A Lack Of Demand Rally

Wednesday, November 23, 2016

What To Do?

No changes from Tuesday

Short Term:

Short-term bulls should continue to maintain their positions. The expected minor reaction would create a difficult risk/reward ratio for any new positions to the downside. Short-term short positions are not recommended.

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 Neutral
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

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

A review of the intra-day waves confirms the above. After a slight gap opening to the downside, the Wyckoff Wave rallied to point U. Then it moved sideways, with a slight upward bias, for the rest of the trading day.

While some demand was present on the initial rally, supply came into the market at point U. The Wyckoff Wave then attempted to rally and spent the day in a long slow upward movement on relatively narrow price spread and volume.

The intra-day O-P Index is in a negative inharmonious action with the Wyckoff Wave. After the rally to point U, the O-P Index was noticeably stronger then the Wyckoff Wave. This suggests that although there was an effort to advance the Wyckoff Wave, it was unsuccessful.

Today’s lack of demand did not allow the Wyckoff Wave to return to the intra-day up trend channel. It appears the channel was broken on the rally to point U. The intra-day trend is changed from up to neutral.

This lack of demand rally and the inability to return to its intra-day up trend channel, continues to suggest the Wyckoff Wave will react and test the lows at points P and Q

The Optimism – Pessimism Index rallied slightly. It is in a slight negative divergence with the Wyckoff Wave when compared with point E.

The Force Index reacted and is producing moderate negative readings.

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

Today, for the second straight day, the Wyckoff Wave rallied above the high at point T. Although the rally was on a lack of demand, it still gives the Wave an opportunity to continue towards the resistance at the top of this latest phase of the trading range.

While today’s rally was on a lack of demand, the “market surprise” is that despite ample opportunity, supply has not come into the market.

However, the lack of demand makes it difficult to see a scenario where the Wyckoff Wave would continue to rally strongly to the upside.

In addition, the markets are relatively dull during Thanksgiving week. Friday is a shortened trading day and if supply does return, it will probably do so next week.

If the Wyckoff Wave continues to rally, it will be helpful to watch the Technometer to see if it moves into an overbought condition. This could assist in timing the expected reaction.