Shorts identify candidates

Short-term bears should begin to identify candidates to the downside. Note the last paragraph on today’s report.

There are no short-term opportunities to the upside.

Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Up, and in an overbought position

Short Term: Up.

Intermediate Term: Down and in an overbought position relative to the trend.

Long Term:  Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed near the top of a wider price spread, in a clearly overbought condition relative to the Technometer. The price spread and volume suggest a lack of supply.

A review of the intra-day waves indicates that the morning featured the presence of demand as the Wyckoff Wave rallied to point S. The afternoon featured a brief reaction on a lack of supply. This was followed by a rally on a lack of demand. In other words, the morning’s good demand dried up during the afternoon.

The Wyckoff Wave also moved into an overbought position relative to its intra-day up trend channel.

The afternoons lack of demand suggests the Wyckoff Wave will react back into the uptrend channel and quite possibly test the channel supply line and the lows at points N and V.

The Optimism – Pessimism Index rallied. It has returned to short-term harmony with the Wyckoff Wave when compared with point N. The longer-term negative divergences with points D, B, Z and X remain in place.

The Force Index rallied, but is still producing moderate negative readings. There is no mitigating impact on the clearly overbought Technometer.

Tomorrow, the Technometer will open in a clearly overbought condition.

Today, the Wyckoff Wave continued his rally off the bottom of the trading range. Strong demand took it through the support at the bottom of the sideways movement, marked by points E, C, A, Y and W.

Demand dried up as the Wyckoff Wave approached the supply line of the short-term uptrend channel.

Despite the poor quality of the rally, the Wyckoff Wave continues to advance. However, this advance may be coming to an end. The Technometer has moved into a clearly overbought condition. This suggests it will be difficult for the Wyckoff Wave to continue its advance.

This conclusion is supported by the continuing negative divergences with the O – P Index and Force Index.

The Wyckoff Wave has advanced high enough in the trading range that the risk/reward ratio on short-term trades to the downside is becoming acceptable.

Short-term bears should identify candidates and begin to look for upthrusts, overbought positions relative to trend channels or successful testing of a trading range.