Wyckof Wave has its lowest close since February 10th

The Wyckoff Wave opened higher Monday, and stair stepped lower the rest of the weak.  For the week the Wave was down 750 points.  Volume was at normal low levels and showed supply present.

The Technometer spent the majority of the week trading near neutral and finished the week slightly below neutral.

The S&P and Nasdaq Indices were both down over 1% for the week.

The Wyckoff Wave spent the week slowly working lower.  We had mentioned last week that the high marked as “N” was important, and allowed us to show a downtrend channel on the daily chart.  We appear to now be working our way to the oversold line of the downtrend this coming week.  We still feel we are in the midst of a correction that has further to go on the downside.

The Optimism – Pessimism Index has shown no desire to rally the last few weeks which we continued to comment on.  It is now breaking to the downside as shown on the intraday chart below.  The continued divergence we mentioned last week between the Wave and the O-P, finally allowed us to follow thru to the downside this past week.

The Force Index closed lower for the week and is now reading -231.  This should allow more downside pull in the days ahead.

The O-P and Force continue to show relative weakness, with the Technometer trading slightly below neutral  We should see somewhat lower prices before the Technometer would become oversold.

We recommend holding short positions and look to cover on further weakness. Also continue looking for stocks that are outperforming to the upside, and could lead us higher after this correction has run its course.  Stocks that are having normal reactions, or preferably back up to the creeks.

The bond market was up strongly for the week trading negative correlation to stocks.
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Good Trading,

Todd Butterfield