Wyckoff method of trading stocks part 4 Understanding group stock behavior by Jack K. Hutson
The Richard D. Wyckoff method of trading brings the technical analyst a clean, logical way to
understand stock market behavior and to anticipate the most opportune trading and investment moments.
The Wyckoff analyst begins with charts of a broad composite market average, overlays charts of industry
group averages and then, when that information is weighed, compares the trends and critical turning
points to the charts of individual stocks within the industry group.
Analyzing group averages is a vital step, because to go after individual stocks willy-nilly, without a plan
of action, is to invite disaster or, at the very least, less-than-peak use of investment capital. Group
behavior guides a trader to the appropriate section of the market where individual stocks should be
Group averages compared against broad market trends will show you where large-scale traders see
something promising and are trading accordingly. By using these signals to make well-timed long or
short trades in conjunction with the safety of stop orders, you can make both the up and down sides of the
stock market profitable.