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Stepping Stone Reaccumulation (SSR) formations are significant yet common. An SSR
is a pause where the stock rests before resuming the uptrend. SSR formations often
have a signature of making the lowest low early in the pause (in the first third to half of
the total time spent in the SSR). We have recently explored some examples of this
phenomena and how best to trade it (click here). Once the low is in place, the tendency
is for the price to then scale upward with a series of higher lows until reaching the
resistance area. Once above resistance, the trend tends to resume at a steady and
robust pace. There is another type of SSR that we should be prepared to trade.
As is the case with all SSR formations, once the Buying Climax has been set, the
Automatic Reaction will follow and these two points set the Resistance and Support of
the emerging trading range. In this alternative type of SSR, we see a pattern of rallies
off of Support being stopped at ever lower peaks. The appearance is of a series of
declining highs which suggests that sellers are becoming more aggressive in their
shedding shares at ever lower prices. This looks like Distribution, but it is not.
The final act of this deteriorating picture is typically a Spring. A break of the Support
line and the prior lows shatters the confidence of the remaining holders and in many
cases they are compelled to sell. It is difficult to hold on to stock that continually
diminishes in value as the trading range grinds onward, only to be confronted with a
wholesale breakdown of the SSR.
The breakdown in the late stages of the SSR is a Spring. The Spring is a terminal act
that concludes the listless sideways price action and it is followed by a robust rally to
the Resistance area and a resumption of the uptrend.
we can. As Wyckoffians we learn to love the uncertainty and the opportunity to learn
something from every situation. This attitude puts us on the mastery path. We walk it
with humility and gratitude.
All the Best,
Bruce
Professor Roman Bogomazov and I will discuss the Wyckoff Method in a three part
webinar series (6 hours in total) on May 9th, 16th and 23rd. Roman teaches the
Wyckoff Method (online course) at Golden Gate University. We will use the Wyckoff
Power Charting blogs as the framework for our discussions with additional material
added. Each session will be recorded and will include ample time for attendees to ask
questions. The recordings will be available for your review or if you are unable to
attend the live sessions. The fee for this series is only $49. Click here to sign up now.