Madness I tell you! It’s time to regroup and go old school, and I mean early 20th century old school. Before I begin, let me say, my track record has been pretty awful. In fact why are you even reading this, I have no credibility. I think I’ve made 4 calls since October based on setups, and have gotten absolutely none of them right. So, listen to me at your own risk! But, if you are a gluten for punishment and still give a rats as what I think… here we go.
Up to now, I’ve been mixing fundamentals and technical trying to guide myself through this labyrinth of SGYP. As noted in my disclaimer, that hasn’t gone so well. However, the last thing I’m going to do is quit. Instead it’s time to regroup and try a new approach. We’re going Wyckoff style!
Instead of writing about what’s already written, I’ll just link you to who he is and why he’s relevant. I linked to this on StockTwits already and, if you can, you may want to print it out. I will be referencing a part of it. If you get a chance you should really read the whole thing and do some more research on who his is why he is still so relevant even after 90 years or so.
Here is another great link that I will also be referencing. This was posted by stealin_your_thunder on StockTwits, so thanks to him for this.
Before I start with the charts, you should know I’m focused on the weekly. I find the weekly is cleaner, easier to read and to identify the significant areas noted in that first link. That means I’m talking in a longer term and looking for confirmation by weekly closes and not daily. I am also doing some basic candle analysis. I find they have been pretty effective, especially in the weekly time frame. I won’t go into too much detail what they mean or why they form, so you might want to look them up for more information. If you do, you should understand why they are useful when doing a volume price analysis.
I’m a big fan of using this method, but it’s hard, sometimes really hard. It can be very ambiguous and almost always subjective. You have to reject emotions, in fact do the opposite of what they tell you to do. You are literally trying to outsmart smart money, and their job is to stop you from doing that. You must look at things from their perspective, which means, as mentioned, doing everything opposite to what you think. For example, in the book A Complete Guide To Volume Price Analysis, which I highly recommend, she talks about a buying climax. I will get to what that is later, but if you look at that first link, they call it a selling climax. In fact, just about anywhere you look calls it a selling climax. It is the first big sell-off on big volume that marks the bottom of the accumulation trading range. It’s a big red candle with big price drop, and yet she calls it a buying climax. Yes, it’s true, retail is selling in total zombie apocalyptic fear. However, the move was planned and manipulated by smart money, because as the hoard is trampling over one another to get out, the smart money is starting their accumulation campaign. So, from their perspective it is a buying climax, and you need to think from their perspective to follow them.
I know it sounds all conspiracy theory and if you say these things out loud, you’ll get called some very pleasant names… been there done that. But, as much as technology and regulations have changed the face of Wall Street, the core of it, is what it’s always been and always will be. These guys I mention were using this and making bank back in the 1920’s and 30’s. Compared to today, the early 20th century was barbaric in term of trading, but this worked then and still works now. If you are going to do it, you can’t be lazy because its difficult. I’m no guru, but I have that truth seeking type of personality and like to get to the bottom of things and want to be able to control as much as I can when it comes to my money, and not just throw caution to the wind.
So, the first thing you need to do, is identify a stock that is being manipulated into an accumulation trading range. If you printed out that first link, look at page 8. If not, the diagram is titled Accumulation Schematic #1. You are looking for something that looks generally like that. A stock who is coming out of a long down trend and starting to trade in a range. Oh look I found one… SGYP! The next thing is to identify the major events that are noted in Phase A of that diagram. Below the diagram, it tells you what the markers mean. This is when things start getting real. Don’t find points that match just because you want to find them, remain calm and objective. Look at volume and price, not just price. If you are looking at a chart and are too indecisive and the markers aren’t more obvious, it’s best to move to another stock. Fortunately for us, SGYP was easy peasy to identify. As a side note, this is easier to do with a stock you’ve been following for a while. You know what has happened news wise before and how the market reacted. Basically, the timeline of price and volume action is more of a storyline, and the more of the story you know, the easier it is to interpret it.
Here is how I identified the weekly, compare this to the diagram from that link:
I actually made this chart on Wednesday, so that last week doesn’t reflect the closing price of the week.
So, here is where our story begins. When you look at it in retrospect, it’s not hard to build your case, but at the time it was impossible to know. Start at the Preliminary Support (PS) and go back three weeks, do you remember what happened that week? That’s when we got the big news that we secured the loan and didn’t need to dilute. That was a total WTF!? moment. That should have sent us straight to Bit Coin prices, but instead it sold off on above average volume?!?!? In fact the exact day was 9/5 and the volume was a gigantic 20 million or so, and we still closed lower.
