Good morning, traders…
Ever notice how certain stocks seem to move up like clockwork before big announcements?
As if a small group of “in the know” traders have information you don’t?
You’re not imagining things.
In fact, there’s a century-old theory that explains this perfectly.
Way back in the 1920s, a guy named Richard Wyckoff realized that share price fluctuations aren’t random at all.
They follow predictable patterns based on how institutional capital flows in and out of positions.
The crazy part? His methodology is more relevant today than ever.
While retail traders chase headlines and momentum, only to find themselves entering positions too late…
The Smart Money whales are quietly accumulating shares weeks (or even months) before the crowd catches on, the narrative shifts, and the bullish news is announced.
Wyckoff called it “Smart Money” behavior.
Sound familiar? It should. Wyckoff paved the way for my own Smart Money trading strategy.
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The key is recognizing when institutions are building positions vs. when they’re dumping shares on unsuspecting “dumb money” buyers.
Options volume is the dead giveaway.
But back then, Wyckoff had to make educated guesses about institutional activity.
You don’t. You can be certain.
My OMEN Scanner is specifically designed to track these movements with surgical precision.
The same principles apply, but the tools at your fingertips are exponentially more powerful…
We can identify exactly when (and where) the Smart Money is making their moves…
The 7 Pillars of Wyckoff Theory
Wyckoff Theory is defined by 7 foundational pillars…
The 3 Laws
Law of Supply and Demand: The most basic economic principle applied to price.
Law of Cause and Effect: The period of accumulation or distribution (the cause) will lead to a proportional trend (the effect).
Law of Effort vs. Result: Divergences between volume (effort) and price movement (result) can signal trend weakness or strength.
The 4 Phases
Accumulation: Smart Money buys in a range, absorbing supply.
Markup: The strong uptrend phase, where prices rise.
Distribution: The sideways range, where Smart Money offloads their holdings.
Markdown: The downtrend phase, where prices fall.
What Wyckoff Theory Shows You
Overall Market Structure
It helps you see the big picture. Is the market consolidating, trending, or reversing? This is crucial for anticipating moves.
Identifying Smart Money Positioning
Learn to spot the footprints of institutional players. Trade with them, not against them. But where Wyckoff was making informed guesses about the Smart Money’s moves, we can be certain.
Improved Entry and Exit
It shows you when each specific phase of the Wyckoff Structure starts and ends, providing high-probability entry points and excellent exit signals.
Risk Management
It gives you the market context to avoid low-probability trades in choppy conditions (and focus on Smart Money setups in bullish accumulation periods).
How I Apply This To My Trading
I start by identifying the names on my OMEN Scanner with the strongest Smart Money flow.
I then move to the charts for confirmation. I want to see the chart in a clear Accumulation phase.
I aim to enter the trade as the Accumulation phase peaks and begins transitioning into the Markup phase.
I scale out of the position throughout the Markup phase, with the goal of being 100% out by the beginning of the Distribution phase.
Apply these pillars to my top 5 setups from my Dynamic Watchlist:
Tesla, Inc. (NASDAQ: TSLA)
Classic Wyckoff structure with 2 closes above the 21 EMA, pullback retest, and break of the 50 SMA.
Watching the $452 level for confirmation.
Contracts to Watch: January 16 $550 Calls based on heavy premium flow and past breakout potential.
Bill Holdings Inc. (NYSE: BILL)
Bullish setup if the stock breaks above $52.50. The pattern suggests a breakout from consolidation into Stage 2.
Contracts to Watch: January 16 $52.50 Calls
United Parcel Service, Inc. (NYSE: UPS)
Forming a classic compression pattern after a huge downtrend. Consolidating before a bounce.
Use a break above the 200 SMA as your trigger to enter.
Or, for a more conservative entry, wait for the pullback to the 200 SMA after it breaks once.
Contracts to Watch: February 20 $110 Calls
Hims & Hers Health, Inc. (NYSE: HIMS)
Watching for a breakout above $38.50 resistance.
Potential Wyckoff higher low.
Supported by multiple large Smart Money orders and weekly chart alignment.
Contracts to Watch: March 20 $41 Calls
Palantir Technologies Inc. (NYSE: PLTR)
Late-day Smart Money activity in $170 and $180 calls.
The plan: enter on a break above $177.50 or a pullback entry near $167.50.
Contracts to Watch: December 12 $180 Calls
The Smart Money Edge
Wyckoff gave you the framework over a century ago.
My OMEN Scanner gives you a level of precision he could’ve only dreamed of.
Combine the two, and you can be practically unstoppable.
Happy trading,
Ben Sturgill
*Past performance does not indicate future results