Dow Jones Industrial Average (DJIA)

The Wyckoff Price cycle consist of four phases, Accumulation, Mark Up, Distribution and Mark Down. Each phase has a series of distinct characteristics to help traders identify where they and how they should trade in harmony with the market and smart money.

Here's an analysis of world's most watched index. Yes! the Dow Jones Industrial Average (DJIA) and what we have observed and expecting.

DJIA has entered into the Mark Up phase since consolidated (Re-accumulation) in late 2016.

1) The average hit a high in Feb 2018, consolidated and retested the high again but failed. This is one of the most common sign of a Distribution Phase, which we term it as Upthrust (UT) failure.

2) Next, the average made another bearish indication by trading below uptrend line (stride) in recent months. This is NOT a character of Mark Up (Bullish) phase.

3) We continue seeing large sell offs, more often then rallies during the consolidation (possible distribution phase). This is a Bearish Character which only observes in bearish phases such as Distribution and Mark Down phases. And who made these selling? Yes, the smart money.

4) Combining with technical indicator, we also noted that MACD (Monthly) has also witnessed a Bearish crossover, which helps provide further technical evidence that the bear grip on DJIA is strong.

To confirm a Distribution phase (or top), we will need DJIA to trade below 23,300, Feb 2018.

Only then, we can confirm that DJIA has seen a distribution and ready for Mark Down. Also where traders starts to short weak stocks as the market marks down.

Hope the above is a good introduction to newer traders on how we identify market/stock phases and trade in harmony with the market and smart money.

Continue to follow us, and if you interested to incorporate Wyckoff Method as part of your trading strategy which I strongly encourage!, do join us in our next Richard Wyckoff Method class in March 2019. The course is organised in Conjunction with Singapore Exchange (SGX) Academy. Click HERE for more details.

Wyckoff's Law of Effort

Law of Effort Wyckoff's Law of Effort states that on any single trading day (or week depending on time frame), huge volume (effort) push by participants should see huge price movement, resulting in a wide spread (long body). This is a basic principle of effort and result. However, as per Singtel's case study, we saw huge selling volume on 11 May, yet the price action only shows a narrow spread (small body). This divergence of effort and result in Wyckoff's Law of Effort principles, indicates possible exhaustion in selling or hidden buying. Thus, with a lack of weakness, Singtel should continue trading range bound for the coming days or weeks till further strength or weakness is observed. Swing Traders who trades range can consider positions at 3.70-3.72, with exit target 3.76-3.78.

Markets searching for technical support

Thoughts on Week Ahead: Week 21 Aug 2023 Markets searching for technical support US FOMC minutes have confirmed market’s fear of a hawkish US FED. This fear has triggered a continued sell-off in global equities over the past week. China economy and policy did not help too much either. China Evergrande filed for chapter 11 in US while Country Garden future remain uncertain as investors continue to keep an eye for a more aggressive policy from Beijing to support the economy and people’s confidence. From a technical perspective, markets are searching for technical support levels, where bargain hunters are willing to come in. Support levels are 4,300 for S&P 500 and 3,130 for STI. For the week ahead, market participants will be zooming in on US FED Chair Powell’s speech at the Jackson Hole meeting. We did not uncover trading (tactical) set up for the week ahead and will update once we identify any. Have a great trading week ahead. Headlines for Week Ahead: Key corp earnings (Nvidia

Thoughts on Week Ahead: Week 28 Aug 2023 Looking out for technical reversal indication Past week was an eventful one, with significant developments ranging from the arrest of former US President Donald Trump to BRICS expanding its membership to include financial powerhouses Saudi Arabia and the UAE. However, the focal point for the financial markets remained the speech by the US Federal Reserve Chair at Jackson Hole. The Chair highlighted that current economic condition is more favorable and hinted at holding rates during the Sept FOMC meeting, but also suggested a possible 25 basis points hike later in 2023, aligning with market expectations. Personal view, mixed rate outlook could suggest potential interest rate pivot (peak). Currently, both the S&P 500 and Hang Seng Index are in the process of establishing support levels at 4,300 and 17,800, respectively. We are closely monitoring these markets for signs of supply exhaustion, which would indicate a potential reversal. Intuit

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