Bill McLaren's Corrective Trend Framework: How Sideways Consolidation in ASX Leading Stocks Signals the Biggest Breakouts
- Christopher Hall
- 2 days ago
- 15 min read
Written by Christopher Hall, AdvDipFP | Authorised Representative, AFSL 526688 |
Updated June 2026
Analysis sourced from Gary Glover (AR 259215), Authorised Representative, Novus Capital Limited (AFSL 238 168)
A corrective trend — sideways, overlapping price action where a leading stock contracts in range and volume without making new lows — is the structural precursor to a large impulsive move. Australian technical analyst Bill McLaren described this relationship decades before Mark Minervini codified it as the Volatility Contraction Pattern (VCP). Both practitioners were observing the same phenomenon in high-performing stocks from independent starting points: a stock that consolidates sideways without losing its leadership position is building pressure, not losing momentum.
This article covers what McLaren meant by corrective trends, why his framework parallels — but did not originate — the VCP, what a corrective trend looks like on a live ASX chart, and Gary Glover's stock personality methodology for using historical pattern repetition to build conviction before entry.
What Did Bill McLaren Mean by a Corrective Trend — and Why Does It Still Matter for ASX Traders Today?
Bill McLaren, the Australian technical analyst, distinguished between two fundamental types of price movement: corrective and impulsive. A corrective trend is sideways and overlapping — price moves back into the prior range without making new lows. An impulsive move is directional and expanding — price makes decisive progress in one direction, on rising energy, with widening daily ranges. McLaren's central observation was that large impulsive advances in leading stocks consistently emerge from corrective structures, not from stocks already in motion.
The concept was introduced to the FMP community by Gary Glover (AR 259215), Authorised Representative of Novus Capital Limited (AFSL 238 168), who reviews ASX momentum stocks in a recorded weekly session with Finer Market Points. Gary's anecdotal framing is precise: a corrective trend does not stall a leading stock — it loads it. The stock stays high in its trend, holding in the upper half of the prior advance, while price action runs sideways and volume contracts. McLaren's observation, referenced by Gary in the 12 June 2026 session, was that these periods were not directionless; they were accumulating potential for the next major move.
For context on how this phase connects to VCP pattern identification, see Minervini's Volatility Contraction Pattern.
The academic evidence supports this pattern at the portfolio level. Research by Jegadeesh and Titman, published in the Journal of Finance in 1993, found that momentum strategies — buying recent market leaders — generated 12.01% annual excess returns over a 24-year period (1965–1989). Leading stocks keep behaving like leading stocks. The corrective phase is where that repeatability is most visible before the next advance: the same stock that led the prior impulse is organising for the next one while other market participants assume the move is over.
As discussed in the members only video here: https://youtu.be/5Y7zp2pDhpU, Gary reviewed specific ASX stocks in corrective phases during the 12 June 2026 session — identifying which structures were holding constructively and which were beginning to show distribution signals. That distinction between constructive tightening and early selling is central to what McLaren's framework makes observable.
How Does McLaren's Corrective Trend Observation Connect to the Way Leading ASX Stocks Behave Before Major Breakouts?
Decades after McLaren described the corrective sideways trend, Mark Minervini identified and systematised the Volatility Contraction Pattern (VCP) — a base-building structure in which successive price and volume contractions tighten a leading stock before an impulsive breakout. McLaren described the structure conceptually. Minervini named it, defined the entry criteria, and built a systematic methodology around it. Both practitioners observed the same underlying behaviour in strong companies from independent starting points. The VCP is Minervini's creation.
Minervini describes the supply exhaustion mechanism directly: "When you quiet the stock down and it gets very tight on that right side after contracting and the volume comes in, that's telling you that stock supply has stopped coming to market. That's why they're so explosive when they come out of these formations." (Mark Minervini, Webinar on Big Returns — Trade Like a Stock Market Wizard, McGraw-Hill, 2013.) This is precisely what McLaren's corrective trend framework predicts. When supply leaves a leading stock, the corrective phase ends and the impulsive move begins. The quieter the stock becomes, the more explosive the eventual breakout.
