Looking for retest of low…

Click Here For Wyckoff Wave Chart 01-19-2016

Short Term:

Short-term positions to the downside should have been closed. There are no new opportunities.

Short-term bulls could consider new opportunities to the upside. However, as discussed below, if the Wyckoff Wave rallies Friday’s low may need to be retested.

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 vulnerable to be broken.

Short Term: Neutral

Intermediate Term: Down, but weakened and in an oversold position.

Long Term: Neutral.

The stock market, as measured by the Wyckoff Wave, traded lower on relatively high, but decreased volume. It closed in the lower half of a wider price spread, in a very slightly oversold condition relative to the Technometer. The price spread and volume suggest a lack of demand.

There was no intra-day failure to the upside as the gap opening was the high for the day.

A review of the intra-day waves indicates that most of the day featured a lack of supply. Demand did come into the market during the last hour and 10 min. of the trading day.

After a wide gap opening to the upside (point E), which was the high for the day, the Wyckoff Wave went into a fairly long slow reaction which ended at point F. Some demand came into the market and the Wyckoff Wave rallied to point G, before reacting for the last 10 min. of the day.

For the second time in three days, the Wyckoff Wave weakened the supply line of the intra-day down trend channel. Today’s reaction to point F barely put the Wyckoff Wave back into the down trend channel.

In addition, on the reactions to points W, X and D, the Wyckoff Wave has been unable to reach the channel support line.

These are both positive indications and suggest the intra-day down trend channel is in a position to be broken. If the Wyckoff Wave puts in a positive day tomorrow, there is a good chance the intra-day trend will be changed to neutral or even up.

Today’s lack of supply and positive behavior, when testing the intra-day channels, suggests the Wyckoff Wave is at or close to the end of the intra-day down trend. This suggests the Wyckoff Wave has an excellent opportunity to attempt to rally this week.

The Optimism – Pessimism Index reacted and is now testing the support line of its upward trend channel. It is in a short-term positive divergence with the Wyckoff Wave when compared to point Y. The positive divergences with points C and A have been eliminated. It is in positive inharmonious action with the Wyckoff Wave when compared with point U.

The Force Index reacted and is producing high negative readings. There is a mitigating impact on the slightly oversold Technometer.

Tomorrow, the Technometer will open in a clearly overbought condition.

Today, the Wyckoff Wave tried to rally, failed and then reacted and tested Friday’s low. The test was on a lack of supply and, at the test, some demand did come into the market.

More importantly the Wyckoff Wave has seen support on two consecutive days as it tests the low at point U. This continues to suggest the Wyckoff Wave could be putting in another important support point in the developing trading range.

While the Wyckoff Wave may begin to rally, the rally may not be particularly strong. The relatively high volume over the past several trading days and the weak Force Index suggests supply is still present.

If Friday’s low was indeed a support point, the Wyckoff Wave may need to retest that support before it is able to rally back towards the top of the trading range.

Charts of the Wyckoff Wave are attached.