I have been re-reading The Wyckoff Course and clearly Mr. Wyckoff used charts to determine the plans, thoughts and intentions of the operator. Today the idea of an operator is considered almost a paranoid conspiracy theory and instead there is some magical idea of the predictive power of markets or else they are believed to be random. Please look at the above 1 minute chart of the SPY. The market gapped up on Friday's open, retreated to fill the gap and then rallied to an upthrust. The market was then hit with intense selling, a wide range and high volume. Someone stepped in and bought and probably bought the decline as well. Now do we believe that all of a sudden thousands of people around the world sent in their orders to buy a quickly falling market? Or that a very few traders and their computers stepped in and caught the falling safe? Surely it is the latter. What is more they have balls and skill. They are better traders than us. Much better. And they have unbelievable amounts of money at their disposal.
Our job according to Mr Wyckoff is to determine their intention. Here it is clearly to stem the decline, but is it to sell again at higher prices, distribution, rather shortly or to begin a new bull move?
Observe in the next post the 5 minute bar which made the bottom and how important the close is in showing that demand came in.
