Set-Ups, that Repeat

Late Session

Wyckoff: ‘Spring to Up-Thrust’

Years ago, while reading one of David Weis’ daily updates, he made a comment to the effect:

‘I can’t count how many times I’ve seen a spring, go straight into an up-thrust’.

His observation stuck with me through the years. Being the engineering type, I naturally wanted to know why.

Why does that market observed phenomenon occur?

Pursuing the question from a data perspective, it became clear that finding an answer, would be a never-ending quest.

I abandoned the ‘data’ idea; but the question lingered.

During that time, observation of the markets proved Weis’ point. Some markets tend to go straight from ‘spring to up-thrust.’

One example that’s taking place now, is CAT:

Another example in the potential set-up phase is LOW:

The reason for the phenomenon remains open. Obviously, the market’s going to go where there are orders.

It’s likely, under the right price action and psychological conditions, when support is penetrated enough (amateur) participants sell and then sell short.

Those undisciplined traders continue to move their stops higher (against their trade) as the the market moves higher; ultimately taking them out at the up-thrust top.

How do I know this? Because that’s exactly what I used to do.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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