Can’t Rally Without Demand

Thursday, August 18, 2016

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What To Do?

No changes from yesterday

Short Term:
There are no short-term opportunities to the upside.
Aggressive short-term bears should maintain their positions. Short-term traders need to decide if they want to ride out any rally, or close their positions and reenter the market if the test of point F it is successful.

Intermediate & Long Term:
Their are no intermediate or long term opportunities to the upside.
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: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed in the upper half of a narrower price spread, in a neutral 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 small gap opening to the upside, the Wyckoff Wave continued its advance to the high for the day at point F. The intra-day rally was on relatively narrow price spread and low volume.

Then, the Wave spent the next two hours and 20 min. in a slow reaction to point G. Like before, the reaction was on light volume and the Wyckoff Wave only lost 167 points. This suggested a lack of supply.

Finally, the Wyckoff Wave spent the rest of the trading day in another long slow rally that suggested a lack of demand.

The Wyckoff Wave has returned to its intra-day up trend channel and is making a mild effort to test that channel’s supply line.

Despite today’s poor performance, the rally off point B is expected to continue. So far the Wyckoff Wave has put in two consecutive intra-day higher tops and lower bottoms.

While there is a mild intra-day negative divergence with the Wyckoff Wave when compared with point F, a minor rally tomorrow would eliminate that divergence.

Based on today’s market action, unless much stronger demand comes into the market, the Wyckoff Wave will have a difficult time rallying all the way to the high at point U.

It will be helpful to see if it is able to weaken the intra-day down trend channel.

The Optimism – Pessimism Index rallied. The rally placed it in a negative divergence with the Wyckoff Wave when compared with point E. It remains in its upward trend channel.

The Force Index also rallied.

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

Today the Wyckoff Wave put in another uninspired bit of market action. It continues to move sideways from the initial support at point G.

While the Wyckoff Wave is expected to continue to rally and test the area of point F, the lack of demand suggests a more moderate rally and continuation of the sideways move.