Correction has started??

Todd Butterfield Market Opinion-Free 0 Comments

Monday, November 28, 2016

What To Do?

Short Term:

Short-term bulls should have liquidated their positions as supply was present today.

Short-term bears should continue to identify candidates to the downside.  Short positions should have been taken today for the expected reaction.  We implemented a couple of short positions on our ProTraders update today at 11:23 am CST.

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: Changed to Neutral
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on  on increased volume.  We have shown today’s wave action with the vertical blue line.  Everything to the right is today’s market action.  It closed near the lows of the days, in a high neutral condition relative to the Technometer.  The price spread and volume suggest an increase in supply.

ww-intraday-2-11-28-16

A review of the intra-day waves confirms the above.  After a slight gap opening to the downside, supply continued for the first two hours of trading.  Then we tried to rally on low volume for the rest of the day.  Near the close we had another slight attempt to rally with volume coming in, but price was subdued indicating supply was present.

The intra-day O-P Index is in relative harmony with the Wyckoff Wave.

The Wyckoff Wave’s poor quality rally from point “1-2” finally appears to have ended on a short-term basis.  The Technometer’s overbought condition brought the advance to an end, and we solidly broke the short term uptrend today on an increase in volume.  The intra-day trend is changed back to neutral.

The Optimism – Pessimism Index reacted slightly on the day as well.

The Force Index also reacted and is producing moderate negative readings.  Should continue to pressure the Wyckoff Wave lower in the days ahead.

On Tuesday, the Technometer will open in a high neutral condition.

ww-daily-11-28-16

 

Today, the Wyckoff Wave began to correct the most recent poor quality advance from point “U” to “V”.  The lack of demand, over the last several trading days, diminishes the Sign of Strength within the trading range scenario.  Today’s weakness, which we expected, continues to make the Wyckoff Wave vulnerable to further correction.

This suggests the Wyckoff Wave will react back towards the bottom of the trading range.

The reduced probability of a successful Sign of Strength also indicates the Wyckoff Wave will not experience a Lack 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 low at point “S”.

The negative divergence with the O-P Index and the overbought Technometer supported this scenario.  Today’s action suggest that it will be difficult for the Wyckoff Wave to move past the resistance at the top of the trading range.

ww-longer-term-11-28-16

Good Trading,

Todd Butterfield

Leave a Reply

Your email address will not be published. Required fields are marked *