Now some points from RDW
Pertinent to the moment
"The more we study volumes, the better we appreciate their value in Tape Reading. It frequently occurs that a stock will work within a three-point range for days at a time without giving one a chance for a respectable-sized ‘scalp’. Without going out of these boundaries, it suddenly begins coming out on the tape in thousands instead of hundreds. This is evidence that a new movement has started, but not necessarily in the direction first indicated.
The Tape Reader must immediately go with the trend, but until it is clearly defined and the stock breaks its former limits with large and increasing volumes, he must use caution.
The reason is this: If the stock has been suddenly advanced, it may be for the purpose of facilitating sales by a large operator.
The best way to distinguish the genuine from the fictitious move is to watch out for abnormally large volumes within a small radius. This is usually evidence of manipulation. The large volume is simply a means of attracting buyers and disguising the hand of the operator. A play of this kind took place when Reading struck 159 3/4 in June1909. I counted some 80,000 shares within about half a point of 159 - unmistakable notice of a coming decline. This was a case where the stock was put up before being put down, and the Tape Reader who interpreted the move correctly and played for a good down swing would have made considerable money."
The chart is "Hunting" ( just like a lawn mower engine running out of fuel )
The 3 ( and so the 5 & 10 ) reversal charts are stationary.
Consider what they means in terms of Waves
Building Up and Down and in terms of various turning points ( time horizons )
Consider also the ease of manipulation and false moves with such dullness.
BEWARE !
"This is evidence that a new movement has started, but not necessarily in the direction first indicated".
MANY people are apt to regard a dull market as a problem for trading purposes. They claim: "Our hands are tied; we can't get out of what we've got; if we could there'd be no use getting in again, for whatever we do we can't make a dollar". Such people are not Tape Readers. They are Sitters. As a matter of fact, dull markets offer innumerable opportunities and we have only to dig beneath the crust of prejudice to find them.
If the history of the market were to be written, these periods of lifelessness should mark the close of each chapter. The reason is: The factors that were active in producing the main movement, with its start, its climax and its collapse, have spent their force. Prices, therefore, settle into a groove, where they remain sometimes for weeks or until affected by some other powerful influence.
When a market is in the midst of a big move, no one can tell how long or how far it will run. But when prices are stationary, we know that from this point there will be a pronounced swing in one direction or another. There are ways of anticipating the direction of this swing.
When a market is in the midst of a big move, no one can tell how long or how far it will run. But when prices are stationary, we know that from this point there will be a pronounced swing in one direction or another. There are ways of anticipating the direction of this swing.
One is by noting the technical strength or weakness The resistance to pressure mentioned as characteristic of the dull period in March, 1909, was followed by a pronounced rise, leading stocks selling many points higher. This was particularly true of Reading, in which the shakeouts around 120 (one of which was described) were frequent and positive.
When insiders shake other people out it means that they want the stock themselves. These are good times for us to get in.
When a dull market shows its inability to hold rallies, or when it does not respond to bullish news, it is technically weak, and unless something comes along to change the situation, the next swing will be downward.
On the other hand, when there is a gradual hardening in prices; when bear raids fail to dislodge considerable quantities of stock; when stocks do not decline upon unfavourable news, we may look for an advancing market in the near future.
No one can tell when a dull market will merge into a very active one, therefore the Tape Reader must be constantly on the watch. It is foolish for him to say: "The market is dead dull. No use watching it today. Nothing profitable can happen in such a market".
No one can tell when a dull market will merge into a very active one, therefore the Tape Reader must be constantly on the watch. It is foolish for him to say: "The market is dead dull. No use watching it today. Nothing profitable can happen in such a market".
Such reasoning is apt to make one miss the very choicest opportunities - those of getting in on the ground floor of a big move.
For example: During the previous mentioned accumulation in Reading, the stock ranged between 120 and 124 1/2. Without warning, it one day gave indication (around 125) that the absorption was about concluded, and the stock had begun its advance. The Tape Reader having reasoned before hand that this accumulation was no small investors game, would have grabbed a bunch of Reading as soon as the indication appeared. He might have bought more than he wanted for scalping purposes, with the intention of holding part of his line for a long swing, using the rest for regular trading. As the stock drew away from his purchase price he could have raised his stop on the lot he intended to hold, putting a mental label on it to the effect that it is to be sold when he detects inside distribution.
