Looks Like A Spring

Thursday, October 13, 2016

What To Do?

Short Term:
Short term bulls, who entered the market, should maintain their positions.
New positions can be taken on the Spring.
There are no short-term 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.
New positions to the upside can be taken on a successful Spring.

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 and intra-day failure to the downside. It closed, on increased volume, in the upper quarter of a wider price spread, in a slightly oversold condition relative to the Technometer. The intra-day failure suggests the presence of demand.

A review of the intra-day waves confirms the above. After a gap opening to the downside, the Wyckoff Wave continued to react to point J. There, demand came into the market and the Wyckoff Wave spent the next five hours and 10 min. rallying to point K. While a positive indication, the demand was not overpowering.

Supply returned and the Wyckoff Wave spent last 15 minutes of the trading day in a relatively shallow, 81 point reaction. The relatively narrow reaction, coupled with increased volume, suggest some demand was still present.

The Wyckoff Wave encountered this resistance in the area of points G and I. This was relatively mild resistance and suggests that while the Wyckoff Wave may react briefly, it should continue its move to the upside.

The Optimism – Pessimism Index rallied slightly. It is in a very slight short-term positive divergence with the Wyckoff Wave, when compared with point K. It is in a longer-term positive divergence with the Wave when compared with point D.

The Force Index rallied, but is still producing moderate negative readings. There continues to be a mitigating impact on the slightly oversold Technometer.

Tomorrow, the Technometer will open in a slightly oversold condition.

Today, the Wyckoff Wave appears to have Sprung the support line drawn from point D. This was one of the prevailing scenarios.

The relatively mild penetration of the support, coupled with relatively low volume suggests this may be a #3 Spring.

One concern is that while demand was certainly present, it was not dominant. It will be helpful if the Wyckoff Wave rallies strongly on Friday. That would confirm the spring scenario.

Another concern is the negative Force Index reading. Unless the Force Index rallies, it will be difficult for the Wyckoff Wave to rally strongly back to the top of the trading range. This means there may be some consolidation during a test of the Spring.

While these concerns should be monitored, the Wyckoff Wave is now expected to rally back to the top of the trading range and test the high at point E.

It will also be important to look at the expected rally as a potential Sign of Strength.