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Handout of Lecture

BRIDGE THE GAP

Jan 2006
By
KH Tang
Topics for Discussion:
 Who are the participants in the Market?
 What is the Time Frame of their Business?
 What are their Edges in this Business?
 Phases of Manipulation Cycle.
 Sector Rotation. (How to detect Them)
 Methods to operate in the Market by the pools. (A detail Example..)
 What is the Significant of Understanding the Volume.
 Methods to operate in the Market by the Professionals. (Approach…)

Objective:
1. To bridge the most fundamental gap that do not cover in any modern
investment books/courses that I have come across.

2. After gone through this basic introduction, it would facilitate the readers,
in a much faster and easy way, to do their own study/learning with much
better understanding in both classic and modern Technical Analysis
Application rather than just trying hard to memorize patterns.
Who are the participants in the Market?

1. Pools (Insiders of corporations, Very Rich, Powerful and


influential people in the market/political position, Institution
funds.) - Question: Who are their Supporters?

2. Professional Traders (Floor Traders, Lone-Rangers,


Families Business, etc..) – Question: How do they get
Train? – How long is the training?

3. Public. (“Uneducated”, and “not proper educated”


individuals thinking in terms of investment.) – Question:
How Much Training do they receive?
What is the time Frame of their Business?

1. Pools – (A) Long Pull, and (B) short-term profit operation.

2. Professional Traders – (A) Swing Trades, (B) Day-Trade.

3. Public – (A) Buy and Hold, (B) Take Small Profit, hold or Sell at
Big Lost.

(Dow Theory)…The 3 waves.


Dow Theory…The 3 waves.

Question: Can someone decompose the composite waves?


What are their Edges in this Business? – (Pool)

Manpower Material Management

Insiders in companies, Future Prediction (or even Absolute support


fabrication) of Fundamental and co-operation
Experienced Pool Managers, Statistics, from team members.

Influential Policy Makers, Public Financial and Account Status,


Any Special Talent in all
Fields, as long as
necessary for the operation.
Pools Edge
Strategies and Tactics from The Art
of Wars*.
Access to brokerages and banks
The Wealth Transfer
for their clients information,
Machine Stock Exchange
Compensation Scheme for
Rules and Regulations,
Stock Analysts,
Control of Public Media to influence Tips, Rumors and News Factories. Abundance of capital
public mind. by Sponsors*.

Method Machine Money


What are their Edges in this Business? – (Professional)

Manpower Material Management

Training and Hard work! Personal Management and Self


control on Psychology.
Training and Hard work!!

Training and Hard work!!!

More Training and Hard work!!!!

Professional Edge
Mainly on Technical Analysis,
from minutes-to-days-to-
months. Key foundation build
upon Classic Tape Reading
Computer(s) with Multiple Monitors,
Techniques.
keyboard(s) and Mouse(s).
Understanding of Fundamental High Speed Internet Connection. Superior Money Management and
Analysis. Risk Control Scheme!

Method Machine Money


What are their Edges in this Business? – (Public)

Manpower Material Management

Rumors and News distributed


Lack of Self-
mainly from the public media.
Emotional Control.
Brokers Recommendation.

Tips from basically any where

Public Edge
But, PUBLIC HAVE All
Strategies and Tactics that
can be applied in Las Vegas!!!
Phone (calling broker*). Continuously, month after month,
 Gambling Attitude.
bringing more money from their other
No or not fully understand Basic Computer. professions to the Stock market.
Technical Analysis.
No or not fully understand of Any Speed Internet Connection. No Money Management
Fundamental Analysis. or Risk Control Plan.

Method Machine Money

*broker – By Wall Street old definition, A broker is a man who assists the Investor in going broke gracefully.
Phases of Manipulation Cycle.
Continue in Start to
What the Public Investor Need to Know?
Telling Tell
In the view of the Institution and Insiders.
Positive negative
Start to Tell Story, Public Stories,
Positive Turn buy from Public
Continue in Around will get
Telling Bad manipulators
Stories, because of fear
News. Public will greed. again.
Public will be help to push
feared and let up the Price.
go their
holding to
manipulators.

Accumulation Mark up Distribution Mark New Cycle, or


Stage for stage Stage for Down History Repeat
Institution from Institution stage Itself.
the Public to the
Public

Stages of Market (or individual stock is more easily done)


Sector Rotation

Example: Oil and Airline are 180 degree out of phase.

The Composite will be the market index: Such as S&P500, Dow Jones Industrial Average(30), Nasdaq, etc…
Sector Rotation (How to Detect Them?)
Sector Rotation (How to Detect Them?)
Methods to operate in the Market by the pools. (A detail Example..)

Supplement by Words File… Too long to be describe in here.

Key Points:

• Need to Select the Right Stock for Manipulate: Active and


Enough Float. –( Reason to select Leaders and avoid
“inactive” stocks)

• Pool Operations are Extremely Expensive! Therefore need to


generate profit during the operation. Not just simply buy from
bottom and sell at the top. Lot of Tactics are used to achieve the
goal. –(Reason to understand how pattern formations are
formed.)
Methods to operate in the Market by the pools. (A detail Example..)
How pattern formations are formed…
(Upper Limit, Lower Limit) – detail to be drawn on the spot.
What is the Significant of Understanding the Volume.

Where the different group of participants participate the most?


How the System facilitate such volume pattern?
Does it Work EXACTLY the same in Singapore as USA?

Price

Volume

Pool
Pro
Public

Accumulation Marking- Distribution Marking-


Up Down
Do the Pools Operations ALWAYS So Straight
Forwards and Successful???
What is the Significant of Understanding the Volume. (Examples)
Key Summary!!!

Phases Pools’ Price Volume Meaning


Goal

From Long on UP UP +VE


Accumulation Balance
till Marking-up DOWN DOWN +ve
From Short on DOWN UP -VE
Distribution till Balance
Marking-down
UP Down -ve
Learn to use at least one Volume Based Indicator as confirmation indicator.(with Modern Tape Reading Technique!)
- Eg. Money Flow Index, On Balance Volume, etc..

Note: This does not refer to the typical Daily Charts, as Volume has become a decoy used by the
manipulators. For example, the manipulators can sell heavily on the stock all day long from the
beginning of the and buy back a little portion only at the end of the day to ensure a higher closing
price. Using the End Of Day data for analysis will lead to completely WRONG decision!!!

See the Charts on next Page that, illustrate by a back test, EOD volume is USELESS in today Trading
Decision.
Lost of Value in EOD Volume Information
Lost of Value in Typical Public Favorite Indicator(s)
Methods to operate in the Market by the Professionals. (Approach…)

This would take a weekend to workout the Details!

Top Down Approach: Tool Box:


•Overall Market •Sector Rotation Detector
•Sector/Industry Classification •Classic TA – Chart Patterns
•Individual Stock Selection •Modern TA – All kinds of indicators
•Modern Tape Reading*
•Absolute & Relative Strength*
•ETFs Internal Strength Analysis*
Mode of Operation:
•Etc…
•Long Pull (how long)
•Swing Trade
•Day-Trade Bonus:
•A Self-Developed Financial Advisor
Tool for Singaporean.

* New and proprietary.


More Trading Articles:
Trading Concepts and Tools
Traps for Investors & Financial Freedom, etc…

Just a Community Services

Bless You
KH Tang