Wyckoff at work during intraday hours | Wyckoff power chart

It is well known that stock market indices are fractal. Shows a repeatable pricing structure across all time periods. During intraday periods, this price structure is repeated frequently. Wyckoff characteristics of Accumulation, Markup, Distribution and Markdown work continuously within a short period of time. Wyckoff students study these structures to hone their analytical and trading skills. In the example of the S&P 500 Index below, the 60-minute period shows distribution and price cuts unfolding through March and April. A swing trading accumulation period follows. Distribution appears to be forming again in May. In our most recent weekly Wyckoff market discussion, we evaluated this unfolding structure. Let’s review this intraday study.

Distribution-A Note:

• Reserve Supply (PSY) warns of accelerating selling in an uptrend. Watch for a continuation of the upward trend.
• Reconcentration after PSY moves the index into the Gap and Buying Climax (BC) phase. Draw a resistance line.
• The second test (ST) is rejected at BC resistance. The reaction results in a lower low known as Sign of Weakness (SoW).
• Volatility and gap are showing a downward trend along with increasing trading volume. Supply is increasing, overwhelming the index.
• The last three supply point rallies each failed at lower highs. A downtrend channel becomes evident while the distribution is still forming. This sets the stage for imminent decline.
• Markdown covers the $SPX index. As prices fall, volatility increases.
• See PnF Research for downside price target estimates for this intraday structure.
• ThrowUnder and OverSold below the bottom of the trend channel as the PnF count target is achieved. See Selling Climax for low PnF goals. Three elements of bullish conditions!

Swing accumulation notes:

• The Advance Decline Oscillator creates a higher low or descending non-confirmation (DNC) before the SC. The A/D oscillator also rises sharply before the SC low. Positive internal factors bode well for the $SPX rise.
• A stack is formed and a PnF number (blue shaded box) is generated. A rally follows.

Distribution-B Note

• The gap starts the final rally to BC. AR is the sharpest response after Accumulation. BC is considered a future resistance level. ST and Upthrust After Distribution (UTAD) are rejected at BC resistance level. UTAD often responds aggressively to applications. This is a sign of weakness.
• LPSY-1 is a short rally with poor quality and cannot return to BC resistance. The SOW reaction leads to expansionary and aggressive supply characteristics and breaks the uptrend channel.
• LPSY-2 has the characteristics of a ‘short selling rally’ with a short and rapid rise. It usually fails suddenly and the weakness kicks in again.
• PnF count target has been adopted and may be larger.

S&P 500 Points and Numbers Case Study (30 minutes of data)

PnF chart notes (PnF data through May 29th):

• Intraday PnF useful for early identification of price movements
• Redistribution PnF (green box) is calculated as the lowest value….
• Accumulated form (red box) and fulfilled ($SPX – 5,341.88)
• Modern structures have distributional properties.
• Your current PnF count is likely incomplete.

conclusion

Distribution A and Distribution B are adjacent to each other. This is evidence of shorter intraday times when Composite Operators (COs) are actively distributing stocks at the top of their trading ranges. The fractal nature of the market makes it necessary to scale up daily and weekly time frames to see if new distribution characteristics are forming. An imminent clue to this would be an attempt to fall to the April lows. Also, the speed and volatility of its decline. Intraday periods can help you develop a nuanced view of an index’s intent and sharpen your tactics across all periods.

All are the best,

bruce

@rdwyckoff

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.

Useful WPC blog links:

The Three Beats of Trouble (Click here)

Deployment definition (click here)

Wyckoff power chart. Let’s review it (click here).

Wyckoff Resources:

Additional Wyckoff Resources (Click Here)

Wyckoff Mayoral Discussion (Click Here)