A Friday Surprise

Friday, July 8, 2016

Click here to open the attached charts

What To Do?

Short Term:
Their are no short-term opportunities to the upside.

Aggressive short-term bears should have closed their positions. Due to the neutral Technometer, new positions to the downside should not be considered at this time.

Intermediate & Long Term:
Their are no intermediate or long term opportunities to the upside.

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

Market Trends:

Intra-day: Neutral
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed in the upper quarter of a wider price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest a lack of supply.

A review of the intra-day waves confirms the above. After a wide gap opening to the upside, the Wyckoff Wave rallied until the last hour and 10 min. of the trading day. While the rally was steady, demand was not particularly strong and a lack of supply provided the impetus for today’s market action.

The late supply came into the market as the Wyckoff Wave reached the top of the trading range. That top is marked by the black horizontal line on the intra-day chart.

In addition, despite the days strong advance, the Wyckoff Wave was unable to return to its intra-day up trend channel. All this continues to suggest it will be difficult for the Wyckoff Wave to continue its rally and will react back into the range to test the lows at points V, T and probably point G.

The Optimism – Pessimism Index rallied and is now in harmony with the Wyckoff Wave. It remains in the upper portion of its upward trend channel.

The Force Index rallied and is producing strong positive readings. This suggests a lack of pressure on the market, but it cannot be confirmed due to the neutral Technometer.

On Monday, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave surprised and put in a nice move to the upside. What appeared to be a successful test of the highs at points A and C, is now, at best, a poor quality test.

If the Wyckoff Wave was going to rally strongly through the resistance at the top of the trading range, it normally would’ve done so on wide price spread and good volume. That would indicate the presence of strong demand. While the price spread was certainly wide, the relatively low volume suggests strong demand was not present. This makes the Wyckoff Wave vulnerable to react back into the trading range.

Poor quality tests need to be confirmed. This would suggest that will react and then rally to test today’s high.

This scenario is supported by the relatively low volume on the rally off point D.

While it is certainly possible that demand can come in to the market on Monday and move the Wyckoff Wave into new high ground, that scenario has a lower probability of success.