Think about that from the perspective of the composite man (see that first document for what the composite man is). Maybe you have some information that the general public isn’t privy to. Whatever the reason, you decide it’s time to start accumulating shares after a long down trend. Check out this quote from that second link:
Instead, here’s how he sets it up: first, he’ll “shake out” the little guys by forcing the stock lower in order to get a better price
“He prefers to do this while the market is weak, dull, inactive and depressed. To the extent that they are able, he, and the other interests with whom he works, bring about the very conditions which are most favorable for accumulation of stocks at low prices…
“When he wishes to accumulate a line, he raids the market for that stock, makes it look very weak, and gives it the appearance of heavy liquidation by sending in selling orders through a great number of brokers.”
Source: Wyckoff (1937)
So, with that in mind, I can show you how 9/5 was a setup for a major shake out that ultimately defined the bottom of Selling Climax (SC) on 11/15. We are all pretty miffed that the terms of that loan weren’t disclosed when it was announced, in fact lawsuits are just now popping up like zits on a teenager because of it. I’m telling you, the way that was announced and the reaction to it was all by design. Retail was dancing in the streets, buying it hand over fist… I mean no dilution and that wall of worry came crashing down right? Who wouldn’t buy that? I’ll tell you who, composite man didn’t. There is no telling exactly how he controlled it, but the gist is that he likely bought it at it’s low and retail got behind the rise aggressively, then composite mad started dumping and shorting against all that retail momentum to stop it. This caused lots of confusion in the retail world, like not getting that thing you wanted so badly and begged Santa for on Christmas. You thought it was a sure thing, but got coal instead. Again, that was the intention. It led to a melt-down ending on 9/28 at a low of $2.57. That price may seem like an arbitrary number, but actually it had great technical significance. Once again, the fact that composite man decided to shake out and start accumulating at this level is not by accident.
Look at this:
That’s a 10 year monthly chart. That magenta line shown major support going back to 2014. That yellow arrow shows where we bounced off that line on 9/29. A lot of technical eyes were watching that level to see if it held. A solid move out of that range would be a big sign to buy as a bottom was in. Go figure, we got a nice pop right there to entice more buying and created the preliminary support (PS). The pop started with well above average volume, that was probably composite main buying along with retail to help the quick “fake” pop along. Then, on 10/3 it just stopped for no apparent reason. That day was pretty big volume too, probably composite man selling what they had just bought to stop the rise and trap the bulls that were panic buying. Who me? Did I do that?…. busted! Yep, I got played too right there.
So, now for the grand finally. The loan news failed, the bounce off major support failed and sentiment was pretty low. The move back down to that support was systematic, but then there was one last hope as we got to $2.56 again. Wait! Maybe this is a double bottom? Maybe not all hope is lost? Maybe we should buy again? Yes! Yes! We are going back up! Finally, sweet Jesus we got a nice move on above average volume to over $3! Oh wait, we are stalling. No problem we just made a sweet move and we need a break, after all we haven’t made a new low. Ok, good we are getting back on track and inching up again. That’s what retail was thinking between 10/27 and 11/9. Not to mention, this was also a build up to 11/10 earnings report. No coincidence the timing of that came into play on the latest rebound.
Composite man was thinking. “Let’s get the last bit of suckers to buy, then drop the hammer on them. That will shake out a ton of shares for sure.” Then it came, 11/10. Started with a nice move to a high of $3.10 after better than expected earnings. After that though, the shit show began. I’m willing to bet composite man started shorting at that point to drive it back down and once again cause retail confusion. Then, just when you thought it couldn’t get any worse, 11/13 and a secondary is announced! Wham! Bam! No thank you ma’am! Lights out and the selling climax (or buying climax as mentioned earlier) was complete on 11/15.
So yeah, call me Mr. Conspiracy, but the whole move from the loan announcement to the secondary to access the load was an orchestrated shake out. Just like that quote I posted said it happens. The timing of events in relation to technically significant areas on the chart were no coincidence.
Oh, but we’re not done. We’re just getting started. Here is the weekly again without all the candle annotation:
Now we had our selling (buying) climax and defined the support of the trading range. So, sentiment in the retail world has been completely destroyed. How do you figure we will entice new buying? We need new blood to come and raise the price up and build confidence again, only to shake it again and get more shares out of retail. Oh wait, we have an FDA decision date on the horizon, a big catalyst to suck in new retail. Do you really think the timing of that along with everything else wasn’t part of this equation?
Now, keep this quote in mind:
Then, he will try to time the top of his planned price rise with some “good news” about the stock he may already know about
Remember the saying, “Buy the rumor, sell the news”?
“You have often noticed that a stock will sell at the highest price for many months on the very day when a stock dividend, or some very bullish news, appears in print. This is not mere accident. The whole move is manufactured. Its purpose is to make money for inside interests — those who are operating in the stock in a large way. And this can only be done by fooling the public, or by inducing the public to fool themselves.”
