An Intra-day Fall Through The Ice

Thursday, July 21, 2016

Click here to open the attached chart

What To Do?

New Opportunities To The Downside

Short Term:
There are no short-term opportunities to the upside.
Aggressive short-term bears can consider new opportunities to the downside. This is especially true if the Wyckoff Wave puts in a small, lack of demand rally tomorrow. This would confirm the intra-day Last Point of Supply.

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: Neutral
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 gap opening to the downside and a brief follow-through to point S, the Wyckoff Wave rallied to point T. This all happened within the first 30 min. of the trading day.

The Wyckoff Wave spent the rest of the day reacting down to point U. The reaction was on good price spread and volume and, most importantly, broke through the support line at the bottom of the intra-day trading range.

The Wyckoff Wave did attempt to rally during the last hour of the trading day. However, the Wave made little progress on high volume. This continues to suggest the presence of supply.

This suggests the move from point T to at least point U is an intra-day sign of weakness.

The rally off point U could well be the beginning of a rally to an intra-day Last Point of Supply. This would be an opportunity to take new short-term positions to the downside.

The Optimism – Pessimism Index reacted slightly. It continues to test the supply line of its upward trend channel. The O – P Index remains in harmony with the Wyckoff Wave.

The Force Index reacted and continues to produce positive readings.

Tomorrow, the Technometer will open in a neutral condition.

Today, as supply came into the market, the Wyckoff Wave appears to be ending its “roll over” and is starting to react back towards the top of the trading range (line drawn from point C).

While this is a good place for aggressive bears to take short-term positions, it will be extremely important to watch the quality of the reaction. While the Wyckoff Wave may rally briefly tomorrow, as it attempts to put in that intra-day Last Point of Supply, it will be important to watch the quality of any subsequent reaction.

If price spread and volume decrease, that would increase the probability that the Wyckoff Wave will hold above the resistance line drawn from point C. If the Wyckoff Wave continues to react on wider price spread and increased volume, there is a good probability it will react back into the trading range and even test the lows at point D.