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The ABC’s of VSA:

Signs of Weakness

By Lauren Snedeker
Objectives for Today
• Learn to read a chart and detect weakness in
the market
• Learn how Supply and Demand play a role in
detecting weakness in the market
• Come away with one clear VSA Principle in
your mind


Demand for Uggs Boots # of Units

Supply in a Weak Market
• In a Rising Market, look for a huge amount of
Volume to appear
• Volume = Selling orders by the Smart Money
into a rising Market
• The Signal is often Climactic Action or Supply
Coming In or Buying Climax

The Distribution Phase

What it looks like
• Volume = Ultra High

• Spread= Massive

• Close = Mid to High

• Trend = Up
The UpThrust
• Up Bar

• Bottom Close

• Next Bar down to confirm signal

Smart Money Thinking
• As the price rises, Smart Money sells into the
market: to catch the Herd going long
• As each order comes in one after another, it
creates Ultra High Volume
• When the volume disappears, they have
dumped their supply and are not interested in
higher prices = No Demand
No Demand
What it IS: the withdrawal of interest by the SM
in higher prices
• Up Bar
• Next Bar Down to confirm
• Narrow Spread
• Low Volume: the lower the better to show
lack of selling by the SM
No Demand
1. It is a confirming signal of weakness

2. You need weakness in the background:

Buying Climax, End of a Rising Mkt, UpThrust

3. You should be in a downtrend before

shorting – downtrend implies weakness
No Demand: Serious Weakness
Why that worked
Followed an UpThrust

In a downtrend

Serious weakness in the background:

Potential Buying Climax three times

No Volume
Confirmation at the 30 minute
Trap Upmove (Bar B)
Based on two bars: 1st closes up off the highs
2nd widespread down bar closing near the
2nd bar’s high is higher than the 1st bar,
tricking people into going long
If low volume (no selling) & weakness in bkgrd
it is a strong sign of weakness – can lead to a
strong rally – Bar A = Weakness in
Failed No Demand
Why it failed
• The volume was fairly high
• The next bar closed up on higher volume
• The Supply Coming In bar right before it had a
lot of volume = a lot of selling to do before it
can go down again
• Not until the UpThrust and then the down bar
on lower volume do you see the short
• Weakness appears on an UP Bar
• Short when you are in a downtrend
• Use the UpThrust as the middle signal
• No Demand is a confirming signal of serious
weakness behind you
• Be Patient!!!!!!!
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