Tomorrow Is A Critical Day

Thursday, October 20, 2016

What To Do?

Short Term:

If good supply comes into the market tomorrow and the Wyckoff Wave reacts through the Spring, short-term positions to the upside should be closed.

There are no short-term positions to the downside.

Intermediate & Long Term:

If good supply comes into the market and the Wyckoff Wave reacts through the Spring, new positions taken in anticipation of a Sign of Strength should be closed.

Older long-term positions to the upside should be maintained.

There are no intermediate or long term opportunities to the downside

Market Trends:

Intra-day: Changed to Neutral
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on very slightly increased volume. It closed in the lower half of a wider price spread, in an 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 while the first hour and 20 minutes of the trading day featured the presence of supply, Like yesterday, the long, slow afternoon reaction indicated a lack of supply.

After a gap opening to the downside, the Wyckoff Wave continued to react to point T. A poor quality rally followed and the Wyckoff Wave rallied to point U.

The Wyckoff Wave spent the rest of the trading day reacting on relatively narrow price spread and reduced volume.
The intra-day O-P Index shows a significant positive divergence with the Wyckoff Wave when compared with point J.

The Wyckoff Wave reacted through the intra-day up trend channel. The intra-day trend is changed to neutral.

Today’s reaction put the Wyckoff Wave in a position to test the low at point J. Point J marks the Spring and is the same as point O on the daily vertical line chart.

The afternoon’s lack of supply and the positive O-P Index divergence suggest the Wyckoff Wave will successfully test the low at point J and rally.

The Optimism – Pessimism Index reacted. It is now in a very slight positive divergence with the Wyckoff Wave, when compared with point D.

The Force Index reacted slightly and continues to produce moderate negative readings. There is a mitigating impact on the oversold Technometer.

Tomorrow, the Technometer will open in an oversold condition.

Today the Wyckoff Wave reacted and is attempting to put in a successful Secondary Test of the Spring at point O (point J on the intra-day line chart).

While it is still expected the test will be successful, it would have been more helpful if the price spread was narrower, then on Thursday and volume noticeably lower.

The remaining positive indicator is the oversold Technometer.

While this does put the Wyckoff Wave in a position to react through the Spring, or put in a poor quality Secondary Test, the oversold Technometer, plus the inability of supply to come into the market continues to suggest that the test will be successful.

Today’s market action was not particularly bullish. However, there have been periods of a lack of supply, especially during this week, as the Wyckoff Wave attempted to put in a successful test of the Spring. As mentioned yesterday, usually if a test is going to fail, strong supply appears early and the event happens quickly. That is not been the case. That is why the successful Secondary Test scenario continues to have the highest probability of success.

However, tomorrow will be a critical day. If supply comes into the market tomorrow morning, short-term positions to the upside should be closed.