Source: Wyckoff (1937)
As I was analyzing this, I notice a little problem the composite man had after the SC. He had to keep this in a pretty tight range. Look back at the monthly chart I posted. Remember that major support line? Well, they got the price just below it. That in itself was part of the plan. If they could get it just under support that would make it look extremely weak. However, the flip side to that is now, that support is resistance and they don’t want to let it get over that. If it did get too far above and close over it, it would likely bring in a whole new bunch of buyers, which would hinder their control and plan to accumulate in the $2.00 area. So, now the objective is to get it back up to that resistance without closing over it.
So, SC happened and a bout of major accumulation stopped the fall. Then for about a month it was stagnant. They needed a push to get the price back up to continue the campaign. Composite man reached into his bag of tricks and out pulled a headline on 12/19, Troy is now the CEO and Gary is whatever it was. The masses had been crying for this to happen, and in truth, the news was pretty benign, but played on the human emotion enough to get the desired effect. Come 1/1, the effect may have been too great. A new CEO and a new year equals new hope and vigor. The price started moving up, likely not planned to go as quickly. and composite man had to stop it before it broke over that resistance. So, he got on the phone and dialed, “boop beep beep boop beep… Hello, Oppenheimer. Can you do me a favor? Can you drop a little downgrade so we can use it to control this price from going too high? Really? Thanks man. Oh and how’s your mom? That’s great, I owe you one. Talk to ya soon. Bye”. Then we got it on 1/5, Oppenheimer downgrades from outperform to perform. Pffffft Puh-lease. It wasn’t even bad really, it had more positives than negatives with a little “but” at the end. Total manipulation I tell you. The media is composite man’s secret weapon, and yeah that includes message boards… hint hint.
So, this leads our story to today. The FDA approved IBC yada yada yada, sell the news, blah blah blah and use that to take the price back down. Except this time the take down is with different intentions. The idea is to test the supply at the SC low. They need to know if they absorbed the bulk of it in the SC, or if there is more they need to contend with. As of right now, about 12:15 CST on Friday, it looks like a pass. I noted on that weekly chart why its a pass. Also, the description of ST in that document describes what a passed test should look like.
So, now I’m getting tired of typing and I have to go get a haircut in a hour, so I’ll start wrapping it up. I’ll leave the rest up to you. At the very least, look at the Schematic #2 and read the characteristics of the Wyckoff phases. I defined phase A and think we are just entering phase B now. If you read it, then yeah I know what you’re thinking and you’re right. This could take a while to pan out and the shake outs probably aren’t over just yet. But, this will hopefully help you make better decisions in the process.
Is all of this crooked, shady and grotesque? Absolutely, but it is what it is. You can complain about it or use it to your advantage. That’s your choice to make. Here are a couple of points to keep in mind. Those schematics are just guidelines. Don’t get hung up in every up and down that they show. Focus on finding those markers they list to identify where you are in the cycle. You may not even get all of them, but you should get enough to guide you. This is where it gets really subjective and you start thinking with your emotions and will see what you want to happen as opposed to what actually is. It’s a hard thing to learn, it’s not a science and there are no absolutes. Me writing this is just as much for me as anyone who reads it. I need this to help keep things organized and in check.
Do you guys remember the game Asteroids on the Atari? No? Uhhhhh errrr me either! Anyway, I read about it in this old book once and, in part, is a good analogy for what’s happening. The spaceship, in the game, never stops. It is in constant motion. Apparently, you would hit thrusters to move one way, then hit thrusters in the other if you go to far to reverse. That’s how composite man works it. The thrusters are the volume. They hit the volume to go up, then reverse thrusters to go the other way. Their objective is to stay pretty much in that range of accumulation and pick up as many shares as they can within the range. Ther’s no telling when their campaign will be done or how long each phase will last. All you can really do is be patient and try to identify where you are in the story line. Knowing which phase your in and how you got there will lead to better decision making, and never assume once a range is established that the whole thing can’t just go to shit. For example, if they did do a test and found a bunch more supply, they would have to bring it down and find a lower range.
Ok, I’m done. I hope this helps. I’ll be around on the boards, but not taking them too seriously. See ya!
Oh wait… P.S. I wanted to repost a chart I did on the boards. It’s another volume analysis thing called the shortening of thrusts. It’s just another sign that a significant downtrend is possibly coming to an end. It’s pretty common sense really, but makes a nice visual and helps validate what I just wrote about, that we have reached a range of accumulation after a down trend.
All this shows is that the range of the magenta down thrust, the green then yellow are all getting shorter. What is significant is that it’s doing it on rising volume through the whole process. I put that arrow in the volume bars, but you can see the 60 day volume average is rising also, so I’m not just making that arrow up. So, greater effort is being applied to the down move indicated by that volume, but the result is getting less, indicated by the shorter thrusts. So. it’s getting harder to take down. I would imagine that yellow thrust is mostly retail shorts getting caught panic selling. Panic buying or selling is another good indication of a possible top or bottom. But, I’m just speculating at that.