Is Supply Drying Up?

Tuesday, September 13, 2016

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What To Do?

Short Term:
Short term bulls should look for new opportunities to the upside.
Short-term bears who hold positions to the downside should consider closing positions and taking profits.

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: Down
Short Term: Down
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on decreased volume. It closed in the lower half of a narrower price spread, In a clearly oversold 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 downside the Wyckoff Wave continued to react until it reached point Z. Some demand came into the market and the Wyckoff Wave rallied to point A.

Demand dried up and the Wyckoff Wave reacted on a lack of supply. It eventually reached point B, which was a successful test of the earlier low at point Z.

Wyckoff Wave put in a minor rally during the last 45 min. of the trading day.

There is an intra-day positive inharmonious action with the O-P Index when compared with point X.

The Wyckoff Wave reacted below yesterdays low at point X. This allows the drawing of a new intra-day down trend channel. The supply line is drawn through points W and Y. A parallel support line is drawn through point X.

Both today’s lack of supply and the inability of the Wyckoff Wave to react and test the support line of its new intra-day down trend channel are positive indications. They are supported by the intra-day positive inharmonious action with the O-P Index.

These suggest the Wyckoff Wave has an excellent opportunity to rally. There is a good probability that the Wyckoff Wave will rally, weaken its intra-day down trend channel and test the high at point W.

The Optimism – Pessimism Index reacted. It is in harmony with the Wyckoff Wave when compared with point E. It is in a positive inharmonious action with the Wave when compared with point D. The O-P Index remains in the upper portion of its upward trend channel.

Tomorrow, the Technometer will open in an oversold condition.

Today’s lack of supply and the inability of the Wyckoff Wave to test the support line of its short-term down trend channel and the support line drawn from point D, suggests the Wyckoff Wave is in a position to rally and return to the highs at point E.

This scenario is supported by an oversold Technometer and the positive inharmonious action with its O-P Index.

In addition, the Wyckoff Wave’s Technometer is more oversold than it was at point D. This is another positive indication that a rally should be expected.

Due to today’s relatively high volume level, the Wyckoff Wave may need to continue to react and dry up more supply, before attempting any rally.

Because the Wyckoff Wave has held above the support line drawn from point D, it has not been able to Spring that support. That means that, so far there has been no ending action. Therefore the Wyckoff Wave should continue to move sideways in the new phase of the trading range. The resistance’s at point E. The support at point D.

While the Wyckoff Wave may still need to react and dry up more supply, it is extremely doubtful it can move through the support of both the support line drawn from D and the support line of its short-term down trend channel.