Watch and Wait

Their are no short-term opportunities to the upside.

There are no short-term opportunities 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: Up.

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 near the bottom of a narrower price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest a lack of supply.

A review of the intra-day waves confirms the above. After a gap opening to the upside and a brief 10 min. follow-through to point R, supply came into the market and the Wyckoff Wave began its reaction to point S.

After the initial down wave, supply began to dry up and some demand returned at point S. The Wyckoff Wave attempted to rally for the last 45 min. of the trading day. However, the attempt was met with little success and the Wyckoff Wave barely move to the upside.

Point R was an initial successful test of the high at point Q.

While supply was drying up, the late day poor quality demand gave the Wyckoff Wave a chance to continue its reaction on Monday and at least test the support line of its intra-day up trend channel.

However, it should be noted that, so far, supply is drying up and is given no indication that it will return with any strength.

The Optimism – Pessimism Index moved sideways. It remains in a negative in harmonious action, with the Wyckoff Wave when compared with points D, B and X. It has returned to a negative divergence, with the Wave, when compared with point Z.

The Force Index reacted and is still producing low negative readings.

On Monday, the Technometer will open in an overbought condition.

Today, the Wyckoff Wave tested yesterday’s high and reacted. However, the reaction was on narrower price spread and lower volume. This would suggest that the overhanging supply, that is usually present at the top of the trading range, did not come into the market.

The Wyckoff Wave is in an interesting position. It is at the top of the trading range, but there is little demand present to drive and into new high ground. Conversely, there is little supply present to initiate a reaction.

Today’s market action eliminates the upthrust scenario. However, the lack of supply ads a little credibility to the “strong demand moving the Wyckoff Wave into new high ground” scenario.

Still, the Wyckoff Wave is most probably going to either react or put in a new high in the trading range and then react. The market action, over the past several days, suggests that once all is said and done the Wyckoff Wave will continue to move sideways.

The reaction scenario is supported by the Technometer, which will open in an overbought position on Monday.

However, the Wyckoff Wave’s relative strength suggest that any reaction may simply be back to test the lows at points U and S. Then, we could expect a rally to test the highs that are presently being put in place.

This is a time when it is best to let the market give us more information, before making any buying or selling decisions.