Nearing support level

Click Here For Wyckoff Wave Chart 05-20-2016

Short Term:

Their are no short-term opportunities to the upside.

Although the Wyckoff Wave may continue to react, it appears to be close to a support level and any new positions to the downside would have a bad profit risk ratio.

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, and in an overbought position relative to the trend.

Short Term: Changed to Down

Intermediate Term: Neutral

Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed in the middle of a narrower price spread, in an overbought 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 After a gap opening to the upside and a strong, one intra-day wave, follow-through to the upside, demand began to be withdrawn as the Wyckoff Wave completed the intra-day rally at point E.

There it encountered some supply and, for the next three hours and 20 min., reacted to point F. The last intra-day wave lasted for 35 min. on high volume. While supply was present and sustained, it was not overpowering.

Normally the high volume at the end of the trading day is somewhat discounted. However, today the length of the wave and the limited progress to the upside, suggests supply was still in the market.

The Wyckoff Wave rallied into an overbought position relative to its intra-day down trend channel. Today’s market action suggests it will return to the channel and test the lows at point D.

The Optimism – Pessimism Index rallied. It continues in an overbought position relative to its upward trend channel. It has also established a negative divergence with the Wyckoff Wave when compared with point V.

The Force Index rallied slightly and is producing moderate negative readings. There is no mitigating impact on the overbought Technometer

On Monday, the Technometer will open in an overbought condition.

Today, the Wyckoff Wave continued to rally off yesterday’s low and the resistance, now support line drawn through the top of the trading range and points R and T.

So far, the rally has been of poor quality. It is not expected to make much more progress to the upside. This conclusion is supported by an overbought Technometer and the negative divergence with the O – P Index.

The short-term trend has been changed to down. This should have been changed yesterday when the Wyckoff Wave moved to definitively below point W. My apologies for the oversight.

While demand was being withdrawn, supply has been present during the reaction from point V. However, it does not appear strong enough to drive the Wyckoff Wave deep into the trading range.

Therefore, the scenario that has the reaction meeting good support between its present position and points U and S continues to have the highest probability of success.