Stocks lower on increased volume

Click Here For Wyckoff Wave Chart 01-07-2016

Short Term:
Short term bears should maintain their positions.

There are no new short-term opportunities to the upside.

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, but weakened and in an oversold position.
Short Term: Up, but weakened and in an extremely oversold position. If the reaction continues the trend is in jeopardy of being changed to neutral.
Intermediate Term: Down.
Long Term: Neutral.

The stock market, as measured by the Wyckoff Wave, traded lower on increased volume. It closed in the lower half of a wider price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves confirms the above. However, supply, while certainly present, was not overpowering.

After a wide gap opening to the downside, which comprised almost 2/3’s of the day’s decline, the Wyckoff Wave briefly continued to react to point Q. There it put in a poor quality rally to point R. Then it spent the rest of the day in a long, slow reaction to point S. While it rallied for the last 30 min. of the trading day, little demand was present.

While supply was certainly present throughout the trading day, the lack of demand was equally significant. Normally, that lack of demand would result in wider intra-day waves that contained good volume.

Although the Wyckoff Wave may rally and make an attempt to return to the intra-day, the reaction is probably not completed.

As the Wyckoff Wave continues to react, the intra-day waves should be examined closely to see if supply is drying up.

The Optimism – Pessimism Index reacted. The short-term negative divergences with points B, D, Z and X have been illuminated.

To the downside, the O – the Index is in a short-term positive divergence with the Wyckoff Wave when compared with points C, A, and Y.

The Force Index reacted and is producing low negative readings.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave continued its strong reaction off point D. It is now in a position to test the support line of the intermediate-term downtrend channel. It is also in a position to test the low at point U.

The lack of any significant demand, coupled with a neutral Technometer reading suggests that the reaction has not reached its objective.

However, it is important to understand that there is a very small probability it will continue to react through the Selling Climax low at point Q.

This is not a major correction. After moving sideways for over three months, the Wyckoff Wave is finally reacting to establish support points in the trading range that began in August. Once there established, the Wyckoff Wave will have an opportunity to rally and test the highs at points D and B.

Charts of the Wyckoff Wave are attached.