More Watch and Wait

Wednesday, July 13, 2016

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What To Do?

Short Term:
There are no short-term opportunities to the upside.
There are no short-term opportunities to the downside.
Intermediate & Long Term:
Their are no intermediate or long term opportunities to the upside.
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, traded higher on decreased volume. It closed in the upper half of a narrower price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest a lack of demand.

A review of the intra-day waves indicates there was a minor battle between demand and supply. After a small gap opening to the upside and a brief, 20 min., follow-through, supply came into the market and the Wyckoff Wave reacted to its low for the day at point B.

Then the Waves began to rally on reasonable demand. The demand began to dry up and good supply came into the market. This caused the Wyckoff Wave to react for the last 30 min. of the trading day.

The Wyckoff Wave had also moved away from the support line of its intra-day up trend channel. In addition, the intra-day thrusts, that are shown on the vertical red line are becoming shorter. This and that demand is sporadic and not sustained suggests
the Wyckoff Wave will have a difficult time continuing its rally and will react to test the lows at point G.

The Optimism – Pessimism Index reacted and remains in the upper portion of its upward trend channel. It is in harmony with the Wyckoff Wave.

The Force Index is still experiencing difficulties with it’s readings, but there is no mitigating impact on the Technometer.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave continued its poor quality advance to the upside. The narrowing of price spread and relatively decreased volume continue to suggest the rally is near, or at, an end.

While, quite candidly, it is surprising that the Wyckoff Wave has not yet reacted, the continued weakness of the rally suggests that, while demand is still present, it is being taken in. If we were seeing absorption, or a significant battle between supply and demand, volume would increase and we would see wider price spread in both directions.

The opposite is happening. We are seeing reduced price spread and volume. While there is more demand than expected, once it is completely taken in, there is a good possibility we will see a nice reaction.

When the market is not behaving, as expected, it is best to stay on the sidelines.