A Tough Market Gets Tougher

Tuesday, July 12, 2016

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What To Do?

Watch and Wait

Short Term:
Their are no short-term opportunities to the upside.

There are no short-term opportunities to the downside.

Intermediate & Long Term:
Their are no intermediate or long term opportunities to the upside.

There are no intermediate or long term opportunities to the downside.

Market Trends:

Intra-day: Neutral
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on slightly increased volume. It closed in the upper half of a wider price spread, in a clearly overbought condition relative to the Technometer. The price spread and volume suggest the presence of demand.

A review of the intra-day waves indicates that today was primarily a lack of demand day. However, good supply was briefly present during both the morning and afternoon.

After a wide gap opening to the upside, there was a brief follow-through to point Z. Supply came into the market and the Wyckoff Wave reacted. It then spent a good portion of the trading day in a poor quality rally which ended at point A.

Good supply came into the market during the last 40 min. of the trading day.

Like yesterday, after a nice gap opening to the upside, the Wyckoff Wave was unable to make much progress. Like yesterday, it also closed lower than it was at the mornings gap opening. This lack of demand and the inability to return to its intra-day up trend channel, make the Wyckoff Wave extremely vulnerable to a reaction.

Despite this week’s poor quality rally, the Wyckoff Wave is still expected to react and test the lows at point G.

The Optimism – Pessimism Index rallied and remains in the upper portion of its upward trend channel. It continues to be in harmony with the Wyckoff Wave.

The Force Index malfunctioned and is not producing correct readings However, based on previous readings there should be a slight mitigating impact on the overbought Technometer.

Tomorrow, the Technometer will open in an over bought condition.

Today, the Wyckoff Wave continued its mysterious advance through the top of the trading range. The rally continues to be of poor quality. This suggests it will have a difficult time continuing and should react back into the trading range.

The Technometer has moved into an overbought condition. While this helps support the reaction scenario, the most important information is the lack of demand the Wyckoff Wave has experienced over the past three trading days.

It is important to note that much of the gain has been made on the gap openings to the upside. Once the motion is set aside and shares are traded, the Wyckoff Wave has an extremely difficult time advancing and encounters some supply.

The Wyckoff concepts strongly suggest the market should react. This is a time for discipline and patience.

While long-term Bulls should continue to maintain their investments, until the market clarifies there are no short-term opportunities in either direction. Watch and wait.