The Dull Market Continues

Wednesday, August 10, 2016

Click here to open the attached charts

What To Do?

Short Term:
There are no short-term opportunities to the upside.
Aggressive short-term bears should maintain their positions. However, they should be closed if strong demand returns.

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, but continues in an extremely oversold position.
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on slightly increased volume. It closed in the lower half of a slightly wider price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves confirms the above. However, while supply was present and was sustained, it was not particularly strong.

After a tiny gap opening to the upside, the Wyckoff Wave put in a poor quality 35 min. rally to point Z. Demand was withdrawn and supply returned. With only one intra-day up wave, the Wyckoff Wave reacted to point A. Then it moved sideways for the rest of the trading day. Some demand did return during the last 20 min. of trading.

While supply was certainly present, it was not dominant. This is consistent with the overall character of the reaction following the wide gap opening to point V. Since then, the Wyckoff Wave has made little progress to the downside.

The O – P Index has moved into an intra-day positive divergence with the Wave. This, coupled with the lack of progress to the downside, give the Wyckoff Wave another opportunity to rally and at least return to its intra-day.

However, for that to happen, good demand, which has been noticeably absent, must return to the market. If that doesn’t happen, the Wyckoff Wave will continue to drift to the downside.

The Optimism – Pessimism Index reacted and continues to test the supply line of its upward trend channel. It remains in harmony with the Wyckoff Wave. Intra-day, the O – P Index is in a positive divergence with the Wyckoff Wave when compared with point V.

The Force Index reacted slightly and is producing positive readings.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave continued its reaction off point E. While it did put in a new rally low, supply was not particularly strong. This continues to give the Wyckoff Wave an opportunity to rally and test the resistance line drawn from point C.

Usually gap openings are filled by a subsequent rally or reaction. Friday’s gap opening remains unfilled.

As mentioned above, this will not happen until some demand returned to the market. While some demand did return later in the trading day, this is not an uncommon occurrence and for the Wyckoff Wave to rally we would need to see more demand earlier in the trading day.

Until then, short-term positions to the downside should be maintained. If strong demand comes into the market they should be closed as new opportunities could well be present at the end of any minor rally.