“…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it.” (The Richard D. Wyckoff Course in Stock Market Science and Technique, section 9, p. 1-2)
Wyckoff advised retail traders to try to play the market game as the Composite Man played it. In fact, he even claimed that it doesn't matter if market moves “are real or artificial; that is, the result of actual buying and selling by the public and bona fide investors or artificial buying and selling by larger operators.” (The Richard D. Wyckoff Method of Trading and Investing in Stocks, section 9M, p. 2)
Based on his years of observations of the market activities of large operators, Wyckoff taught that:
The Composite Man carefully plans, executes and concludes his campaigns.
The Composite Man attracts the public to buy a stock in which he has already accumulated a sizeable line of shares by making many transactions involving a large number of shares, in effect advertising his stock by creating the appearance of a “broad market.”
One must study individual stock charts with the purpose of judging the behavior of the stock and the motives of those large operators who dominate it.
With study and practice, one can acquire the ability to interpret the motives behind the action that a chart portrays. Wyckoff and his associates believed that if one could understand the market behavior of the Composite Man, one could identify many trading and investment opportunities early enough to profit from them.
Wyckoff's composite man theories, price cycles, schematics of accumulation/distribution and three laws have helped me a great deal in understanding how markets work.
Just as important has been Cem Karsan. The 19th I mapped out in this chart of a buy the dip trend:
was originally identified by Cem since 2020 as the Fed pumping stimulus (liquidity) into the markets. The Fed stimulus creates a well fed Gary (ape).
Gary is what people in vol markets refer to as how the majority of market markers are positioned for volatility. If a majority of MMs are long vol (well fed ape) it makes it harder for the underlying structure of the market to break down (corrections). Karsan identified this cycle of (dips) as a result of end of MM and HF 20 day cycles. With so much liquidity in the stock markets right now a well fed gary creates a pinning effect in major indexes for expiring contracts /hedging cycles.
Using order flow (supply / demand) of major derivatives, Karsan is able to identify market support/resistance levels from volatility hedges and dozens of other factors with weekly/monthly pin point accuracy.
What I think is causing all the short squeezes lately (AMC, SPRT, etc..) is that more people are identifying this cycle. All the short squeezes started up again at this wyckoff markup phase.
Gamestop is one of the OG short squeezes and the effects of these cycles/phases are clear in the charts now. There are several posts on popular subreddits related to these phases/cycles going back to the original short squeeze in Jan.
The thing with Gamestop are the Wyckoff price cycles are diminishing in volume and I don't know what that means.
Volume is diminishing because nobody is selling and the shares available to borrow are diminishing daily. Most of the low volume is due to options hedging by market makers. See the insanely strong options chain all the way to $950.
Noob35
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Well said. Didn't open pos in SPRT thinking it is a pump & dump.
HODL
Signed ; Smooth Ape
NFA
bappykhalidhasan0
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great work
treytoyota83
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Hey, thanks for the great write up as usual. My personal opinion is the big VOL players that have been driving price action have mostly walked away from GME to different plays since the split. There is more liquidity available as a result of the split which dampens VOL. That's my personal opinion, however I do believe the September ETF rebalance period could be promising for upside potential since ETF's need to rebalance for the first time since the split and if any short position that used ETF share creation to short the underlying were overextended; the period of settlement is T+2 after September 16th. ETF share creation has been used so heavily to suppress/neutralize the price on GME for awhile now. I am keeping my expectations tempered however we could see the largest move since March this year coming next month and I will plan accordingly. - I love Wyckoff by the way so this post is gold to me