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Click Here For Wyckoff Wave Chart 02-08-2016

Short Term:
There are no opportunities to the downside

Aggressive short-term bulls should consider new opportunities to the upside. However, the minor Last Point of Support should be confirmed by a continued strong move to the upside on Tuesday morning. Less aggressive short-term bulls should wait for a second reaction which will dry up more supply.

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 a slightly overbought position
Short Term: Neutral
Intermediate Term: Down
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, experienced and intra-day failure to the downside. It closed, on increased volume, near the top of a wider price spread, in a nearly overbought condition relative to the Technometer. The intra-day failure suggests the presence of demand.

A review of the intra-day waves confirms the above. After a wide gap opening to the downside, supply continued, for the next 30 min., as the Wyckoff Wave reacted to point R.

There supply began to dry up and the Wyckoff Wave found support at point S. Then, it rallied to point T, where it once again ran into supply and reacted to point U. Supply dried up right after the low at point U.

Then, good demand came into the market and the Wyckoff Wave rallied for the last hour and 25 min. of the trading day.

It should be noted that the two intra-day waves, with the highest volume and good price spread, were up waves.

While in an oversold position relative to its intra-day down trend channel, the late afternoon rally moved the Wyckoff Wave into an overbought position relative to that channel.

This gives the Wyckoff Wave an opportunity to continue the rally and test the high at point K. If, tomorrow, the Wyckoff Wave moves quickly and strongly to the upside, it could move past point K. If any move to the upside is not particularly strong, there is a good chance the test will be successful.

The Optimism – Pessimism Index rallied and moved into an overbought position relative to its upward trend channel. It is in a negative divergence with the Wyckoff Wave when compared with points D, B, Z and X, that are located at the top of the trading range.

The Force Index rallied sharply. It is producing moderately positive readings. There would be a mitigating impact on an overbought Technometer.

Tomorrow, the Technometer will open in a nearly overbought condition.

Today, the Wyckoff Wave reacted and is found support at the resistance, now support, line drawn from point J. It should be noted that due to the wide gap opening to the downside, the reaction from today’s opening to that support area was on reduced price spread and volume.

This suggests that a majority of the days strong volume was a demand.

It is possible that the Wyckoff Wave put in a Last Point of Support during the early part of the trading day and begin its rally off that support in the afternoon.

That scenario is supported by the strong Force Index readings.

The concern is the nearly overbought Technometer. It is preferable to see a Technometer in an oversold or low neutral condition during a Last Point of Support. This scenario would suggest, that the Wyckoff Wave still needs to dry up more supply, before it can rally back towards the top of the trading range.

That scenario is supported by the negative divergences from the O – P Index.

Aggressive short-term bulls should consider new positions to the upside. However, they should be watched carefully, especially if a strong move to the upside does not happen on Tuesday morning.

Less aggressive short-term bulls should wait for a second reaction and the drying up of supply.

Charts of the Wyckoff Wave are attached.