More Selling to Come?

Thursday, January 19, 2017
What To Do?
Short Term
Short-term bears should hold short positions and keep stops on first short positions as marked on the intra-day chart.  On any new short positions taken yesterday use a stop at today’s high which is also marked on the chart.
Short-term bulls should stand aside.
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: Down
Short Term: Down
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave opened higher today, and then proceeded to react the rest of the day and closed near the lows.  Volume was slightly lower today, as I’m sure traders/investors are nervous coming into tomorrows inauguration.
The Wyckoff Wave closed basically unchanged today, and the price spread and volume gave no new clues.
The Technometer came off of the overbought reading which we used as a sell signal, and now registering 47.33.
The Nasdaq and S&P 500 were both lower today.


A review of the intra-day waves shows the Wave gapped higher and made the highs of the day, then came off those highs to close unchanged.  The O-P did not follow this mornings gap higher, and traded slightly lower for the day.   The O-P broke the short term uptrend of the last few days, and appears to want to work lower.   These indications should allow for futher downside in the days ahead for the Wyckoff Wave.
The Optimism-Pessimism Index closed lower today.
The Force Index closed lower today as well.
On Friday, the Technometer will open just off an overbought reading.

Today, the Wyckoff Wave closed unchanged on slightly lower volume.   The last few days it has held below the recent top of the trading range and appears to want to react further.   The O-P divergence and the overbought Technometer argues that the Wyckoff Wave will see still lower prices from here.
The alternative scenario is that we are backing up to the previous highs for a Last Point of Support.  For all the reasons we have mentioned over the last few weeks, we see this as a very low probability.  If the Wyckoff Wave can continue higher with an increase in volume, then that would be a bullish scenario and we would discuss in more detail.  With yesterday’s divergence and overbought Technometer, this alternative is losing favor.
As we have been continuing to acknowledge, the rally from “S” to “Z” did not have the volume and price spread we was expecting from a Jump Across The Creek, but appeared more as a test of the upper limits of the trading range.  Lets see if we can fall further back into the trading range here as expected.
 

Good Trading,
Todd Butterfield