Edition

IFTA JOURNAL
2017 EDITION
Simple count guide: Up count
After seeing a sign of strength (SOS), locate the LPS on a
reaction, and count from right to left.
Detailed count guide: Up count
After having identified an SOS on the vertical line chart,
locate the last point at which support was met on a reaction—
the LPS. Locate this point on your figure chart as well and count
from right to left, taking your most conservative count first and
moving further to the left as the move progresses.
In moving to the left, turn to your vertical line chart and
divide the area of accumulation into phases, adding one
complete phase at a time. Never add only part of a phase to your
count. Volume action will usually show where the phase began
and ended.
As the move progresses, you will often see a lateral move
forming at a higher level. Often, such a move will become a
stepping stone confirming count of the original count. Thus,
as such a level forms, you can often get a timing indication by
watching the action of the stock as the potential count begins
to confirm the original count. Resumption could begin at such a
point.
For longer-term counts, you should add this count to the exact
low or at a point about halfway between the low and the count
line. You will thus be certain that the most conservative count is
being used.
Counts are only points at which to “stop, look, and listen.”
They should never be looked upon as exact points of stopping or
turning. Use them as projected points where a turn could occur,
and use the vertical line chart to show the action as these points
are approached.
In the case of a longer-term count, often the LPS comes at the
original level of climax, and this level should be looked at first
in studying the longer-term count. The climax itself indicated
a reversal, with the subsequent action being the forming of the
cause for the next effect. If the last point of support comes at
such a level of climax, it usually makes it a more valid count.
Often, the climax is preceded by preliminary support, and the
LPS often occurs at the same level as the preliminary support.
The spring, which in this case is a number 3 spring or the
secondary test of a number 2 spring, often constitutes the SOS
and the LPS in the same action that is reached at the same point
and at the same time. Usually, a spring will be followed by a
more important SOS, and the reaction following that SOS is also
a valid LPS.
Frequently, long-term counts on three- and five-point charts
are confirmed by subsequent minor counts on the one point
chart as the move progresses. Watch for this confirmation
carefully, as it often indicates when a move will resume.
In the case of three-point or five-point charts, the same count
line should be used as for the one-point chart.
A Case Study of the US Stock Market, 2009
An opportunity to apply the Wyckoff Laws and the Wyckoff
Tests occurred in the US stock market during 2009. Figures 3
and 4 show the bar chart and the point-and-figure charts of the
DJIA 2008-2009.
The reader is encouraged to use this application as a learning
exercise. The laws of supply and demand can be seen operating
on the weekly bar chart of the Dow Industrials (Figure 3). A
definition of the uptrend, the line of least resistance, was
revealed at around the 8,100 level for the Dow. Therefore,
the expectation was for a bull market to unfold. At that same
juncture of 8,100, a LPS was identified for which a count could be
taken on the point-and-figure chart.
Once the LPS was identified, the Wyckoff analyst would turn
to the point-and-figure chart of the Dow (Figure 4) to apply the
Law of Cause and Effect and then make upside price projections.
By counting from right to left along the 8,100 level, the analyst
finds 37 columns. Since this is a three-box reversal chart, with
each box worth 100 Dow points, the count becomes 37 × 300 =
11,100 points of cause built up in the 2008–2009 accumulation
base. Added to the low of 6,500 the upside projection is to a price
level of 17,600 on the Dow. Then, from the count 8,100 line itself,
the accumulation base of 11,100 adds up to an upside maximum
projection of 19,200.
The Wyckoff analyst should “flag” those upside counts
on the point-and-figure chart of the Dow to provide a frame
of reference that may help to keep the long-term trader/
investor on the long side while the market undergoes inevitable
corrections and reactions along its path toward 17,600–19,200.
Of course, risk should be contained with trailing stop orders
and the anticipation of further upside progress suspended or
reversed with a change in the character of the market behavior
that suggests the arrival of a bear market.
The Last Point of Support, the Count Line and
Upside Price Projections to DJIA 17,600–19,200
The pullback or backup after the SOS on the bar chart of the
Dow Jones Industrials defined the place on the point-and-figure
chart to take the count. That count line turned out to be the
8,100 level on the 100-box-sized Dow Industrial point-and-figure
chart. Along the 8,100 level, counting from right to left, there
were 37 columns of three-point reversals, for a total point-andfigure
count of 11,100 points accumulated during the 2008–2009
basing period. Using the Wyckoff Law of Cause and Effect and
the Wyckoff Count guide (defined in the IFTA Journal 2008, page
14) one should add that 11,100 point count to the low of 6,500 to
project a 17,600 minimum count. Adding that 11,100 point count
to the count line 8,100 projects a maximum count of 19,200 (See
Figure 4).
In conclusion, the expectation is for the Dow Industrials to
rise into the price objective zone of 17,600–19,200 before the
onset of the next primary trend bear market.
Conclusion
End Game: A Forked Road
During 2015–2016, the Composite Man might have induced a
dramatic final rush upward to attract a broad public following.
He could have “locked up the shorts” and seemingly “locked
out” the late-arriving bulls by restricting corrections to around
6% DJIA or less. A virtual parabolic price rise into a “buying
climax” within the price target zone seemingly occurred, and
PAGE 102
IFTA.ORG