying point on the way down to the bottom, or at the top of a bull market, or at any important reactionary point on the way up, is a mark of ability in an investor as well as a trader.
Remember: The market itself tells us everything we need to know about its
probable future action.
Every significant change in supply or demand is registered
on the tape. When you have learned to analyze the market by its own action, as
recorded on the tape or on your charts, then you will be proficient in the art of
operating in stocks.
Of all the things that are most desirable to know about the stock market,
these two are the most important:
(1) First, to be able to determine the final top of a bull market; and
second, to determine the top of the intermediate swings, and finally
the top of the minor moves
(2) To be able to determine the final low in a bear market; the bottom of
the intermediate swings, and the end of the minor moves.
Master this branch of the subject thoroughly, it is vital. (RDW)
Technical Position. A market (or a stock) is said to be in a weak technical
position on the bull side when the buying power has been exhausted, either in a
small or a large way. A campaign of distribution exhausts buying power in a
large way because much of the floating supply of stocks is then in the hands of
traders and the public. Sponsors and large operators have sold. Those of the
public who still hold these stocks are potentially bearish factors because, having
bought, they must sooner or later sell, and their selling will bring pressure upon
the market.
A strong technical position develops when liquidation has run its course,
either for the time being or more lastingly. Those who could be induced to sell or
were obliged to do so, have sold. The majority of stocks are in the hands of
experienced investors, bankers, sponsors, syndicates and large operators. The
sellers are weak; the buyers are strong; that -is, able to carry what they have
bought through whatever further declines occur. Such a condition usually prevails
at the end of a big decline, a panic or depression. Sometimes in
the finishing-up stages of a decline the weak holdings being sold to strong
buyers may require many months. (RDW).
There is PRICE , VOLUME and TIME ..
These have more than one attribute. They are all important and they are all to be measured. But relevantly in the context of Position . This means a particular How and Why
and this relates to WAVES and INTRINSIC TIME
Motorway
