Wyckoff: Relative Strength And Weakness
by Craig Schroeder
In his course in stock market science and technique, Richard D. Wyckoff stated the basics of his method
in five steps:
Step 1: Determine the present position and probable future trend of the market. Then decide how you
are going to play the game: long, short or neutral.
Step 2: In a bull market, select from those stocks in harmony with the market the ones that are
stronger than the market. In a bear market, select those that are weaker than the market.
Step 3: Using point and figure charts, select those stocks that have built up a potential count for a
move in keeping with your goals.
Step 4: Determine each stock's readiness to move. Analyze the vertical and figure charts of the
candidates with the help of the buying and selling tests.
Step 5: Time your commitments with a turn in the market.
The five steps of the Wyckoff method can be divided into three groups that ask and help answer three
important questions. Step 1 stands alone and asks the question what. Steps 2 through 4 can be grouped
together and ask the question who. Step 5 stands alone and asks the question when. Therefore, by
employing all five steps, the investor or speculator can determine what type of market operation to
undertake, which individual stocks or bonds represent the best candidate(s) and when the best time is to
make a commitment.