Another Day Of Aggressive Selling

Thursday, August 17, 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.  If we break hard tomorrow long positions should be closed out.
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 sharply lower, and had major selling come in all day.  Volume was higher again today on the selloff.
The O-P traded lower today.
The Force Index traded lower as well.
The Technometer finished the day at near oversold levels.
The S&P 500 was down 1.54% with the Nasdaq down 1.94%.
 


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.
On Friday, the Technometer will open near an oversold condition.
 

 
The Wyckoff Wave appeared to be working on a low volume pullback last few weeks, but that scenario is getting tested tomorrow.  Volume has increased on this selloff so we might fall back into the creek.  But the Technometer is nearing oversold which works against the Wyckoff Wave collapsing here.  Tomorrow will be an important day heading into the weekend.
The negative aspect of recent action is the lack of rallying to the overbought line of the intermediate uptrend marked below.  We stopped in the middle of the trend and have turned down.  The next week 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 once again did quickly today.  The Technometer here is moving to oversold but it appears that we could break the uptrend support line on this selloff.  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.  The Technometer is extreme overbought at a 58 level.
 

Good Trading,
Todd Butterfield