GCN pt 13-2

 Consider the importance and function of a "mid pattern rally" 

"THE PRICE PATH CHARACTERISTICS

In studying the movements of stocks, it is well to have in mind the old saying,

"Stocks must fluctuate.""

"In a speculative market, where the laws of supply and demand are operative, we

must have fluctuations in prices. These fluctuations are due mostly to differences

of opinion which cause what is technically known as the bid and asked spread.

Experience has taught us that a great number of fluctuations in a congestion area usually

indicates either accumulation or distribution.

 When stock is offered for sale at the

market, we must take the nearest bid price; and when one is anxious to purchase

a stock and offers to take it at the market, he must pay the nearest asked price. The

price changes of a stock, as it moves from one price to another, are caused by the

difference of opinions of those who are buying and selling."

"The most vital

signals given by this Method are those occurring in the trading ranges, the congestion

areas, either at the termination of moves at bottoms and tops, or in the

consolidation areas, during the advance or decline.

A trading range is the zone in which a stock backs and fills, i.e. fluctuates

above the level of support where sufficient buying is encountered to absorb all

offerings and the resistance level above where the demand is unable to absorb

the supply. A trading range is sometimes called a "line movement"

" A study of the stock market means a study in the forces above and below the present level of prices. Each movement has its period of preparation, execution and termination, and the most substantial of movements are those that make long preparation. Without this preparation and gathering of force, a movement is not likely to be sustained. 

 forces above and below the present level of prices

This is why it is a Study of Responses and tests.

This is the importance of the mid pattern rally and it's test

"WATCH FOR CHANGES IN ACTIVITY

You will observe from your charts that stocks fluctuate narrowly during periods

of major accumulation. Soon thereafter, activity, sharp advances and equally

sharp technical declines follow.

 This is usually a sign of the beginning of an

extended move. Watch carefully for it. When a stock alters its most recent fluctuating

habits, it is wise to be on the alert, for it is a sign of either accumulation

or distribution."

Expansion and Contraction 

Cause and effect

acceleration and deceleration 

Changes in Activity 

Absorption and Emission 

Price Volume and Time

SPEEDING UP AND SLOWING DOWN

TURNING POINTS

ALL is Expansion and Contraction

With GCN a chart of the most recent action

displaying Mid pattern rally.

Test Through support

forming a possible "Recoil Pattern"

Important "lines" 

At .04 ( The four 0s )

and at .043

The one X at .038

is the Higher Low seen on the other charts

It is the last point of SUPPORT

What do Fluctuations achieve ?

What does the mid pattern rally facilitate ?

The way ahead 

For price to go UP sellers need to SELL

For prices to go down BUYERS need to BUY.

Only Then.

Look for a move UP from the close at .04 ( The last Purple 0 )

Look for Expansion in Price and Volume

 Look carefully at .043 ( The move past the X at .042 )

Then LOOK for  Resistance at .048 ( remember--RESISTANCE IS ALWAYS MET UP AHEAD )

esp LOOK for a "JUMP"

IE The recoil = The back-up

A Danger Point is .038

FMTJan 22, 2012 03:46 PM

I'm going to have a punt Motorway - looks to me like those 44 and 45 lines are established as 'value' at the moment, more so the 44 line. There is plenty of work being done above 44, especially since the yellow box. BUT - the most recent work is being done below 44 ... I place more weight on the recent work and it gives me a bull bias on this stock.

The move to 48 on Friday was rejected, and since that high 44 is forming resistance, with value built at 43 since the high. On a candle chart Friday's action would show the close below the open after a run up to test the recent highs. It is not a bullish candle. But your chart here reveals so much more than a candle reveals ... getting Friday's close at the low, and having the candle look like it does, may very well be a deliberate action and i would not trust this bearish candle over what I see as bullish action on the figure chart. Any sell-off from here would, I believe, be shallow and would provide a good buying opportunity.

How'm I doing so far?

Very Good ! The big picture helps !

Your comments regarding Candles ( BARS ) versus The "FIGURES" are important and worthy 


of further discussion.

Not just Individual slices of tIME .  But combinations ( patterns ) of them and anything built from 


them. eg. Indicators  (OBV ? MACD ? RSI ? ) miss what is important. 

Because they are not in the universe of the COMPLETELY REAL like  AVERAGES ! They 


Moving or otherwise JUST DO NOT EXIST.

Anything is still possible.

FEEDBACK and the STUDY of RESPONSES is what matters

Not PREDICTING... But FORECASTING

Motorway