Looking for new upside opportunities

Short Term:

There are no opportunities to the downside

Short-term bulls should continue to consider new opportunities to the upside. However, they should wait for a reaction and successful test of the lows before new positions can be taken.

Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Down

Short Term: Down

Intermediate Term: Down, but weakened and in an oversold position.

Long Term:  Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on increased volume. It closed at the top of a narrower price spread, in a slightly overbought condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves indicates that today was more of a demand driven day. However, the demand was confined to three intra-day waves; the first, the 13th and the last wave of the trading day.

Aside from that the Wyckoff Waves made little progress, compared to the relatively high volume. This indicates supply was present.

After a wide gap opening to the upside and a nice 25 min. follow-through, to point A. Then, demand was withdrawn and the Wyckoff Wave reacted and moved sideways to point B. Then the Wave attempted to continue to rally, but made little progress until the last wave of the day. That wave lasted 60 min. and was on good price spread and extremely high volume.

Despite the presence of some supply, today’s rally changed the intra-day trend to up. The new trend channels are drawn in blue.

Today’s market action gives the Wyckoff Wave an opportunity to test the highs at points M and E. If the supply continues, there is a good probability the test will be successful and the Wyckoff Wave will react.

The Optimism – Pessimism Index rallied and remains in its upward trend channel. It is in a very short-term negative divergence with the Wyckoff Wave when compared with point H.

The Force Index rallied and is producing moderate negative readings.

On Monday, the Technometer will open in a clearly overbought condition.

Today, the Wyckoff Wave rallied and is testing last Friday’s high at point H. It also weakened the short term down trend channel.

These events add credence to the scenario that there will be a successful test of point G or point Q.

The Technometer’s overbought condition suggests the test is not completed and the Wyckoff Wave could react after testing either point H or the support line of the intermediate-term downtrend channel.

The overbought Technometer will also make it difficult for the Wyckoff Wave to continue to rally.

Wednesdays and Thursdays price spread and volume were relatively wide and high. The lows for the day held above point G. In addition, the volume was lower than on the reaction to point G. While this does not indicate a successful secondary test, it is another positive indication.

The O – P Index is in a short-term negative divergence with the Wyckoff Wave, Since a minor rally will eliminate that divergence, it would be difficult to include the divergence in the day’s market analysis.

All this suggests the Wyckoff Wave may continue to rally, but will not gain much ground. It could then react and test the lows at point G and Q. If the test is successful, the Wyckoff Wave has an opportunity to rally back towards the top of the trading range.