Intra-day Last Point Of Support In Jeopardy

Friday, October 28, 2016

What To Do?

Short Term:
Short-term bulls should continue to maintain their positions.
There are no short-term positions to the downside.

Intermediate & Long Term:

Intermediate and 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 to Down
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 narrower price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest the presence of demand.

A review of the intra-day waves indicates that while demand was present, today was driven by supply.

After a gap opening to the upside, supply came into the market and the Wyckoff Wave reacted to point G. The relatively wide price spread and good volume, on the reaction, was another indication that supply was present.

The Wyckoff Wave made another attempt to rally, but the move to point H was on a relative lack of demand.

Supply returned and the Wyckoff Wave reacted to point I. This reaction took the Wyckoff Wave back into the intra-day creek. That put the intra-day Last Point of Support scenario in jeopardy.

Demand returned and the Wyckoff Wave rallied to point J. It is now in the process of reacting back to test the low at point I.

If this test is successful and the Wyckoff Wave rallies, the Last Point of Support scenario would remain in place. However, any reaction needs to be on reduced price spread and volume. In addition, the subsequent rally must, at least, weaken the new intra-day down trend channel.

The Optimism – Pessimism Index rallied slightly. It is in a positive inharmonious action with the Wyckoff Wave when compared with points K and D.

The Force Index rallied, but is still producing moderate negative readings.

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

Today the Wyckoff Wave was unable to continue its advance off the support line drawn from point D.

Although, on Thursday, supply appeared to be drying up on the intra-day line chart, today additional supply came into the market. Unless the supply dries up, as discussed in the above intra-day analysis, the Wyckoff Wave will most probably return to the support line.

If supply does dry up, the Wyckoff Wave will be able to continue its rally back towards the top of the trading range.

Even if the Wyckoff Wave reacts back to the support line, there are indications that strongly suggest it will, once again, encounter support.

These are the positive relationship between the Wyckoff Wave and its O-P Index and the inability for strong and, most importantly, sustained supply to come into the market.

While it might take a bit longer than expected, the rally back to the top of the trading range scenario continues to have the highest probability of success.