Someone TAG XVII ¢ Las Vegas ‘95 =Sarsaeate sever action in parca circumstances. Larry Williams — Accumulation and Distribution Larry {hey Willams, one ofthe Bato poplar the commode marks tackin the 19605, . Wok How iia s io Dae Trang Coomoumeoncoroxexciescom” | Williams modity books ever). He also penned the first book to analyze the seasonality of commodi- ties: Sure Thing Commodity Trading. Other commodity/market books by Larry include The Secret of Selecting Stocks for Immediate and Substantial Gains, How Seasonal Factors Influence Commodity Prices, nd The Definitive Guide 0 Commodity Trading (Volumes ‘One and Tro). Larry also wrote the immensely popular and accurate How to Prosper in the ‘Coming Good Years, which came out in 1982 and made the bestseller list. This book cor- rectly forecast the largest surge of economic growth America has ever seen when the majority of pundits predicted exactly the opposite of Lary’s forecast ‘in 1987 Larry astounded the commodity world by parlaying $10,000 into over $1 million in the twelve month “Robins World Cup Trading Championship.” Larry has served on the board of the National Futures Association representing fellow Commodity Trading Advisors. As one of the most widely quoted and followed advisors over the past twenty-five years, Larry has appeared on television (FNN, Merr Griffin, PBS, Late Night) spoken at leading commodity and economic conferences around the world, and had articles written about him appear in Barron’, The Wall Street Journal, Forbes, Moneyand Fortune, Every month Larry publishes two popular newsletters: Commodity Timing and Treasure Hunter Confidential ‘* Topic: How to Detect Professional Accumulation and Distribution in Stocks ‘and Commodities Larry will begin his workshop by presenting an entirely new way of monitoring and actually using the positions of Commercials, the largest traders in the market place, to help identify markets poised for intermediate to long term moves. He will provide you with a long term historical review of Commercial buying and selling so that you can get a feel for the real power of this group. Since Commercials tend to buy and sell early, Larry will demonstrate an important “trigger” mechanism to use for actual entry and exit for both long and short positions. Larry will then reveal his own proprietary techniques for detecting professional buying, and selling from daly charts of any stock or commodity in any freely traded market. You ‘will see actual examples from his personal records as wel asa variety of current markets ‘using examples from Omega’s Trade Station. You will larn to recognize the right times to buy and sell. You will understand why markets top and bottom out, when they do so and who causes the tum. This in turn becomes an invaluable guide to determining when any market cycle, short, intermediate or long term, nears its end. Finally, Larry will show you several trading systems and pattems that he personally uses for trading equities and fixed income items. Copyright L. WILLIAMS 1995. Al Rights Reserved. complete catalogue of ‘Larry WILLIAMS Spey bearded fom 140 Marine View 701 Roya, Sue 3900 oa are Solana Beach, CA 92075 New Orleans, LA 70139-3901 , (800) 835-7990 Phone: 800-800-8333 (504) 592-4550 , /(elerato Seminars FAX: 619-259-1331 FAX (504) 592-4553, 875LARRY WILLIAMS ON SELECTION AND TIMING There are two main components of commodity trading. Namely, what to buy or sell, and when. Here are some of my solutions to these ongoing problems. TRADE SELECTION ‘There are several highly valuable tools which aid in selecting which markets to be long or short. Among them are: seasonal tendencies, premiums or spread relationships, comparative strength, and price patterns or formations. More importantly though, I think, are the actions of the largest participants in the markets, the Commercials. They have the most money, are closest to the market, and have a long term track record of usually being successful Equally important and helpful is the role of the Public. These traders usually loose ‘money, have no clue as to what they are doing, and react quite emotionally to price swings. They They have an excellent record of being wrong at the extremes, and correct in mid-stream. WHAT I LOOK FOR ‘What [ like to see develop in a market is a condition where the Commercials are heavily Jong a while the Public wildly bearish, or the Commercials short while the Public outlandishly bullish. For sake of definition, I demand, for a buy, the Commercials be net long, and the Public sentiment showing a bullish reading of 35% or less. For a sell, I want the Commercials net short, and the public showing 65% or more bullishness. This is a powerful condition, espesially when coupled with seasonals and the like. See charts 1-3. SECRETS OF SHORT TERM TRADING . There are three dominant cycles to all markets. They can been seen in range expansion and contraction, close to high/low relationships, and finally open/close relationships. 876‘The operating rules are: ranges go from small range to large, thus we want to take signals after small range periods, and wait following large ranges. The close shows the cycle. By this I mean that the nearer the close is to the low of the day, the sooner a market bottom is at hand. The closer the close is to the high of a day,-or two, the nearer we are to atop. The adage I like to use is “the end is your friend.” ° ~ Finally, large range days (weeks, months, etc.) most often close right at their extreme high or low. Thus our “target” is one of time . .. the end of the time frame we trade. TRADING PATTERNS OOPS! An excellent entry technique or trading tool. The requirement is that prices must ‘open below yesterday's low. IF PRICE THEN RALLIES BACK TO YESTERDAY'S LOW, I will buy at that price on a stop. A sell is just the opposite. Price must open above the previous high, then decline to that high, where I will sell. GAPS! Following a large gap. say 150 points in the S&P, I will bracket the open with a buy stop above the open and sell below. Whichever way price breaks out of this open “box,” I will go long/short. Gaps are explosive. They almost always represent an immediate continuation of a move or an exhaustive failure.DAYS OF THE WEEK! Some markets have one or two days of the week they usually rally or decline on. Stocks usually rally on Mondays. or at least that is a good buy point. Ditto Wednesdays, and sell off on Fridays. Bonds are usually down on Mondays, up on Tuesdays. Bellies usually rally on Thursdays. The point is, you should know the day of week bias to the markets you trade. It's one more parc-neier to help you make the right decision. CHANNEL BREAKS! The oldest and most successful trading tool has been to buy what is called a channel breakout. That's buying at the highest high of the last X days, or selling at the lowest low of the last X days. Long term traders have made fortunes with this technique. Keep in mind, Richard Dennis made about $200,000,000 with this simple trading idea. Tuse Channel Breaks as follows. 1. I await a market ready for a buy/sell based on my selection criteria above. 2. THEN, assuming I'm in a down trend waiting for a buy. I will see what the highest daily high has been that has not been taken out on the short term rallies. If, as. an example, in the down move no rally was able to take out the highest high of the last 9 days I would then use a 9 day channel as my break out buy signal. Reverse this for a sell. CONTRACT EXPIRATION! The S&P 500 usually decline after option expiration as well as after contract expiration. About two weeks after contract expiration they start to rally. Soy Beans usually decline from around the time of first notice day, and rally on or shortly after last trade day, Again, get to know your markets. ACCUMULATION/DISTRIBUTION Here's how to detect what's really happening in a stock or commodity. My formula is to first ask if price closed up or down for the day. IF up, I will than subtract the low from the close, and add this amount of “accumulation” into a cumulative line or index. If prices closed down for the day, I will subtract the close from the high and subtract this value out of the cumulative index. By doing this you develop a measure of the buying and selling going on in the market. 1 look for divergence between price and the A/D. If price is up and not matched by A/D, a sell is coming, If price breaks to a new low and A/D does not, then a buy is coming. NOTE: this can be used as a selection tool as well as a timing tool.