Gary Glover's anecdotal observation, developed across his trading career, connects the two frameworks directly. As discussed in the members only video here: https://youtu.be/5Y7zp2pDhpU, Gary noted that McLaren was describing the corrective sideways trend without knowing the VCP, and that "the VCP is a sideways orientated trend... not an aggressive [pattern]. That's why those loose patterns can be not as good as the tight patterns." The quality of the corrective phase determines the quality of the coil. A wide, loose sideways consolidation is not the same structure as a tight one, and that distinction shows up in the breakout.
William O'Neil's quantitative analysis of 3,000+ of the greatest stock market winners from 1880 to the present, documented in How to Make Money in Stocks (2009) and further detailed in IBD and MarketSmith coaching materials, found that 90.77% broke out from sound bases during confirmed Stage 2 uptrends. McLaren's corrective trend is the mechanism those sound bases are built from — the structural compression that precedes institutional accumulation before a major price advance.
Another pattern from the O'Neil tradition — the cup and handle — fits the same corrective structure McLaren described. Gary Glover's anecdotal observation, developed across his trading career, is that 40–50% of cup and handle patterns on the ASX resolve successfully when identification criteria align. For a direct comparison of how the VCP and cup and handle differ in structure and trigger conditions, see the difference between VCPs and cup-and-handle setups.
What Does a Corrective Trend Look Like on an ASX Chart — and How Do Experienced Traders Read It Before Acting?
In a corrective trend, a leading stock stays high in its price trend while successive down days carry declining volume, price bars tighten progressively, and each pullback is shallower than the last. The stock is not falling — it is being held. The 50-day moving average often acts as the floor, with the stock compressing toward the MA rather than breaking below it. For context on the 50-day MA as a trend reference in this context, see how the 50-day MA functions as a trend reference.
Gary Glover's anecdotal approach to reading a corrective trend structure, developed across his trading career, breaks the identification process into five observable signals. This is a practitioner framework, not a formal methodology — each element represents a pattern Gary has observed to recur across leading ASX stocks.
How to Read a Corrective Trend Structure on an ASX Chart
Drawing on Gary Glover's practitioner approach, developed across his trading career and synthesised from the 12 June 2026 session:
Stock location in trend. The stock is in the upper half of its range — well above the 50-day moving average, not retesting the lows of the prior advance. Gary's anecdotal observation is that stocks below the midpoint of their range have not yet re-established the trend conditions a corrective phase requires. The foundation of the corrective trend is a stock still in the leadership zone.
Volume on down days. Down days carry light volume. Supply is not entering the stock. The absence of above-average volume on selling days is as informative as the price itself — it confirms sellers are not active, not merely that the price is holding. Quiet down days are the first characteristic of constructive compression.
Price bar contraction. Price bars narrow in daily range. As discussed in the members only video here: https://youtu.be/5Y7zp2pDhpU, Gary described what he looks for as "tight, tight, tight, just hugging the fifty." The contractions should be progressively tighter across the consolidation — each wave shallower and narrower than the last. Loose, wide bars on quiet days indicate a different structure.
Absence of aggressive selling. No wide-range expansion bars on high volume appear on down days. Corrective trends do not include sharp impulsive selloffs on volume. If wide-range selling appears, that is no longer a corrective trend — it is an early distribution signal requiring a different response.
Moving average compression. The 50-day moving average itself flattens as the stock consolidates above it. The MA and the stock converge. This visual compression is Gary's practitioner confirmation that the corrective structure is mature and tightening toward a resolution.
For smaller or less liquid ASX stocks, the 50-day MA can be unreliable. In those cases, Gary's anecdotal observation is that swing lows and higher lows become the primary reference — the absence of new swing lows is the corrective trend signal when MA analysis is too noisy to be definitive.
