Our discussion of Wyckoff's analytical methods have so far concentrated on deductive reasoning to
reach investment or trading conclusions. We first determined the position and trend of the general
market, then the positions and trend of group averages, and finally selected individual stocks based on
their ability to move in harmony with those larger trends.
The opposite approach-inductive reasoning-offers the experienced Wyckoff analyst a valuable way to
double check those conclusions. I emphasize experienced analyst because determining the positions of
individual stocks first and then proceeding to the market and groups requires more skill and judgment, as
well as more analysis time.
To make inductive reasoning easier and to help the deductive analyst make better individual stock
selections, Wyckoff devised a record keeping device in 1916 called the Position Sheet. A Position Sheet
simply keeps track of the potential movements of individual stocks. This helps the Wyckoff analyst
determine which stocks offer the best trading opportunities, judge stocks' turning points, determine group
trends, forecast group movements, and ascertain the trend of the entire market.
The premise behind the Position Sheet is straightforward. Every stock is either bullish, bearish or neutral;
in harmony or out of harmony with the general market's trend. The