Take new positions to the downside

Their are no short-term opportunities to the upside.

Today’s market action suggests that  this could be the final opportunity to take new positions to the downside.

Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Neutral

Short Term: Neutral.

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

Long Term:  Neutral

The stock market, as measured by the Wyckoff Wave, experienced and intra-day failure to the upside. It closed, on decreased volume, near the bottom of a narrower price spread, in a clearly overbought condition relative to the Technometer. The intra-day failure suggests a lack of demand.

A review of the intra-day waves confirms the above. After a gap opening to the upside, some demand and the Wyckoff Wave rallied to point R. There, demand was withdrawn and the Wyckoff Wave reacted for the next two hours and 45 min. While supply was present, it was not particularly strong and was gradually withdrawn as the Wyckoff Wave approach point S.

There, the Wave attempted to rally, but the lack of demand resulted in little progress to the upside.

While the Wyckoff Wave did briefly returned to its intra-day up trend channel, it quickly reacted and again weakened the trend.

While the Wyckoff Wave may make an attempt to retest the high at point R, today’s lack of demand suggests the test will be successful and the Wyckoff Wave will have a difficult time even returning to the intra-day up trend channel.

Nothing in today’s market action changes the reaction forecast. The Wyckoff Wave is still expected to react to test point M and probably continue its move to the downside.

The Optimism – Pessimism Index reacted and remains in an overbought position relative to its upward trend channel. It remains in a slight short-term negative divergence with the Wyckoff Wave, when compared with point R. The longer-term negative divergences with points D, B, Z and X remain in place.

The Force Index reacted and is producing moderate negative readings. There is no mitigating impact on the clearly overbought Technometer.

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

Today, the Wyckoff Wave tested last week’s high at point R and reacted. The lack of demand will make it extremely difficult for the Wyckoff Wave to continue to rally and move through the resistance at the top of the trading range.

This scenario continues to be supported by a clearly overbought Technometer and negative divergences with the O-P Index.

The short-term uptrend channel was broken at point R. The break was confirmed by today’s inability to move into new high ground.

The Wyckoff Wave has reached the top of the trading range and, by its own market action, has indicated it is prepared to react back into that range.