Technical Analysis of Stock----Wyckoff Method Project
Fin 354 term project
Course: Fin 354 Wyckoff Method
Instructor: Hank Pruden
Student: Lai Wei. 0569972
Under Wyckoff Method, we applied stock sentiment and momentum analysis to predict the trend of Ford Company (Symbol: F), as well as trading statics. At first, the article studies the performance of the 4 main market indices and the industry index where Ford belongs to. After the analysis of primary trend, under supply and demand law, the individual stock trend will be analyzed by volume and price pattern. 9 buying or selling test then will be used to help trader to build profit positions or exit strategy. At last, a short sell trading static will be recommended as to Ford Company.
Part 1: Market Trend Analysis.
Market indices: S&P 500, Nasdaq, NYSE, DJIA, and DJUSAU
According the trend line and OBV indictor, the 4 main market indices, including U.S. automobile industry index, have shown a signal of reversal in trend from previous uptrend to present downtrend.
Part 2. Individual stock analysis.—Ford company
a. Supply and demand analysis:
The overwhelming demand situation is diminishing and is turning to supply side, so the trend of this stock is down. One reason is that the volume has shrink from Jan 2014 to Oct 2014, compared with the previous period of May-Dec in 2013. This shrink in volume is caused by the weak demand. Another signal for this downtrend is the low price breakthrough combined with high volume bar in Oct, as circled in the chart above. Compared with another big volume bar in Dec.2013 as circled, this time, in Oct 2014, even the volume bar is smaller, however at the same, the spread of the price is more significant to create a lower low out of the TR (Trading range). This demonstrates that, in Oct 2014, the demand is weaker than that in Dec. 2013.
b. 9 selling point test.
1. Upside price objective accomplished ?---No
There are 7 columns.
Target price=7*3*1+9=30$ / share.
It doesn’t accomplish the price objective.
2. Activity bearish.---Yes
As the blue curves show, the volume decrease on rallies and increases on reactions.
3. Preliminary supply, buying climax.---Yes.
As chart 1-1 labels.
4. Average or stock weaker than market.—Yes.
Relative strength comparison:
5. Upward stride broken.---Yes.
As chart 1-1 labels.
6 & 7.
Lower high, lower low ? ---Not clear, for weekly chart---- Yes, for daily chart.
8. Crown forming-----Yes.
9. Estimated profit is at least 3 times the indicated risk for stop-order placement—Yes.
Target price=17.45-3*3*1= 8.45$
The price of LSPY is 16.67$
(8.45-16.67) : (17.45-16.67)=10:1 is greater than 3:1
Part 3: Individual stocks: General Motor (GM)
a. Supply and demand:
The big volume bars have showed the change of investor behavior. In addition, after the BC, the following huge volume told us the composite man has begun to sell out the stock.
b. 9 selling test:
From the whole life cycle we can see, GM is experiencing a distribution phase.
1. Price objective. 18.5+5*3*1=33.5$---------Yes.
2,3 test-----Yes, see labeling.
5. test---No. See labeling.
9. Targe price=41-6*3*1=23$, (33.5-23):(41-33.5)=1.4, smaller than 3:1. ----No.
Part 4. Individual stock #3--
Price objective: 58+16*3*1=106$
(106-76):(76-58)=1.6:1, smaller than 3:1