Maintain Shorts

Click Here For Wyckoff Wave Chart 05-02-2016

Short Term:

Their are no short-term opportunities to the upside.

Aggressive short-term bears should maintain their positions and continue to look for opportunities to the downside. Market action should be watched carefully, as the reaction may not be particularly strong or deep.

Intermediate & Long Term:

Intermediate and long-term bulls should maintain existing positions.

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, experienced and intra-day failure to the downside. It closed, on decreased volume, near the top of a narrower price spread, in a neutral condition relative to the Technometer. The intra-day failure suggests a lack of supply.

A review of the intra-day waves indicates that today was a lack of demand day. After a narrow gap opening to the upside at point S, supply came into the market and the Wyckoff Wave reacted to point T. The supply was contained within one intra-day wave.

The Wyckoff Wave spent the rest of the trading day attempting to rally. The rally made little progress and the Wyckoff Wave closed a mere 16 points above the opening high at point S.

Today’s, poor quality market action makes it difficult to expect that the Wyckoff Wave will return to its intra-day up trend channel. Instead, the top of the poor quality rally may become part of a new intra-day down trend channel.

This suggests the Wyckoff Wave will continue its reaction off point O. It should test and probably react through an earlier low at point F.

The Optimism – Pessimism Index rallied slightly. It remains in an overbought position relative to its upward trend channel. The negative divergences with the Wyckoff Wave, when compared with points D, B, Z and X remain in place.

The Force Index reacted and is producing moderate negative readings.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave put in a poor quality attempt to rally and test Thursday’s high. As mentioned above, today’s market action suggests that test will fail and the Wyckoff Wave will continue to react towards the resistance, now support line drawn through point T.

While today featured a lack of demand, it is important to note that little supply came into the market. While this does not suggest supply has dried up, the moderate level of supply reduces the probability of the Wyckoff Wave reacting strongly back into the trading range.

So far, there is no indication that the Wyckoff Wave will react father then testing the lows at point U. However, that could change if strong supply comes into the market.

Positions have been taken. Now it’s time to watch and wait.