Looking Like A Successful Secondary Test

Monday, October 17, 2016

What To Do?

Short Term:

Short term bulls, who entered the market, should maintain their positions.
As it appears the Wyckoff Wave is putting in a successful Secondary Test, new positions to the upside can be taken.
There are no short-term positions to the downside.

Intermediate & Long Term:

As it appears the Wyckoff Wave is putting in a successful Secondary Test, new positions to the upside can be taken
Long-term positions to the upside should be maintained.

There are no intermediate or long term opportunities to the downside

Market Trends:

Intra-day: Neutral
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

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

A review of the intra-day waves confirms the above. After a small gap opening to the downside, supply remained and the Wyckoff Wave continued to react to point N. Some demand returned and the Wyckoff Wave put in a poor quality rally to point N. Then, the Wave reacted for the last four hours and five min. of the trading day. The reaction was on a lack of supply.

The intra-day Optimism – Pessimism Index is in a negative positive divergence with the Wyckoff Wave, when compared to point J. The O – P Index continues to make an effort to the downside, but the price is not matching that effort. This suggests an overall drying up of supply.

Look for the Wyckoff Wave to hold above point J and begin to rally.

The Optimism – Pessimism Index rallied slightly. It remains in a short-term positive divergence with the Wyckoff Wave when compared with point K. The longer-term positive inharmonious action with point D continues.

The Force Index reacted slightly and continues to produce moderately negative readings. There is a mitigating impact on the oversold Technometer.

Tomorrow, the Technometer will open in an oversold condition.

Today, the Wyckoff Wave reacted on reduced price spread and volume. It appears that it is putting in a successful secondary test of the spring at point O.

This scenario continues to be supported by the positive readings from the O-P Index and the oversold Technometer.

The one negative is the moderately negative Force Index and the mitigating impact it may have on the Technometer’s oversold condition.

However, that should not prevent the Wyckoff Wave from putting in a successful secondary test and beginning to rally back towards the top of the trading range. If that happens, as expected, it will be important to watch the amount of demand that comes back into the market. The next logical step is a Sign of Strength.