Short-term bears should begin to identify candidates to the downside

Click Here For Wyckoff Wave Chart 06-03-2016

Short Term:

Their are no short-term opportunities to the upside.

Short-term bears should begin to identify candidates to the downside. Positions can be taken if the two scenarios discussed in this letter play out.

Intermediate & Long Term:

Intermediate and long-term bulls should maintain existing positions. However, this is a good place to close trades that have reached objectives and eliminate any underperforming positions. Cash should be held in preparation for ending action and a move to the upside.

There are no intermediate or long term opportunities to the downside.

Market Trends:

Intra-day: Changed to Up

Short Term: Changed to Neutral

Intermediate Term: Neutral

Long Term: Neutral

The stock market, as measured by the Wyckoff Wave traded higher on increased volume. It closed near the top of a narrower price spread, in an extremely oversold condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves indicates that today was a demand day. After a small gap opening to the downside and a brief 5 min. rally, the Wyckoff Wave reacted to point S.

The reaction was on reducing price spread and volume. This suggests supply was drying up.

At point S, demand came into the market and the Wyckoff Wave rallied to point T. Then it reacted to point U.

Some demand returned and the Wyckoff Wave continued to rally for the rest of the trading day.

The intra-day wave, off point U, marked #1 appears to have good price spread and volume. However, the intra-day wave lasted 1 hour and 20 min. This suggests demand was weakening.

It also should be noted that at point T and at the high for the trading day the Wyckoff Wave was unable to reach the supply line of the new intra-day up trend channel. These failed attempts are marked by a red down arrow. This also suggests the weakening of demand.

These failed attempts put the new trend in jeopardy. This would suggest the Wyckoff Wave will react and weaken the new short-term uptrend channel.

The Optimism – Pessimism Index rallied and remains in an overbought position relative to its upward trend channel. The negative divergence with the Wyckoff Wave, when compared with point V, remains in place.

The Force Index rallied and is producing moderate negative readings. There is a significant mitigating impact on the extremely overbought Technometer.

On Monday, the Technometer will open in a clearly overbought condition.

Today the Wyckoff Wave continued yesterday’s rally. It is now in a position to test the high at point V. Today’s market action changes the short-term trend to neutral.

The extremely overbought Technometer and the O-P Index’s negative divergence with the Wyckoff Wave, continue to suggest the test will be successful and the Wyckoff Wave will react.

Again, it should be noted that the strong Force Index has a mitigating impact on the extremely overbought Technometer. This will, most probably, shorten any reaction in both time and distance.

It is expected that the Wyckoff Wave will react. This reaction should begin somewhere between today’s high and the high at point V.

One scenario would have the Wyckoff Wave reacting and weakening the intra-day up trend channel. Then, a poor quality rally, back to the channel’s support line, would confirm the breaking of the channel. This may be a good place to take new positions to the downside.

The Wyckoff Wave could also continue to rally. If it does that, positions to the downside can be taken as the Wyckoff Wave tests the high at point V.