Financial stocks, homebuilders, and semis have at least one thing in common: the break of support on Friday sets up potential Wyckoff springs (for those who like etfs, consider XLF, XHB, and SMH). A rally within the next two days would spring the trap on the bears. Considering the bearishness on ET, many here would be sitting on their hands, waiting for the other shoe to drop. If the trap is set, it will be time to go long, and those who go long would enjoy a pristine risk/reward opportunity.
Hello Smilingsynic, Using XHB as an example, would you want to see a close above the pivot low of $18.45 that was set on 12/20/07 before you considered it a valid spring? Or, would it be something else? TIA Gary
In my experience trading false breakouts/springs, the speed of the move off of the potential bottom is critical. In other words, price AND time must be considered. Speed induces panic and subsequent short covering. If XHB trades above Friday's high at some point over the next 2 days, that would represent enough strength for me. If that happens, I'd be looking for 22 and 24. Of course, if the spring fails, that's what stops are for (as long as the stop is not right under the low).
Thank you sir. That's how I am looking at springs too. As I'm sure you know, in Mr. Hill's first booklets, he wanted the close to be above the first pivot low, but he doesn't now. Just break the high as you pointed out. As I'm a greenhorn still backtesting and looking for edges- I recently coded some simple springs from 2 to 5 bars between the first pivot high (in this case 19.97 on 12/26/07) and the next pivot low (which might be Friday's). I haven't been considering a setup complete until the high of the pivot low is exceeded. I'm still hacking around with them, but I really like these springs. If itâs not too proprietary, can you discuss your stop method here? Thanks, and nice to see someone discussing something I was just recently thinking about and testing. Gary
Recently been watching to see how springs play out with two to five bars between the swings. Out of the entire stock universe on TC2000 it has been very slim the last couple of weeks. 2 bars between pivot lows with mo today - CHD 4 bars between pivot lows with mo today - DNA MSEX 5 bars between pivot lows with mo today - MDVN
Just to make sure all those who study this stuff.........it is Wyckoff....not "Wackoff" and these springs do work. The wife does like those springs and up thrusts also, so you get a two for one and make some good trades in the process..........Trade well and remember that "those that pick bottoms usually end up with a stinky finger" Let those springs show you the strenght is buiilding in and the big seller are sold out......than sqeeeeeez those shorts that came late to the party.