The document discusses how volume and trends can be used to recognize accumulation and distribution phases in the market. It explains that accumulation occurs when smart money buys into a falling market to get in at lower prices, while distribution occurs when they sell into a rising market to get out at higher prices. Three key points are recognizing supply and demand imbalances using climactic volume bars, entering trades based on tests of support and resistance, and understanding how cause and effect relate to changes in volume and trends.
The document discusses how volume and trends can be used to recognize accumulation and distribution phases in the market. It explains that accumulation occurs when smart money buys into a falling market to get in at lower prices, while distribution occurs when they sell into a rising market to get out at higher prices. Three key points are recognizing supply and demand imbalances using climactic volume bars, entering trades based on tests of support and resistance, and understanding how cause and effect relate to changes in volume and trends.
The document discusses how volume and trends can be used to recognize accumulation and distribution phases in the market. It explains that accumulation occurs when smart money buys into a falling market to get in at lower prices, while distribution occurs when they sell into a rising market to get out at higher prices. Three key points are recognizing supply and demand imbalances using climactic volume bars, entering trades based on tests of support and resistance, and understanding how cause and effect relate to changes in volume and trends.
The document discusses how volume and trends can be used to recognize accumulation and distribution phases in the market. It explains that accumulation occurs when smart money buys into a falling market to get in at lower prices, while distribution occurs when they sell into a rising market to get out at higher prices. Three key points are recognizing supply and demand imbalances using climactic volume bars, entering trades based on tests of support and resistance, and understanding how cause and effect relate to changes in volume and trends.
By Lauren Snedeker & special guest Steve Phillips Today’s Objectives • Understand how Cause & Effect control the why and when of Trading • Recognize the Selling of Supply during the Distribution Phase • Recognize the Buying of Supply during the Accumulation Phase • Read volume to predict trend changes Theory of Cause & Effect • For every action there is a reaction • The universal theory and mystical law of Cause and Effect is that every person affects the change in their lives. The Ripple Effect • If you throw a stone into the water it creates a rippling effect. • What energy and effort you exert will have a result. • It may not always be the result or effect you had expected! Trading with Cause & Effect
The Cause = the The Effect =
Campaign of the volume will change Smart Money
Accumulation or trend will change
Distribution Phases trade with trend The Distribution Phase What? The selling off by the Smart Money When? Into a Rising Market Why? So they can sell high How? Climactic Action bars – wide spread, UHV Supply Coming In, Buying Climax The Accumulation Phase What? The buying by the Smart Money When? Into a falling market Why? So they can buy low How? Climactic Action bars – wide spread, UHV Stopping Volume Strength Coming in Selling Climax Cause and Effect = Case Study
Climactic The Distribution Action Phase
Change in Volume Checking how much
demand for higher Change in Trend prices before bringing the Market down = Taking a Short Trade Up Thrust, No Demand Cause = Distribution Phase B = Potential Buying Climax • Weakness in A (bkgrd) • B is an up bar • Higher volume • Next bar up, fails
• Why is C so massive? (hint: news item) Bar C = UpThrust
Wide Spread Up Bar
Gapped Up on this news Event UHV, Closes on the Low D,E,F = 3 No Demands G &H = No Demands Why Enter There? • Your Cause = Distribution Phase • A series of weak bars on lower volume • G&H are No Demand on much lower volume • Trend begins to change = Your Effect
Selling by the SM into No Demand Bars
Rising Prices Lower Volume Trend Change Cause and Effect = Case Study
Climactic The Accumulation Action Phase
Change in Volume Testing the supply
before bringing the Change in Trend Market Up = Shakeout, Test, No Taking a Long Trade Supply The Cause = Accumulation Point A = Stopping Volume The Volume is Ultra High over three bars The next bar closes up confirming A The price then rises but the volume wanes The continued high volume shows there is still more accumulation by the Smart Money Stopping Volume Range Point B = The Shakeout • Market moves sideways until Point B • Widespread down bar • Closes on the high • Next bar up confirms • Goes back down to the area of Point A • Volume is lower relative to Point A Testing Ground Begins C =The Test • C is a test on lower volume than B • Next bar up confirms • Does not break 1229 resistance area • In an uptrend D = No Supply (Test #2) • D is the best entry • Low volume • Two tests behind you • Breaks the old area of Resistance • Up trend • Next bar shakeout The Effect = Go Long after Testing Summary • The Cause = Climactic Action of Stopping Volume • This led to the Accumulation Phase of buying in a down market • A Series of Tests, back into old Resistance Ground • The last effort to rise on lighter volume works The Effect Summary of key areas • Watch for testing and efforts to push through 1291.25 level.
• On guard for weakness at 1291 level no
demands/upthrust/end of a rising market.
• On Guard for Failed test at 1229 level.
Conclusion • Understand the Cause – Accumulation or Distribution Phase by the Smart Money • Anomalies of Supply & Demand alert you to a new Cause (Climactic Action) and help you enter a trade (Supply dries up) • No Demands and Tests are key indicators for trend reversal Thanksgiving Offer!
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