Finding Support

Monday, October 24, 2016

What To Do?

Short Term:
Short-term bulls should continue to maintain their positions. There are also new short-term opportunities to the upside.

There are no short-term positions to the downside.

Intermediate & Long Term:

Older 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 from neutral to Down
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded slightly lower on relatively high, but decreased volume. It closed in the lower half of a wider price spread, in a slightly oversold condition relative to the Technometer. The price spread and volume suggest a lack of demand.

A review of the intra-day waves indicates that after a brief morning rally, today was a lack of supply day.

After a slight gap opening to the upside demand came into the market and the Wyckoff Wave quickly rallied to point W. After a brief reaction, the Wave attempted to continue its rally. However, demand dried up at point X and the Wyckoff Wave began a long reaction on decreasing price spread and volume. The long intra-day reaction suggested a drying up of supply.

During the last 40 min. of the trading day, the Wyckoff Wave attempted to rally. Volume increased, but price spread remain narrow. This suggests supply is still present.

The intra-day Optimism – Pessimism Index is in a positive divergence with the Wyckoff Wave when compared with point V.

The intra-day trend is changed from neutral to down. A new trend channel has been drawn in red.

On the reaction off point X the Wyckoff Wave was unable to make much progress to the downside. As noted by the red arrow, the Wave was unable to react past point V and the supply line of its new intra-day down trend channel. This is a positive indication.

That, along with the reducing price spread and volume on the intra-day reaction and the positive intra-day O-P Index divergence, suggests the Wyckoff Wave has an opportunity to weaken the new intra-day trend channel.

While the Wyckoff Wave may test the low at point D tomorrow, there is a good probability the test will be successful and the Wyckoff Wave will rally.

The Optimism – Pessimism Index rallied slightly. It has returned to a short-term positive inharmonious action with the Wyckoff Wave, when compared with point K. Is also back in a positive divergence with the Wyckoff Wave when compared with point D.

The Force Index rallied slightly and continues to produce moderately negative readings. There is a mitigating impact on the slightly oversold Technometer.

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

Today, the Wyckoff Wave attempted to rally, but encountered supply and reacted for much of the trading day. As mentioned above the reaction was on moderate supply, shown by reducing price spread and lower volume.

This, plus the positive relationship with its O-P Index, suggests the Wyckoff Wave will successfully test and rally off of Friday’s low.

Today’s lack of sustained demand also suggests that points O and Friday’s low will become new support areas in this phase of the trading range that began at point D.