With the exception of the intra-day trend change, there are no changes from yesterday

Click Here For Wyckoff Wave Chart 05-03-2016

Short Term:

Their are no short-term opportunities to the upside.

Aggressive short-term bears should maintain their positions and continue to look for opportunities to the downside. Market action should be watched carefully, as the reaction may not be particularly strong or deep.

Intermediate & Long Term:

Intermediate and long-term bulls should maintain existing positions.

There are no intermediate or long term opportunities to the downside.

Market Trends:

Intra-day: Changed to Down..

Short Term: Neutral.

Intermediate Term: Neutral

Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on increased volume. It closed in the lower half of a wider price spread, in a low 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. After a wide gap opening to the downside, supply continued and the Wyckoff Wave reacted to point V. There, some demand returned but was being withdrawn as the Wyckoff Wave rallied to point W.

This appeared to be an intra-day normal corrective rally. However, there was an intra-day change in character from point W to the end of the trading day.

The reaction from point W was on relatively reduced price spread and volume, which suggested a drying up of supply. Volume increased during the last three intra-day waves of the trading day, as demand and supply fought to a standstill.

Today’s market action changes the intra-day trend to down. A new trend channel has been drawn in red. So far, the Wyckoff Wave has stayed within the trend channel.

The drying up of supply from point W suggests the Wyckoff Wave may attempt to rally tomorrow and test the new trend channel’s supply line. There is a good probability that test will be successful and the Wyckoff Wave will continue to react.

The Optimism – Pessimism Index reacted, but remains in an overbought position relative to its upward trend channel. The negative divergences with points D, B, Z and X, when compared with the Wyckoff Wave, remain in place.

The Force Index reacted and is producing moderate negative readings.

Tomorrow, the Technometer will open in an oversold condition.

Today, the Wyckoff Wave continued to react off last week’s high at point V. While today’s reaction was on increased volume, the moderate volume level suggests strong supply was not present. That observation was confirmed today as supply began to dry up during the afternoon hours.

The Technometer is moving quickly towards an oversold condition. This is also happening as the Wyckoff Wave is approaching its first support area at the top of the trading range (line drawn through points R and T).

It is not unusual for the Technometer to move into an oversold condition a few days before the market turns. However, it does suggest the reaction off point V will not be particularly deep.

The Wyckoff Wave could also put in a brief rally and test the high at point V.

As mentioned last week, it will be important to watch the relationship of the Wyckoff Wave with its O-P Index. It would be a positive divergence is established when compared with point U and a Technometer remains in an oversold condition.

For now, the Wyckoff Wave is reacting and position to the downside should be maintained.