Demand Returns

Wednesday, September 21, 2016

Click here to open the attached charts

What To Do?

Short Term:
Short term bulls, who entered the market, should maintain their positions.
There are no short-term positions to the downside.

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: Changed to Up
Short Term: Down, but weakened and in an overbought condition.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on increased volume. It closed near the top of a wider price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest the presence of demand.

A review of the intra-day waves confirms the above. After a gap opening to the upside in the Wyckoff Wave put in a 30 min. follow through to point V. There, demand was withdrawn and the Wyckoff Wave began a long slow reaction to point W. The reaction was on a lack of supply.

With supply finally withdrawn, demand returned, and the Wyckoff Wave put in a strong rally for the rest of the trading day.

Today’s market action changes the intra-day trend from neutral to up.

The rally from point W allowed the Wyckoff Wave to Jump the Creek and suggests the rally off point W was a Sign of Strength. If the Wyckoff Wave successfully backs up to the resistance at the top of the trading range (Creek), this allows the drawing of a new intra-day up trend channel.

The apparent Sign of Strength indicates the Wyckoff Wave is prepared to make a more substantive move to the upside. This is dependent on a successful Last Point of Support (LPS). If the Wyckoff Wave puts in a successful LPS, there will be a new opportunity for short-term positions to the upside.

The Optimism – Pessimism Index rallied. While slightly diminished, it is still in a positive inharmonious action with the Wyckoff Wave when compared with point D.

Tomorrow, the Technometer will open in a high neutral condition.

Today, the Wyckoff Wave appears to be beginning a nice rally off the support line drawn from point D. If demand continues, as expected, the Wyckoff Wave has the potential to rally and test the high at point E.

As this rally begins, it will be helpful to watch the intra-day chart, as the intra-day Sign of Strength and, if successful, Last Point of Support will provide an early indication that the rally will continue.

It will also be important to watch the O-P Index as the Wyckoff Wave moves into the area of point J and H.

Regardless, the Wyckoff Wave appears to finally dried up and supply and is prepared to make a nice move to the upside.