Resistance At Top Of Trading Range

Wednesday, December 7, 2016
What To Do?
Short Term
Short-term bears if you have not been stopped out of shorts, keep stops at recent highs and remain short.  Otherwise stand aside, but identify possible shorts and be prepared to enter shorts again if we find resistance at top of trading range as expected.
Short-term bulls stand aside.
ProTraders are still short AAPL, ORCL, and Long GDX.  Late today we entered new short in QQQ.
Intermediate & Long Term:
Intermediate and long term positions to the upside should be maintained.
There are no intermediate or long term opportunities to the downside.
Market Trends:
Intra-day: Up
Short Term: Up
Intermediate Term: Neutral
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave, opened slightly lower in the opening minutes,  then spent the rest of the day rallying steadily on a slight increase in volume from the previous day, but still below average for the last months rally.  Today’s rally turns the Intra-day and Short Term trends back to up.
The Wyckoff Wave closed higher on the day, in a near overbought condition relative to the Technometer.  The price spread and volume suggest demand was present today.
The Nasdaq and S&P 500 were higher as well.  The stock market is very fragmented as the Nasdaq is still trading below its high of last week, while the Wyckoff Wave, S&P 500 are at new highs.

A review of the intra-day waves confirms the above.  After the slightly lower opening, the Wave spent the rest of the day rallying strongly to close near the days highs.  Volume was slightly higher today, and showed demand on the rally.
The Intra-day Optimism-Pessimism Index supported today’s rally by rallying to a new high as well.
The Optimism-Pessimism Index closed higher today.
The Force Index closed higher as well and still showing moderate negative readings.
On Thursday, the Technometer will open in an overbought condition.

Today, the Wyckoff Wave opened lower, then experienced a strong persistent rally the rest of the trading day.  The reaction we have been expecting over the last week has failed to materialize.  Todays rally was persistent but volume was not strong enough to support the Sign of Strength.  We feel that the top of the trading range will prove resistance for this rally.  We continue to feel the Wyckoff Wave is vulnerable to a more important correction.
This suggests the Wyckoff Wave will react back towards the middle/bottom of the minor trading range.
The reduced probability of a successful Sign of Strength also indicates the Wyckoff Wave will not experience a Last Point of Support on the reaction.  This suggests the Wave is expected to react back to the bottom of the trading range and test the previous support at point “U”, and the more important lows at point “S” in a normal correction.
This weeks action suggest that it will still be difficult for the Wyckoff Wave to move past the resistance at the top of the trading range.   The near overbought Technometer still supports this scenario.

Good Trading,
Todd Butterfield