Continue to hold short positions….

Monday, December 5, 2016
What To Do?
Short Term:
Short-term bears should hold all short positions for the continued reaction.
Short-term bulls stand aside.
Intermediate & Long Term:
Intermediate and long term positions to the upside should be maintained.
There are no intermediate or long term opportunities to the downside.
Market Trends:
Intra-day: Neutral
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave, opened once again higher on the day and rallied for the first 40 minutes.  This rally took the Wyckoff Wave to a new intra-day high for the recent rally, while the O-P lagged considerably.  This was a negative divergence on the intra-day chart. The Wyckoff Wave then spent the rest of the day in a slow correction to close negative on the day.
The Wyckoff Wave closed slightly lower on the day, in a neutral condition relative to the Technometer.  The price spread and volume suggest a lack of supply for the day.
The Nasdaq and S&P 500 were higher today correcting some of their recent losses.

A review of the intra-day waves confirms the above.  After the higher opening, the Wave reacted back to the lows of the day near the close.
The Intra-day Optimism-Pessimism Index was in a negative divergence with the Wyckoff Wave as the Wave made a new high this morning.  This is a negative divergence with price hitting a new high, with volume not supporting it.
The Optimism-Pessimism Index closed slightly lower today, and appears to be rolling over as well.
The Force Index closed lower as well and showing moderate negative readings.  The Force Index appears to be breaking to lower levels from the recent sideways action.  You can see this on the trendline we show in Blue.
On Tuesday, the Technometer will open in a neutral condition once again.

 
Today, the Wyckoff Wave opened higher, touched a new high for the move, then reacted the rest of the trading day.  It is still  trying to begin a more important correction to the most recent poor quality advance from point “U” to “V”.  The lack of demand, over the last two weeks, diminishes the Sign of Strength within the trading range scenario.  Today’s action continues to make the Wyckoff Wave vulnerable to further correction.
This suggests the Wyckoff Wave will continue to react back towards the bottom of the minor trading range.
The reduced probability of a successful Sign of Strength also indicates the Wyckoff Wave will not experience a Last Point of Support on the reaction.  This suggests the Wave is expected to react back to the bottom of the trading range and test the previous support at point “U”, and the more important lows at point “S” in a normal correction.
The negative divergence with the O-P Index and the neutral Technometer still supports this scenario.  This weeks action suggest that it will be difficult for the Wyckoff Wave to move past the resistance at the top of the trading range.

Good Trading,
Todd Butterfield