Market lower on decreased volume

Click Here For Wyckoff Wave Chart 01-11-2016

Short Term:
Short term bears should maintain their positions. However, if today’s late demand persists and the Wyckoff Wave begins to rally, position should be closed and profits taken.

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

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

A review of the intra-day waves confirms the above. After a gap opening to the upside, the Wyckoff Wave put in a long slow reaction which ended at point U. Late in the trading day, some demand came into the market and the Wyckoff Wave rallied back into the intra-day down trend channel to point V.

Today’s long reaction suggests supply is drying up. This is more significant than the late demand that came into the market.

Today’s late demand gives the Wyckoff Wave chance to continue this intra-day rally and test the supply line of the intra-day downtrend channel.

If the demand dries up and the Wyckoff Wave is unable to reach the down trend channels supply line, it will indicate there is more room to the downside.

The Optimism – Pessimism Index reacted slightly. It is attempting to reenter its upward trend channel. The O – P Index is in a short-term positive divergence with the Wyckoff Wave when compared with points C, A and Y. The longer-term negative divergences remain in place.

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

Tomorrow, the Technometer will open in an oversold condition.

Today, as supply began to dry up, the Wyckoff Wave was unable to make much additional progress to the downside. It is encountering support in the area of the intermediate-term down trend channels support line. It is interesting how, when these trend channels are extended, they have a tendency to come back into play.

While strong demand needs to come in to the market and confirm this support area, the oversold Technometer and the short-term positive divergence is with the O – P Index suggest the reaction off point D may be near its bottom.

Unless strong supply comes into the market, or there is a poor quality rally to the upside, short term positions should be watched closely. If strong demand comes into the market, they should be closed.

Today’s market action suggests it is doubtful the Wyckoff Wave can react through point U. It has reacted enough to put in a reasonable support area that can help define the bottom of the trading range.

Charts of the Wyckoff Wave are attached.