Is Supply Drying Up?

Tuesday, October 24, 2016

What To Do?

No changes from yesterday

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 Down to Neutral
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

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

A review of the intra-day waves indicates today was a lack of supply day.

After a very slight gap opening to the downside, demand came into the market and the Wyckoff Wave rallied strongly to point Z. There, supply returned and the Wyckoff Wave reacted for the rest of the trading day.

The intra-day O-P Index is in harmony with the Wyckoff Wave.

Today’s market action was similar to yesterdays. However, supply was noticeably weaker.

The Wyckoff Wave was unable to return to its intra-day down trend channel. This changes the intra-day trend from down to neutral.

The Wyckoff Wave also held above yesterdays low at point Y and, more importantly, Friday’s low at point V. This continues to suggest the Wyckoff Wave will make little additional progress to the downside and is prepared to rally off the support found at both points Y and V.

The Optimism – Pessimism Index rallied. It is in harmony with the Wyckoff Wave when compared with point K. Yesterday’s observation was incorrect. My apologies for the error.
The O-P Index is in a positive divergence with the Wyckoff Wave when compared with point D.

The Force Index rallied, but continues to produce moderate negative readings. There is a mitigating impact with the oversold Technometer.

Tomorrow, the Technometer will open in an oversold condition.

Today, for the second consecutive day, the Wyckoff Wave tested Friday’s low. So far these tests have been successful. This continues to suggest the Wyckoff Wave is slowly drying up supply and is getting ready to rally back towards the top of the trading range at point E.

This scenario is supported by the O – P Index’s positive divergence and the oversold Technometer.

More importantly, both Mondays and Tuesday’s intra-day reaction were on relatively reduced price spread and volume. This suggests a drying up of supply. If the Wyckoff Wave is going to react strongly through the support, it probably would’ve done so in done so on wide price spread and good volume.