Expecting Further Decline

Friday, February 3, 2017
What To Do?
Short Term
Short-term bears should hold original short positions and keep stops as previously directed.  Be prepared to add to shorts as Technometer reaches overbought once again on this rally.
Short-term bulls should stand aside.
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: Neutral
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave opened higher today, and then spent the rest of the day trading sideways.  Volume was unchanged from yesterday.  The price spread and volume gave no major clues once again today.
The Technometer is close to an overbought reading.
The Nasdaq and S&P 500 were both up over .5% today.

A review of the intra-day waves shows the Wave opening slightly higher and then net sideways the rest of the trading day.
The Optimism-Pessimism Index closed slightly higher today after touching another new recovery high early today.  The Wyckoff Wave is lagging the rally in the O-P.
The Force Index closed slightly lower today.  The Force index is at -134 and applying slight downside pressure.
On Monday, the Technometer will open in an overbought reading.  This combined with the O-P divergence and the continuing negative Force reading, we should continue to see a decline in the Wyckoff Wave from these levels.

The last few weeks, the Wave has been slowly working lower from the resistance at the top of the trading range.   Volume has been lackluster and volatility low.  We would expect this to change, and for the reaction to continue to the downside and pickup speed.
Our indicators have become friendly for the bond market, so possibly we will begin a stock market correction while the bond market rallies in sympathy.

Good Trading,
Todd Butterfield