Thus he stands to benefit to the fullest extent by any manipulative work which may be done. In other words, he says: "I'll get out of this lot when the big boys and their friends get out of theirs". He feels easy in his mind about this stock, because he has seen the accumulation and knows it has relieved the market of all the floating supply at about this level. This means a sharp, quick rise sooner or later, as little stock is to be met with on the way up.
If he neglected to watch the market continuously and get in at the very start, his chances would be greatly lessened. He might not have the courage to take on the larger quantity. On Friday, March 26, 1909. Reading and Union were about as dull as two gentlemanly leaders could well be. Reading opened at 132 3/4, high was 133¼, low 132¼, last 132 5/8. Union's extreme fluctuation was 5/8! - from 180 5/8 to 181¼. Activity was confined to Beet Sugar, Kansas City Southern, etc. The following day, Saturday, the opening gave every indication that the previous day's dullness would be repeated, initial sales showing only fractional changes. Let’s see… B. & 0., Wabash pfd. and Missouri Pacific were up 3/8 or 1/2. Union was an 1/8th higher and Reading 1/8 lower. Beet Sugar was down 5/8, with sales at 32. Reading showed 1100 @ 132¼, 800 @ 3/8, Union 800 @ 181, 400 @ 181, 200 @ 181 1/8, 400 @ 181. A single hundred Steel at 45½ 1/8. B& O 100 @ 109 7/8.
Market dead, mostly single 100 share lots… Ah! Here's our cue! Reading 2300 @ 132½., 2000 @ ½, 500 @ 5/8. Coming out of a dead market, quantities like these taken at the offered prices can mean only one thing, and without argument the Tape Reader takes on a bunch of Reading "at the market." Whatever is happening in Reading, the rest of the market is slow to respond, although N. Y. Central seems willing to help a little – 500 @ 127½ (after ¼). Beets are up to 33¼. Steel is 45 1/8, and Copper 77 ¼ -a fraction better. Reading 300 @ 132/2. Steel 1300 @ 45 1/8, ¼ Union 100 @ 181 Reading 300 @ 132 5/8 Beets 100 @ 33½. Union 700 @ 181½ N.Y. Central 127 5/8, 600 @ ¾… 7/8!…There’s some help coming! Union 900 @ 181½ now Reading 100 @ 132 3/4. Copper 700 @ 71½. Reading 800 @ 132 7/8, 100 @ 133, 900 @ 133, 1100 @ 1/8... Reading 1500 @ 133¼ , 3500 @ 133 ½…not much doubt about the trend now.
The whole market is responding to Reading, and there is a steady increase in power, breadth and volume. The rapid advances show that short covering is no small factor. It looks as though a lot of people are throwing their Beet Sugar and getting into the big stocks. St. Paul Copper and Smelters begin to lift a little. Around 11 A.M. there is a brief period of hesitation, in which the market seems to take a long breath in preparation for another effort. There is scarcely any reaction and no weakness. Reading backs up a fraction to 133¼ and Union to 181 3/8. There are no selling indications, so the Tape Reader stands by his guns. Now they are picking up again… Reading 133 3/8, ½, 5/8, ¾… Union 181 5/8 N.Y. Central 128½ 1/8, 700 @ ¼, Union 1000 @ 181½, 3500 @ 5/8, 2800 @ 7/8, 4100 @ 182 Steel 45 ½…. From then right up to the close it's nothing but bull, and everything closes within a fraction of its highest. Reading makes 134 3/8, Union 183, Steel 46 1/8, Central 128 7/8, and the rest in proportion. The market has gained such headway that it will take dire news to prevent a high, wide opening on Monday, and the Tape Reader has his choice of closing out at the high point or putting in a stop and taking his chances over Sunday.
So we see the advantage of watching a dull market and getting in the moment it starts out of its rut. One could almost draw lines on the chart (the upper line being the high point of its monotonous swing and the lower line the low point) and buy or sell whenever the line is crossed. Because when a stock shakes itself loose from a narrow radius it is clear that the accumulation or distribution or resting spell has been completed and new forces are at work. These forces are most pronounced and effective at the beginning of the new move - more power is needed to start a thing than to keep it going. RDW ( Studies in Tape Reading )
For example: During the previous mentioned accumulation in Reading, the stock ranged between 120 and 124 1/2. Without warning, it one day gave indication (around 125) that the absorption was about concluded, and the stock had begun its advance. The Tape Reader having reasoned before hand that this accumulation was no small investors game, would have grabbed a bunch of Reading as soon as the indication appeared. He might have bought more than he wanted for scalping purposes, with the intention of holding part of his line for a long swing, using the rest for regular trading. As the stock drew away from his purchase price he could have raised his stop on the lot he intended to hold, putting a mental label on it to the effect that it is to be sold when he detects inside distribution.
