Transcription
Are there any warning signs to look out for when the market's going to crash? Oh, when the market's going to crash? Many, many months of distribution at the top of the market.
So what I mean by distribution was defined by Richard Wyckoff. He says that there's basically three stages at the bottom. There's accumulation by insiders. And that takes place over months and months and months. These are very sophisticated people that have got the ability to buy a share but not push the price up. So they will surreptitiously take a hundred here, two hundred here, two hundred here, and they will accumulate. And they're good at it without pushing the price up.
And then all of a sudden you have markup, where all of a sudden all the people that are not in the know get fooled. And the rumor gets out that the share is going to do really well. And then the more naive people keep sort of buying it at market and driving it up the price. And then when it gets to a point where it's shot right past value, then you get distribution, and the same people who surreptitiously bought it will be surreptitiously offloading it.
Now at the bottom of the market, if the price spikes up, you should see the volume rising. So every time you see a spike up, the volume should rise on that spike. That's accumulation. In the distribution stage, as the price falls, the volume should rise. And as the price spikes up, the volume should fall. And sometimes it's not easy to see, but by looking at price and volume, you can actually tell whether you're in an accumulation phase or a distribution phase. That's in an ideal world. Sometimes it's not easy to work that out.
So in a bullish market, as price rises, the volume rises. As price falls, the volume falls. In a bearish market, as the price falls, the volume rises. And as the price rallies, the volume falls. And invariably, when a market rises, it will rise strongly across the board. And then towards the tail end of the trend, you'll find that it starts to rise on falling breadth. In other words, it's being propped up by one or two companies. A classic example of this was the Nasdaq, which rose on one company, one company only, called Apple. But I think the Trump trades have still got a little while to run. Especially if he does what he says he's going to do.