The FMP Momentum Profile — accessible to FMP YouTube Momentum Profile members — included momentum stock data and the chart observations Gary Glover discussed at the time of the 12 June 2026 session, giving members early access to the educational data discussed in this article.
Why Do Some ASX Stocks Repeat the Same Corrective Pattern Year After Year — and What Does Gary Glover Do With That Information?
Individual ASX stocks develop a personality — a recurring preference for the same consolidation structure that repeats across market cycles. A stock that has formed VCPs three times in four years will tend to form them again when the right conditions return. Gary Glover's anecdotal method is to scan five to ten years of daily chart history before acting on any recurring setup in a stock he knows well.
Gary's framing from the session, as discussed in the members only video here: https://youtu.be/5Y7zp2pDhpU, is direct: "It almost becomes like an identity... people have certain habits, so the stock will have a certain habit or profile." Gary's practitioner process involves identifying every corrective phase a stock has produced over a multi-year chart history, noting how many resolved upward and how many failed, and applying that historical record as a probabilistic lens on the current setup.
Gary's career-long observation is that when a recurring setup in a known stock has consistently resolved upward in the past, that record shifts the conviction calculus for the current setup. This is a practitioner observation, not a formal study. The repeating pattern does not guarantee the next outcome — but it provides a basis for sizing a position with higher confidence than a first-seen setup would warrant in an unfamiliar stock.
ASX momentum trader and FMP member Richard Redpath, whose complete methodology is published at Richard Redpath's progressive exposure framework, put a related observation concisely in conversation with Gary during the session: "It's like fractal geometry, broccoli and snowflakes. Just timeframes." The corrective structure that forms on a daily chart can often be observed at the weekly timeframe simultaneously. Stock personality expresses across multiple timeframes — which is why practitioners in Gary's network scan both when building conviction on a familiar setup.
The FMP article why momentum traders study the same stocks repeatedly covers the four-step personality mapping process in full — including case study examples of ASX stocks that have demonstrated this repeating behaviour across multiple market cycles. The two articles are complementary: the personality mapping article covers the HOW and WHAT; this section covers the WHY Gary builds a personality map and the specific decision it informs — higher-conviction entry on a familiar corrective structure in a known stock.
What Signals Warn That a Corrective Trend Is Failing — Rather Than Building Toward a Breakout?
A corrective trend that is breaking down shows the opposite of supply drying up. Volume increases on down days. Price bars widen rather than contract. Swing lows are violated. Wide-range expansion days appear near recent highs. Each of these signals observed individually warrants attention. When they cluster, Gary Glover's anecdotal response, developed across his trading career, is to scale out rather than add to the position.
Gary's practitioner checklist for corrective trend failure, as discussed in the members only video here: https://youtu.be/5Y7zp2pDhpU, covers five observable signals:
1. Selling volume. Down days with above-average volume mean supply is entering the stock, not exiting. This is the most important single distinction between a corrective trend and early distribution. The volume tells the story before the price confirms it.
2. Widening price ranges on down days. Expanding daily ranges on selling days signal an impulsive move in the wrong direction — not a corrective contraction. The defining characteristic of a corrective phase is contracting ranges. When ranges widen on the selling side, the structure has changed.
3. The exhaustion day. Gary's described practitioner signal: "if you see the biggest range expansion of the whole move into a high... for me, I would be taking some off into that." A wide-range high-volume day at the top of a sustained advance signals potential distribution, not consolidation. The stock is being sold into strength, not held in anticipation of a breakout.
4. Violation of swing lows. The last swing low has been broken. This is particularly relevant for smaller, less liquid ASX stocks where moving averages are unreliable as references. When swing lows fail in succession, the higher-low structure that defines a corrective trend has ended.
5. Market conditions filter. Not all corrective structures fire in all market environments. Gary's anecdotal observation from the 12 June 2026 session is that when broader conditions are producing short multi-day moves that reverse before structure matures, the same corrective setup that would work in a trending market can stall repeatedly. Market conditions are a material filter on which corrective phases fire and which do not.
