A Possible Spring

Tuesday, August 16, 2016

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What To Do?

Short Term:
There are no short-term opportunities to the upside.
Aggressive short-term bears should maintain their positions. However, they should be closed if a Spring is confirmed. Short-term traders need to decide if they want to ride out any rally, or close their positions and reenter the market if the test of point F it is successful.

Intermediate & Long Term:
Their are no intermediate or long term opportunities to the upside.
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: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on increased volume. It closed in the lower half of a narrower price spread, in an oversold condition relative to the Technometer. The price spread and volume suggest the presence of demand.

A review of the intra-day waves indicates moderate supply was present. After a fairly wide gap opening to the downside, supply remained and the Wyckoff Wave reacted to point E. Then it put in a long, poor quality rally to point F. The reaction to point G tested the morning low at point E. Then, the Wyckoff Wave put in another poor quality rally to point H.

During the last 55 min. of the trading day, the Wyckoff Wave began to react. Then, during the last 15 min., relatively strong supply came into the market. The Wyckoff Wave reacted sharply and moved slightly below the support line drawn from point X, A, C, E and G.

If supply continues on Wednesday, the Wyckoff Wave may be in a position to Spring the support and a rally. However, for this to happen, strong demand needs to return. Demand has been week or nonexistence through much of the sideways move.

The relatively low price spread and volume during this recent sideways movement suggests the Wyckoff Wave will not go through an intra-day Sign of Weakness. The intra-day Optimism – Pessimism Index is in a positive inharmonious action with the Wyckoff Wave, when compared with all the points along the support line mentioned above.

This suggests the Wyckoff Wave will either Spring the intra-day trading range or continue to move sideways.

The Optimism – Pessimism Index reacted, but, on an intermediate and long-term level, continues to be in harmony with the Wyckoff Wave. It remains in the upper portion of its upward trend channel.

The Force Index rallied slightly.

Tomorrow, the Technometer will open in a low neutral condition.

Today, the Wyckoff Wave closed slightly below the sideways movement that began at point G. As mentioned above, this puts it in a position where it could, if it continues to react and strong demand returns, put in a Spring.

It is also possible the Wyckoff Wave could simply rally off the bottom and put in a normal corrective rally to test the support in the area of point F.

The oversold Technometer and a lack of strong supply during this sideways movement, should make it difficult for the Wyckoff Wave to react back into the trading range without a testing rally.