Maintain Short Positions

Click Here For Wyckoff Wave Chart 05-04-2016

Short Term:

Their are no short-term opportunities to the upside.

Aggressive short-term bears should maintain their positions. They should also begin to study their selections for appropriate exit points, should the reaction bottom out.

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: Down.

Short Term: Neutral.

Intermediate Term: Neutral

Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on decreased volume. It closed in the lower half of a narrower price spread, in an oversold condition relative to the Technometer. The price spread and volume suggest a lack of supply.

A review of the intra-day waves indicates that supply was present during the morning hours, but began to dry up during the afternoon hours.

After a wide gap opening to the downside, good supply drove the Wyckoff Wave down to point X. Point X is at the support line of the intra-day down trend channel. The Wyckoff Wave put in a brief poor quality rally to point Y. Supply returned and the Wyckoff Wave reacted to point Z.

The Wyckoff Wave rallied during the rest of the trading day, but the rally was of poor quality and suggested a lack of supply. Little demand was present during the trading day.

The inability of the Wyckoff Wave to rally strongly off point X is an indication of weakness. Then, the reaction to point Z, which was slightly lower than point X and the subsequent poor quality rally, suggests the Wyckoff Wave has more room to the downside.

The Optimism – Pessimism Index reacted, but remains in an oversold position relative to its upward trend channel. It is in harmony with the Wyckoff Wave. Yesterday’s comments on the negative divergence with the Wave were in error. My apologies.

The Force Index reacted slightly and continues producing moderately negative readings. There is no mitigating impact on the oversold Technometer.

Tomorrow, the Technometer will open in a slightly oversold condition.

Today, the Wyckoff Wave continued its reaction off point V. It is approaching the resistance, now support line that formed the top of the trading range.

It is doing so on narrowing price spread and relatively low volume. However, the intra-day analysis still suggests supply is present.

The Technometer has moved into an oversold condition. The O – P Index is in harmony with the Wyckoff Wave.

As mentioned earlier, on a reaction the Technometer may go into an oversold condition slightly before the actual bottom.

While we may not be at the bottom of the reaction, it appears supply could dry up and the reaction will bottom out in an area between the above-mentioned resistance, now support line, drawn through points R and T, and the bottom of the minor sideways movement marked by points S and U.

If this short term reaction bottoms out, it will be important to watch the quality of demand. If the Wyckoff Wave is going to move sideways into a new phase of the trading range, there’ll most likely be a successful test of the high at point V.