Bears maintain positions, Bulls identify candidates to the upside

Click Here For Wyckoff Wave Chart 01-13-2016

Short Term:
Because good demand did not come into the market, short-term bears should continue to maintain their positions. However, we are near the bottom of the reaction and Wyckoff traders should be prepared to cover shorts.

Demand did not come into the market. Therefore there were no opportunities to the upside. However they should be available in the near future. Short term bulls should identify candidates 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.
Short Term: Neutral
Intermediate Term: Down, but weakened and in an oversold position.
Long Term: Neutral.

The stock market, as measured by the Wyckoff Wave, traded lower on increased volume. It closed at the bottom of a wider price spread, in a clearly oversold condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves confirms the above. After a gap opening to the upside and a brief, 10 min., follow-through, supply continued and the Wyckoff Wave reacted for the rest of the trading day..

The reaction from point X to point Y was on good price spread and volume. This indicated the presence of good supply. Point Y was reached at 1:50 PM.

While the Wyckoff Wave continued to react for the remainder of the trading day, supply was gradually being withdrawn.

Despite the wide gap opening and follow-through, the Wyckoff Wave was unable to move through the supply line of its intra-day down trend channel. However, at both point W and today’s low, the Wyckoff Wave has been unable to reach the channels support line.

While it could do that tomorrow, the gradual withdrawal of supply suggests the Wyckoff Wave may attempt to rally and, once again, test the channel’s supply line.

The Optimism – Pessimism Index reacted. The short-term positive divergences with points C, A and Y continue. The O – P Index has also returned to its upward trend channel.

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

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

Today, despite its gap opening to the upside, demand did not come into the market and the Wyckoff Wave reacted. However, the strength of the supply coming into the market was reduced during the last part of the trading day.

The Technometer’s oversold condition and the positive divergences with the O – P Index continue to suggest the Wyckoff Wave will successfully test the low at point U.

The only negative is the weak Force Index. This could have an impact on any rally, but it is difficult for the Wyckoff Wave to react in the face of an oversold Technometer.

Nothing in today’s market action changes the reaction to establish a support point in the trading range scenario. The only question is, where will it be? As the Wyckoff Wave is approaching point U, there isn’t much more room to the downside.

Charts of the Wyckoff Wave are attached.