Thus he stands to benefit to the fullest extent by any manipulative work which may be done. In other words, he says: "I'll get out of this lot when the big boys and their friends get out of theirs". He feels easy in his mind about this stock, because he has seen the accumulation and knows it has relieved the market of all the floating supply at about this level. This means a sharp, quick rise sooner or later, as little stock is to be met with on the way up.
If he neglected to watch the market continuously and get in at the very start, his chances would be greatly lessened. He might not have the courage to take on the larger quantity. On Friday, March 26, 1909. Reading and Union were about as dull as two gentlemanly leaders could well be. Reading opened at 132 3/4, high was 133¼, low 132¼, last 132 5/8. Union's extreme fluctuation was 5/8! - from 180 5/8 to 181¼. Activity was confined to Beet Sugar, Kansas City Southern, etc. The following day, Saturday, the opening gave every indication that the previous day's dullness would be repeated, initial sales showing only fractional changes. Let’s see… B. & 0., Wabash pfd. and Missouri Pacific were up 3/8 or 1/2. Union was an 1/8th higher and Reading 1/8 lower. Beet Sugar was down 5/8, with sales at 32. Reading showed 1100 @ 132¼, 800 @ 3/8, Union 800 @ 181, 400 @ 181, 200 @ 181 1/8, 400 @ 181. A single hundred Steel at 45½ 1/8. B& O 100 @ 109 7/8.
Market dead, mostly single 100 share lots… Ah! Here's our cue! Reading 2300 @ 132½., 2000 @ ½, 500 @ 5/8. Coming out of a dead market, quantities like these taken at the offered prices can mean only one thing, and without argument the Tape Reader takes on a bunch of Reading "at the market." Whatever is happening in Reading, the rest of the market is slow to respond, although N. Y. Central seems willing to help a little – 500 @ 127½ (after ¼). Beets are up to 33¼. Steel is 45 1/8, and Copper 77 ¼ -a fraction better. Reading 300 @ 132/2. Steel 1300 @ 45 1/8, ¼ Union 100 @ 181 Reading 300 @ 132 5/8 Beets 100 @ 33½. Union 700 @ 181½ N.Y. Central 127 5/8, 600 @ ¾… 7/8!…There’s some help coming! Union 900 @ 181½ now Reading 100 @ 132 3/4. Copper 700 @ 71½. Reading 800 @ 132 7/8, 100 @ 133, 900 @ 133, 1100 @ 1/8... Reading 1500 @ 133¼ , 3500 @ 133 ½…not much doubt about the trend now.
The whole market is responding to Reading, and there is a steady increase in power, breadth and volume. The rapid advances show that short covering is no small factor. It looks as though a lot of people are throwing their Beet Sugar and getting into the big stocks. St. Paul Copper and Smelters begin to lift a little. Around 11 A.M. there is a brief period of hesitation, in which the market seems to take a long breath in preparation for another effort. There is scarcely any reaction and no weakness. Reading backs up a fraction to 133¼ and Union to 181 3/8. There are no selling indications, so the Tape Reader stands by his guns. Now they are picking up again… Reading 133 3/8, ½, 5/8, ¾… Union 181 5/8 N.Y. Central 128½ 1/8, 700 @ ¼, Union 1000 @ 181½, 3500 @ 5/8, 2800 @ 7/8, 4100 @ 182 Steel 45 ½…. From then right up to the close it's nothing but bull, and everything closes within a fraction of its highest. Reading makes 134 3/8, Union 183, Steel 46 1/8, Central 128 7/8, and the rest in proportion. The market has gained such headway that it will take dire news to prevent a high, wide opening on Monday, and the Tape Reader has his choice of closing out at the high point or putting in a stop and taking his chances over Sunday.
So we see the advantage of watching a dull market and getting in the moment it starts out of its rut. One could almost draw lines on the chart (the upper line being the high point of its monotonous swing and the lower line the low point) and buy or sell whenever the line is crossed. Because when a stock shakes itself loose from a narrow radius it is clear that the accumulation or distribution or resting spell has been completed and new forces are at work. These forces are most pronounced and effective at the beginning of the new move - more power is needed to start a thing than to keep it going. RDW ( Studies in Tape Reading )
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