As we have mentioned, the process that we will be using is the idea of Action-Test, Action-Test. The test must validate the action or nothing is proven. When a stock moves up, there are four parts to the stopping action: Preliminary supply, Buying Climax, Automatic Reaction, and Secondary Test. There are also four parts to stopping a down move: Preliminary Support, Selling Climax, Automatic Rally, and Secondary Test. Once we have the stopping action in place, a new cause must be build. That cause can be for accumulation, re-accumulation, distribution, redistribution, or nothing at all.


As we examine the Secondary Test, there are several things we will want to see. First, we would like to see the price action end below the level of the Buying Climax in an uptrend, or above the level of the Selling Climax in a down trend. In both cases we want significantly less volume then on the Climax itself. Secondly, the price action should show a narrowing of spread. If we don't see this, we may need to see additional tests to prove that the buyers or sellers have been exhausted and that the trend is at least temporarily over.