Thomas Bulkowski, an independent market researcher and author of Encyclopedia of Chart Patterns (Wiley), found that in a rising market the highest-ranked stocks by relative strength returned 52% over two years compared to 32% for the middle-ranked group (thepatternsite.com — 472 stocks, bull period 2002–2005; US equity market data). A stock that transitions from corrective consolidation into distribution — elevated down-day volume, widening ranges, broken swing lows — crosses from the leadership cohort into the underperforming one. Research conducted in US equity markets; the relationship may vary in ASX conditions.
Conclusion
Three things define corrective trend trading on the ASX at a practitioner level.
First: McLaren and Minervini were parallel observers, not a lineage. McLaren described the conceptual relationship between sideways corrective structures and the large impulsive moves that follow. Minervini named and systematised this into the VCP. Both frameworks are useful for the same reason — they describe a stock building pressure, not losing it. The VCP is Minervini's creation; McLaren provided the conceptual framing for why the structure works.
Second: the corrective trend checklist is defined more by what is absent than by what is present. Declining volume on down days. Contracting price bars. No aggressive selling. A stock held high in its trend while supply exhausts. When those conditions cluster, the structure is constructive. When any reverses — elevated volume, widening ranges, violated lows — the interpretation changes immediately.
Third: stock personality converts a single setup into a probabilistic read. The process starts with one stock a trader already knows. Scan five years of daily charts. Identify every corrective phase. Track how each resolved. That historical record is the foundation Gary Glover uses to build conviction before acting on a familiar corrective trend structure in an ASX stock. The supporting Momentum Profile data from the 12 June 2026 session is accessible to FMP YouTube Momentum Profile members.
The analysis in this article draws on Gary Glover's recorded session and the FMP Momentum Profile data, which is published daily and accessible to Finer Market Points YouTube membership. Members receive early access to the educational data that forms the basis of articles like this one. The Momentum Profile readings at the time of the 12 June 2026 session are available to members. For information on FMP YouTube Momentum Profile membership, visit Finer Market Points YouTube membership.
Remember that past performance is no guarantee of future results, and all trading involves risk.
Frequently Asked Questions
What is a corrective trend in stock trading?
A corrective trend is a sideways price pattern in which a leading stock consolidates within a defined range — with each successive pullback shallower than the last, declining volume on down days, and price bars contracting rather than expanding. The stock is not falling; it is building. Bill McLaren, the Australian technical analyst, described corrective trends as the structural precursor to large impulsive moves: price remains high in the trend while supply contracts, coiling energy for the next advance. Gary Glover's anecdotal observation, developed across his trading career, is that the tighter the corrective phase, the higher-quality the setup.
What is the difference between a corrective trend and an impulsive move in technical analysis?
An impulsive move is directional and expanding — price makes rapid, decisive progress in one direction, typically on rising volume, with widening daily price ranges. A corrective trend is the opposite: sideways, overlapping, contracting in both price range and volume. McLaren's observation was that corrective sideways structures do not stall a trend — they load it. The largest impulsive moves in leading stocks consistently emerge from the tightest corrective structures. The distinction tells a trader whether a pause in a leading stock means "wait" or "watch closely for entry."
How does Bill McLaren's corrective trend framework relate to the VCP pattern — and who created the VCP?
McLaren's corrective trend framework and Mark Minervini's Volatility Contraction Pattern (VCP) describe the same underlying price behaviour from independent starting points. McLaren observed that corrective sideways structures preceded large impulsive moves in leading stocks. Minervini identified and systematised this into the VCP — a pattern defined by sequential volatility contractions with increasingly tight price bars before a breakout. The VCP is Minervini's creation, documented in Trade Like a Stock Market Wizard (2013, McGraw-Hill). McLaren and Minervini were parallel observers of the same market phenomenon, not linked lineages.
What does "supply drying up" mean — and how do traders identify it on an ASX chart?
