To understand the specialists' practices, the investor must

learn to think of
specialists as merchants who want to sell an inventory of
stock at retail price levels.
When they clear their shelves of their inventory they will
seek to employ their
profits to buy more merchandise at wholesale price
levels.”
I used the same analogy in my article for Working Money magazine many
years
later, which was the Parable of Uncle Joe.
The easiest way to think of volume in terms of the market price action, and
this
applies to all markets, is to use the wholesaling analogy. However, in order to
keep
things simple, let's just refer to the specialists, the market makers, the large
operators, the professional money, as the insiders from now on. So, the
insiders are
the merchants who own the warehouses of stock and their primary goal is to
make
money buy buying at wholesale prices and then selling at retail prices.
Remember also, in the following explanations, that in my VPA Principle No
2, the
market always takes time to turn in a dramatic way, and this is also borne out
in
Wyckoff's second law of cause and effect. We are always going to see small
changes
up and down, as the market pulls back or reverses in a longer term trend. But,
for the
major changes in trend to occur, (and remember, a 'major change' can appear
on a 5
minute chart or a 1 day chart) this takes time. The longer the time taken, (the
cause),
the greater the change (the effect). However, this does vary from market to
market.
Some markets may take days, weeks or even months, before they are ready to
turn
dramatically, whilst other markets may take just a few days. I will be
covering this
later in the book, once we start to look at the various nuances which apply to
specific
markets, as they all behave slightly differently.
The key principles described here still apply. It's just the time frames and
speed at
which events occur that changes dramatically, and is due to the different
structure of
each market, the role of the insiders in that market, and the role that each
capital
market plays as an investment or speculative vehicle.
The first term we need to understand is accumulation.
The Accumulation Phase
Before the insiders can begin to do anything, they need to make sure they
have
enough stock, or inventory, to meet demand. Think of this as a wholesaler,
about to
launch a major advertising campaign for a particular product. The last thing
any