Last Point of Support, or Successful Test

Click Here For Wyckoff Wave Chart 02-09-2016

Short Term:
There are no opportunities to the downside

Aggressive short-term bulls should continue to identify new opportunities to the upside. Positions can be taken either on a successful Last Point of Support, described below, or a successful test of the support line drawn from point J. The timing key is when the Technometer reading becomes oversold.

Intermediate & Long Term:
Intermediate and long-term bulls should maintain existing positions.

There are no intermediate or long term opportunities to the downside.

Market Trends:

Intra-day: Down, but weakened and in an overbought position
Short Term: Neutral
Intermediate Term: Down
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, experienced an intra-day failure to the upside. It closed, on sustained, but relatively increased volume, in the middle of a wider price spread, in a neutral condition relative to the Technometer. The intra-day failure suggests the presence of some supply.

A review of the intra-day waves indicates that the day was a standoff between supply and demand.

After a wide gap opening to the downside to point W, the Wyckoff Wave made a poor quality rally to point X. Each time the Wave attempted to rally, demand dried up. The Wyckoff Wave then reacted to point Y on relatively narrow price spread and volume.
That suggested a lack of supply.

Then, demand returned as the Wyckoff Wave rallied to point Z. While this was the best up move of the day, notice the reduced price spread prior to point Z. This suggests supply was coming into the market.

That’s what happened as the Wyckoff Wave reacted off point Z to its close.

The Wyckoff Wave successfully tested point K . The supply that came into the market at point Z suggests the Wyckoff Wave will return to its intra-day down trend channel.

The Optimism – Pessimism Index reacted and is at the supply line of its upward trend channel. It remains in a negative divergence with the resistance levels at the top of the trading range.

Force Index reacted and is producing low negative readings.

Tomorrow, the Technometer will open in a neutral condition.

Today the Wyckoff Wave reacted, tested the resistance, now support, line drawn from point J and rallied. The initial reaction was on the gap opening. The rally tested last Thursday’s high.

This eliminated the scenario that called yesterday a Last Point of Support. As there was a gap opening to the downside, followed by a poor quality rally, new short-term position, to the upside, were not available.

However, the Last Point of Support scenario has not been eliminated from consideration. Today’s relatively high volume suggests supply is still present and needs to be dried up.

The fact that, once again, the Wyckoff Wave encountered support, as it reacted back to the top of the mini trading range, continues to be a positive indication.

The Technometer has moved into a neutral condition. If the Wyckoff Wave can react on narrow price spread and lower volume and hold above the support line, the Last Point of Support scenario still has a possibility of success.

If that doesn’t happen, the Wyckoff Wave can react back into the trading range and test the support line drawn from point G.

There continues to be an extremely low probability of success that the Wyckoff Wave will react through that support and into new low ground.

New positions should be available to the upside in the near future. It’s now a matter of timing. It appears the Technometer will be an important Wyckoff indicator. If it is able to move into an oversold condition, there should be good opportunities to the upside.

Charts of the Wyckoff Wave are attached.