Supply drying up means the stock's available sellers have largely exited the market — they have either sold or stopped selling — leaving the shares in stronger hands. On a chart, this appears as declining volume on down days, tightening daily price ranges, an absence of wide-range high-volume selling bars, and the stock holding high in its trend without retesting lower support levels. Gary Glover's anecdotal observation, developed across his trading career, is that near-zero volume on the quietest days of a corrective phase is the clearest signal that supply has exhausted before a move.
How can a stock's chart personality help a trader build conviction before entry?
A stock's chart personality is its recurring pattern preference — the same consolidation structure it has produced repeatedly across years. Gary Glover's anecdotal method is to scan five to ten years of daily chart history, identify every corrective phase the stock has formed, and note how each resolved. When a stock that has consistently resolved its corrective patterns upward appears to be forming the same structure again, that historical record becomes a probabilistic anchor — not a guarantee, but a basis for sizing a position with higher conviction than a first-seen setup would warrant.
What volume patterns confirm a corrective trend is building toward a breakout rather than failing?
A corrective trend building constructively shows declining volume on down days, tightening price ranges with each successive contraction, and an absence of wide-range high-volume selling bars. The pattern is characterised by what it lacks — aggressive sellers — not only by what it shows. The clearest confirmation signal Gary Glover describes is near-zero volume on the quietest days of the consolidation: direct evidence that supply has exited the stock. By contrast, elevated volume on down days or widening ranges signal genuine distribution — a different process requiring a different response.
Where can ASX traders access Gary Glover's weekly analysis of stocks in corrective consolidation phases?
Gary Glover (AR 259215), Authorised Representative of Novus Capital Limited (AFSL 238 168), conducts weekly recorded sessions reviewing ASX momentum stocks — including stocks in corrective consolidation phases, impulsive breakout setups, and ongoing position management. These sessions are accessible to FMP YouTube Momentum Profile members. The educational data from those sessions — including the Momentum Profile data published daily — forms the basis of articles like this one. For membership information, visit Finer Market Points YouTube membership.
Sources
# | Source | Type |
1 | Gary Glover (AR 259215), Authorised Representative of Novus Capital Limited (AFSL 238 168), members session, 12 June 2026 | Practitioner session |
2 | Minervini, M. (2013). Trade Like a Stock Market Wizard. McGraw-Hill. Quote sourced from: Webinar on Big Returns. | Published research |
3 | O'Neil, W. (2009). How to Make Money in Stocks (4th ed.). McGraw-Hill. Further: IBD and MarketSmith coaching materials. | Published research |
4 | Jegadeesh, N. & Titman, S. (1993). Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency. Journal of Finance, 48(1), 65–91. | Published research |
5 | Bulkowski, T. Encyclopedia of Chart Patterns (Wiley). Stock relative strength study, thepatternsite.com — 472 stocks, bull period 2002–2005. US equity market data; findings may vary in ASX conditions. | Practitioner-empirical research |
6 | Bill McLaren — Referenced by Gary Glover, 12 June 2026. No published source confirmed. | Session reference (no confirmed publication) |
Why the Best Momentum Traders Study the Same Stocks Repeatedly — Christopher Hall
Relative Strength Ratings, ATR Extensions and Progressive Exposure: Richard Redpath's Complete ASX Momentum Trading Framework — Christopher Hall
What Is a VCP Pattern? Mark Minervini's Volatility Contraction Pattern Explained — Christopher Hall
Complete VCP Trading Guide for ASX Markets — Christopher Hall
All Gary Glover observations in this article are anecdotal practitioner observations developed across his trading career — not formal studies.
This article is based on analysis and commentary provided by Gary Glover (AR 259215), Authorised Representative of Novus Capital Limited (AFSL 238 168), during a recorded market analysis session on 12 June 2026. Content has been edited and summarised by Finer Market Points for educational purposes. Gary Glover has not independently reviewed or endorsed this publication.
This content is for educational purposes only and does not constitute financial advice. Past performance is no guarantee of future results.
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