The One Minute Millionaire Diamond Mine
 The Wealth Factor
 Stock Market Strategies
 By Dr. Stephen Cooper

Considering the Whys of the Whens:
Discover the mind of market participants using A’s and V’s

When viewing stock, commodity or index charts, it is quite easy to become caught up in the "Technical" side of technical analysis. An overdependence on the lines and squiggles may manifest in the lure of adding more and more indicators to your charts in the hope of bringing enough firepower to bear that the charts must eventually reveal their secrets to you.

My students hear over and over again that the moves of the markets are caused by people and not numbers. To clearly understand what the charts have to tell you, always "Consider the whys of the whens." When price makes an extraordinary move on clearly higher volume in a mature trend, it is vital to ask, "Why?" In the daily chart below you will see such a situation during September.

As selling escalated in late August and early September, notice that volume was rising over the same time period. On the day of lowest intraday price, volume reached its apex.

Now we must explore the whys behind the price and volume moves we’ve observed. The down-trend that concluded in September was quite significant, with an overall price drop of nearly $12. As the dollars rolled off, there were three groups of market participants who all experienced differing emotions and motivations.

First, a group of investors/traders went long during the preceding rally of July, and after the reversal (early August), in the hope that it was just a temporary pull-back. As prices continued to drop into August, these folks became more and more anxious to close their long positions. Some did all along the price slide. A second group of people went short in July and August. With further and further prices drops, these people surely were looking for places to cover their short positions and realize profits. All the while, a third group–let’s call them the vultures–were watching prices fall in the expectation of entering long at bargain prices.

You can see that selling became more and more powerful toward the end of the down trend. This is apparent in both price and volume. The two simple trend lines drawn on the above chart–one of price and the other of volume–serve to quantify the situation. Once the point of critical mass on the selling side was reached, the long buyers opening new positions, and the buyers covering their short positions, began to propel prices back up the other side of the valley, and the beginning of a new bull phase. The Vultures also dropped off the fences to get in on relatively cheap prices also contributing to the new flood of buy orders.

A’s and V’s

The scenario described above may be seen on the charts as what I call "A’s and V’s". The visual configuration of the "V’ in price and the "A" in volume, over the same time span, is a simple tool that may be easily used to point out the underlying psychological mechanisms of varied groups of market participants as they apply to trend reversals. In an up-trending chart, the same mechanism in reverse will be seen as an "A" in price and another "A" in volume. On the chart below, you will see the up-trend reversal, with the "A" in volume and "A" in price (within ellipse) configuration. Two down-trend reversals with their attendant "A’s" and "V’s" configuration are also shown.

May I suggest that a blind reliance on programmed chart indicators is not enough? By becoming aware of simple chart patterns, such as "As" and Vs", the depth of your analysis will be vastly improved thus making the indicators you do employ far more effective in identifying profitable entry and exit points.

In the next issue of The Wealth Factor, we’ll look at two simple yet effective single-bar configurations called Lincoln’s Hat and Reverse Lincoln’s Hat. These bar forms are highly predictive of the direction of close seen on the bar following the signal. Again, this excellent tool is based on market psychology first, and numbers second.


Dr. Stephen Cooper is the Director of, a training and support Web Site for both beginning and advanced traders. Over the past four years, Dr. Stephen Cooper has been the primary Stock Market Trainer for Mark Victor Hansen and Robert Allen’s Enlightened Millionaire Institute. He has taught thousands of students his proven trading strategies. He is the author of The Online Option Trader, Windows to Wealth, and The Truth About Money. He has also authored 10 interactive chart analysis tutorial CDs and contributed to several newsletters and publications.