Be prepared to buy with successful test…

Click Here For Wyckoff Wave Chart 01-22-2016

Short Term:

There are no opportunities to the downside

While Short-term bulls could continue to consider new opportunities to the upside, it might be best to wait for a successful test of the trading range lows.

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: Changed to Neutral

Short Term: Down

Intermediate Term: Down, but weakened and in an oversold position.

Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on slightly decreased volume. It closed in the upper half of a narrower price spread, in a slightly oversold condition relative to the Technometer. The price spread and volume suggest a lack of demand.

A review of the intra-day waves confirms the above. After a wide gap opening to point M, which was the high for the trading day, the Wyckoff Wave encountered supply and reacted to point N. There the supply dried up and the Wyckoff Wave spent the afternoon in a poor quality rally.

The inability of the Wyckoff Wave to put in a strong rally, continues to suggest it may react next week and test the lows at point H.

Despite the poor quality rally off the low at point H, the Wyckoff Wave has noticeably weakened the down trend channel. The series of higher tops and higher bottoms changed the intra-day trend to neutral.

The Optimism – Pessimism Index rallied slightly and remains in its upward trend channel. The positive divergence with the Wyckoff Wave, when compared with point U, as been eliminated.

The Force Index rallied, but is still producing high negative readings. There is a mitigating impact on the slightly oversold Technometer.

On Monday, the Technometer will open in a slightly oversold condition.

Today, the Wyckoff Wave continued to rally off Wednesday’s low at point G. It has returned to its short-term down trend channel and briefly tested its supply line.

While the Wyckoff Wave has bounced off this week’s low, it appears it will have a difficult time putting in a substantial move to the upside.

So far there little demand is coming into the market. That is most probably a reflection of the Force Index’s high negative readings. Even though the Technometer a slightly oversold, the Force Index’s mitigating impact on any rally appears to be stifling any attempt to the upside.

This suggests the Wyckoff Wave will react next week and test the new low at point G and possibly the August Selling Climax at point Q.

In the fairly near future, one of two scenarios will most likely play out.

1. The Wyckoff Wave will successfully test point G and rally back towards the top of the trading range. This appears to have the highest probability of success.

2. The Wyckoff Wave will Spring the entire trading range and experience ending action. If the Wyckoff Wave does Spring the trading range and is still in its short-term down trend channel, one should remember the old adage “beware of Springs in a down trend”.

The Spring of the low at point U scenario has been eliminated. The Sign of Weakness scenario continues to have a low probability of success.

Charts of the Wyckoff Wave are attached.