Aggressive bears take positions

Click Here For Wyckoff Wave Chart 04-28-2016

Short Term:

Their are no short-term opportunities to the upside.

Aggressive short-term bears who took a position today should maintain it, but watch for drying up of supply.

Intermediate & Long Term:

Intermediate and long-term bulls should maintain existing positions.

There are no intermediate or long term opportunities to the downside.

Market Trends:

Intra-day: Up, but weakened and in an oversold position.

Short Term: Neutral.

Intermediate Term: Neutral

Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, experienced and intra-day failure to the upside. It closed, on increased volume, in the lower quarter of a wider price spread, in a nearly overbought condition relative to the Technometer. The intra-day failure suggests the presence of supply.

A review of the intra-day waves confirms the above. After a gap opening to the downside and a 30 min. follow-through, on good supply to point N, the Wyckoff Wave rallied.

The move to point O began slowly, featured one strong intra-day up wave and petered out at point O, as demand was withdrawn. Once again, the Wyckoff Wave was unable to reach the supply line of the intra-day up trend channel.

The reaction off point O featured strong supply as the Wyckoff Wave reacted to and through the channel’s support line. This was the first appearance of strong supply and several days and suggests the Wyckoff Wave is finally ready to put in a definitive reaction.

While some late demand returned during the last 5 min. of the trading day, it appears the Wyckoff Wave will continue to react and, at least, test the lows at point F.

The Optimism – Pessimism Index reacted, but still remains in an overbought position relative to its upward trend channel. The negative inharmonious actions with points D, B, Z and X remain in place.

The Force Index reacted and is now producing low negative readings. There is still a mitigating impact on the Technometer.

Tomorrow, the Technometer will open in a slightly overbought condition.

Today, the Wyckoff Wave began to rally and finally encountered the expected overhanging supply. While this is encouraging, for those expecting a reaction, so far the supply has not been sustained. The Wyckoff Wave most follow-through to the downside on good price spread and volume to confirm supply is taking over the market.

If the reaction continues, it will be important to pay attention to the Force Index. The positive and low negative readings of the past few days suggests any reaction will be relatively shallow. This would put the Wyckoff Wave in a position to encounter some support as it reacts back to the top of the trading range.

If that happens, this would create a couple of new scenarios.

The first is that the rally from point M could have actually been a Sign of Strength. A successful reaction to the top of the trading range could then be construed as a Last Point of Support.

The second is a continued sideways movement at a higher level. This would simply add another phase to the trading range. It would also not require the Wyckoff Wave to react back below 35,000 to and the trading range with a Spring.

Of course, the Wyckoff Wave can continue to react and retreat all the way back to the bottom of the trading.

Preliminarily, the second option may have the highest probability of success.