Richard Wyckoff Investment Decision Walk Through

By: readtheticker | Thu, Aug 2, 2012
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readtheticker.com applies the Richard Wyckoff logic to investments decisions, here is an example of a recent decision walk through.

First, the plan (from here: Original Wyckoff and Wyckoff 2.0 )

For this post we will use a shorter version.

Step1: Identify the trend.

Without getting lost in a massive chart book, RTT uses its own custom RTT Market Timer to confirm trend direction. On 06/06/2012 a long signal fired. Trend is up from 06/04/2012. Whatever you use as a trend tool it must be decisive and more importantly it must secure your belief in its signal.

This is what happened on June 6th 2012, the BLUE flag is entry at SPY 131.51

(SPY) Sp500 Trust Chart

Conclusion: Trend up from June 6th 2012

Step2: Select Sectors in harmony with the Wyckoff Wave (ie SP500)

To do this we will use the readtheticker.com Alpha Scanner to find sectors with better performance than the SP500. The RTT Market Timer signal was on June 6th, however the pivot (or selling climax) was on June 4th. We shall use June 4th to scan for sectors NOT being sold down as hard as the others.

Reference to the red numbers in image

  1. Select 'RTT WatchList Asset Class' with stock sectors that are over their 200 SMA.
  2. Scan date is June 4th 2012
  3. 'Industry' to select Stock Sectors ETFs and not commodities, forex or interest etc
  4. 1,000,000 to secure decent daily volume
  5. After the scan (double click a empty field) we SORT based on the last 50 days Alpha performance (or relative strength), the results are strongest first.

Below you see the results of the scan. Members with a chart subscription can reproduce this scan with ease.

Scan Results Screenshot
Larger Image

Conclusion: We have our Sector ETFs that are out performing the SP500 on the June 4th 2012. This means Money Managers like these sectors best and are reluctant to sell them even in during a selling climax.

Lets sell how they did, no cherry picking or further filtering, lets just select the lot.

Sector ETF Table

The SPY trade between June 6th and July 24 only returned only 1.89%, and after applying a simple relative strength sector selection method the return was raised to 2.10%. This trade was not a big winner, however when price does move then sectors and stocks with better alpha (relative strength) will reward the investor handsomely. Readtheticker.com has the tools to make the above process simple and quick.

Try us out.

 


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readtheticker

Author: readtheticker

readtheticker
www.readtheticker.com/
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We are financial market enthusiasts using methods expressed by the Gann, Hurst and Wyckoff with a few of our own proprietary tools. Readtheticker.com provides online stock and index charts with commentary. We are not brokers, bankers, financial planners, hedge fund traders or investment advisors, we are private investors.

LEGAL DISCLAIMER: The material is presented for educational purposes only and may contain errors or omissions and are subject to change without notice. Readtheticker.com (or 'RTT') members and or associates are NOT responsible for any actions you may take on any comments, advice,annotations or advertisement presented in this content. This material is not presented to be a recommendation to buy or sell any financial instrument (including but not limited to stocks, forex, options, bonds or futures, on any exchange in the world) or as 'investment advice'. Readtheticker.com members may have a position in any company or security mentioned herein.

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