Testing The Bottom Of The Intra-day Trading Range

Friday, July 22, 2016

Click here to open the attached charts

What To Do?

Short Term:
There are no short-term opportunities to the upside.
Aggressive short-term bears who took positions yesterday should maintain them, unless strong demand comes into the market on Monday morning. If the Wyckoff Wave reacts there is still an opportunity to take new positions to the downside..

Intermediate & Long Term:
Their are no intermediate or long term opportunities to the upside.
Long-term positions to the upside should be maintained.
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, experienced an intra-day failure to the downside. It closed, on decreased volume, in the upper half of a wider price spread, in a neutral condition relative to the Technometer. The intra-day failure suggests a lack of demand.

A review of the intra-day waves confirms the above. After a gap opening to the downside, the Wyckoff Wave reacted for the next 10 min. to point V. The reaction was on relatively wide price spread and good volume.

Supply was withdrawn and the Wyckoff Wave spent the rest of the trading day in a long slow rally to point W. Notice the orange line in the volume portion of the chart that depicts decreasing volume levels.

The Wyckoff Wave rallied back to and through the support line drawn from point I. Like the Creek, at the top of the trading range, the support areas also have two banks. The upper bank is drawn on the chart as a intra-day support line from point I to point O and then to the right side of the chart. The Wyckoff Wave is presently testing that support line.

If the Wyckoff Wave is able to rally through that support line, it will return to the trading range and continue its sideways movement.

It is doubtful that the reaction to point V was a shakeout. It still appears to be a intra-day Sign of Weakness. That is because, even though the Wyckoff Wave rallied, it did so on a lack of demand. When a Spring occurs, it is followed by strong demand. As that didn’t happen, it is difficult to give the intra-day Spring scenario a high probability of success

The Optimism – Pessimism Index rallied slightly. It continues to test the supply line of its upward trend channel and remains in harmony with the Wyckoff Wave.

The Force Index reacted and is still producing positive readings.

On Monday, the Technometer will open in a neutral condition.

Today’s market action was best described on the intra-day line chart. However, on the vertical line chart the Wyckoff Wave began to react and is now rallying to test Thursday’s high. For reasons described above, the test should be successful and the Wyckoff Wave should continue to react back towards the line forming the top of the trading range that is drawn from point C. If the reaction is on wider price spread and volume, the Wyckoff Wave has a good opportunity to continue to react back into the trading range and at least test the low at point D.