A Day of Selling

Thursday, August 10, 2017
What To Do?
Short Term
This market is very split so we are holding longs and shorts.  Short-term bears should stay short stocks with relative weakness, and bulls should stay long relative strength.
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: Up
The stock market, as measured by the Wyckoff Wave opened lower, and spent the rest of the day with waves of selling coming in.  Volume was higher today on the selloff.
The O-P traded lower today.
The Force Index traded lower as well.
The Technometer finished the day nearing oversold levels.
The S&P 500 was down 1.45% with the Nasdaq down 2.13%.
 


A review of the intra-day waves shows the Wave stair stepping lower with the O-P doing the same.
The O-P continues to lead to the downside.  It has been much weaker than the Wyckoff Wave over the last few weeks and left behind a considerable divergence.
The Force Index has also lagged price.
On Friday, the Technometer will open near an oversold condition.
 

 
The Wyckoff Wave appears to still be working on a backup to the creek.  The Technometer is nearing oversold so we need to be prepared for this scenario.   Lets see how we trade tomorrow and how volume reacts.
The negative aspect of recent action is the lack of rallying to the overbought line of the uptrend marked below.  We stopped in the middle of the trend and have turned down.  The next couple of weeks will be crucial.
 

 
We have been speaking of the split market by discussing the Wyckoff Wave Growth Index (WWG).  We had expected this index to work to the support line of the uptrend which we did quickly today.  The Technometer here is neutral and it appears that we could break the uptrend support line.  We see more downside in the days ahead here.
 

 
The TLT has rallied in a “risk off” trade.  We think that once this runs its course this market could turn down once again.  We are partially short and looking to go full position short.
 

Good Trading,
Todd Butterfield