Bears are short and holding positions

Click Here For Wyckoff Wave Chart 01-04-2016

Short Term:
Short term bears should maintain their positions.

There are no new short-term opportunities to the upside.

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: Down and in an oversold position
Short Term: Up, but weakened and in an oversold position.
Intermediate Term: Down, but weakened and in a very slightly overbought position.
Long Term: Neutral.

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

A review of the intra-day waves confirms the above. After a wide gap opening to the downside, supply continued and the Wyckoff Wave reacted to point H.

It then put in a poor quality rally to point I and reacted to point J. So far, after the gap opening, the Wave had basically moved sideways.

Then, during the last 35 min. of the trading day, good demand came into the market and the Wyckoff Wave rallied to its strong close.

The Wyckoff Wave is in a significant oversold position relative to its intra-day down trend channel. Today’s late demand suggests the Wave may make an effort to return to that channel.

It also held slightly above the earlier lows at point Q and O.

Today’s late demand may be in reaction to the gap opening to the downside. The Wyckoff Wave may return to its intra-day down trend channel. However, unless there is strong follow-through to the upside tomorrow, there is a good possibility it will again react and test the lows at point Q and O.

The Optimism – Pessimism Index rallied. To the downside, it is in a short-term positive inharmonious action with the Wyckoff Wave when compared with points C, A and Y.

There is also a short-term negative divergence with the Wyckoff Wave when compared with point D.

The intermediate-term negative divergences remain in place.

The Force Index rallied and is producing low negative readings. There is a slight mitigating impact on the overbought Technometer.

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

Today, the Wyckoff Wave reacted on good volume. However, much of the reaction was on the gap opening, predicated by news from China. As mentioned above, today’s late demand may have been in reaction to the gap opening.

Regardless, the Wyckoff Wave is expected to have more room to the downside. This is supported by an overbought Technometer.

The Fact That the OP Index is producing both positive and negative divergences with the Wyckoff Wave, can be a bit confusing. The important fact is that the O – P Index continues to put in a strong effort to the upside, without seeing commensurate results from the Wyckoff Wave. Overall, this is a negative indication.

The Wyckoff Wave has moved into an oversold position relative to its upward trend channel. It should also be noted that at points C, B and D it was unable to reach the channel’s supply line.

The scenario that has the Wyckoff Wave continuing to react and testing the lows in the vicinity of points U and Q, continues to have the highest probability of success.

Charts of the Wyckoff Wave are attached.