Reaction In Progress

Wednesday, January 11, 2017
What To Do?
Short Term
Short-term bears should hold short positions and lower stops to Tuesdays high as marked on the intra-day chart.
Short-term bulls should be looking for long candidates and be prepared to act.
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: Down
Short Term: Down
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave traded both sides of unchanged early, then sold off the remainder of the day before rallying slightly into the close.  Volume was at the same level as Tuesday.
The Wyckoff Wave closed slightly lower today, and the price spread and volume showed a little supply on the market.
The Technometer is back to a neutral reading at the close.
The Nasdaq and S&P 500 were both slightly higher today.


A review of the intra-day waves shows the Wave trading both sides of unchanged early, then following thru the level we had marked as important for the bulls.  From there we continued the selloff, before rallying slightly into the close.
The Optimism-Pessimism Index closed basically unchanged today.
The Force Index closed slightly lower again today and continuing to exert downside pressure.  A reading of -234 will have a mitigating effect on the Technometer.
On Thursday, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave closed slightly lower on average volume.  We still feel there is more downside coming in the immediate days ahead.
We do not want to see a rally above yesterdays highs, and we would like to see the Wave fall further back into the trading range from here.  We have tried to stay short, but it has been a tiring process.
As we mentioned a week ago, the alternative scenario is that we are backing up to the previous highs for a Last Point of Support.  For all the reasons we have mentioned over the last few weeks, we see this as a very low probability.  If the Wyckoff Wave can continue higher then that would be a bullish scenario, and we would discuss in more detail.
As we have been continuing to acknowledge, the rally from “S” to “Z” did not have the volume and price spread we was expecting from a Jump Across The Creek, but appeared more as a test of the upper limits of the trading range.  Lets see if we can fall back into the trading range here as expected.
 

Good Trading,
Todd Butterfield