A Possible Testing Rally

Monday, August 8, 2016

Click here to open the attached charts

What To Do?

No changes from Friday

Short Term:
There are no short-term opportunities to the upside.
Aggressive short-term bears should maintain their positions.

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: Down, but continues in an extremely oversold position.
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on decreased volume. It closed in the lower quarter of a slightly wider 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 confirms the above. After a small gap opening to the upside and a brief 5 min. follow-through, the Wyckoff Wave reacted to point X. While some supply was present, the reaction was on relatively reduced volume. This suggests a lack of demand.

After bottoming out at point X, the Wyckoff Wave moved sideways for the rest of the trading day.

Although little demand was present, the O – P Index’s positive divergence with the Wave does suggest the Wyckoff Wave may make an opportunity to rally back and test earlier highs at points U and S. If that test a successful the Wyckoff Wave will continue to the downside.

The Optimism – Pessimism Index reacted slightly. From an intermediate view, it remains in harmony with the Wyckoff Wave. The O – P Index continues to test the supply line of its upward trend channel.

On a very short-term basis, as seen on the intra-day line chart, the Wyckoff Wave is in a positive divergence with its O – P Index, when compared with point V.

The Force Index reacted slightly.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave did not make an immediate attempt to correct Friday’s gap opening. Instead the lack of demand continued, as the Wyckoff Wave reacted.

As mentioned above, the Wyckoff Wave has an opportunity to rally and test the resistance near the top of the trading range. It is marked by the line drawn from point C.

As mentioned on Friday, if the Wyckoff Wave successfully tests that resistance, there is a good probability it will react back into the trading range and at least test the lows at point D.

It will be difficult for the Wyckoff Wave to put in a noticeable rally until demand returns.