New opportunity for shorts…

Short term bears who took positions to the downside should maintain them. Today’s poor quality rally provides another opportunity for new or additional positions to the downside.

There are no short-term opportunities to the upside.

Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Change from Up to Neutral

Short Term: Up.

Intermediate Term: Down and in an overbought position, relative to the trend.

Long Term:  Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed in the upper half of a narrower price spread, in a clearly overbought condition relative to the Technometer. The price spread and volume suggest a lack of demand.

A review of the intra-day waves confirms the above. After a wide gap opening to the upside, which accounted for 88% of the days total gain, demand was withdrawn and the Wyckoff Wave made little progress to the upside.

After the gap opening, the Wyckoff Wave rallied for 10 min. to point C. It also reached the support line of the intra-day up trend channel. There, supply came into the market and the Wyckoff Wave reacted briefly.

Then it made a second attempt to return to the up trend channel, on a rally to point D. This attempt was on reduced price spread and volume. It was also met with supply as it reached the uptrend channel’s support line.

Because point D is slightly higher than point C, the move to point D must be considered a poor quality secondary test. Even though the rally, to point D, was on reduced price spread and volume, at point C needs to be tested again.

The Wyckoff Wave reacted to point E and is attempting to put in a successful secondary test of point E. If that test a successful, the Wyckoff Wave is expected to react and test the lows at point B and probably point H.

The failure to return to the uptrend channel changes the intra-day trend from up to neutral.

The Optimism – Pessimism Index rallied slightly. It remains in an overbought position relative to its upward trend channel. The negative divergence with the Wyckoff Wave when compared with points D, B, Z and X remains in place.

The Force Index rallied and is producing low negative readings. There is no mitigating impact on the clearly overbought Technometer.

Tomorrow, the Technometer will open in a high neutral condition.

Today, the Wyckoff Wave attempted to rally off the short-term uptrend channel’s support line. The rally would be a test of Monday’s high at point P.

Today’s lack of demand, the overbought Technometer and the negative divergences with the O – P Index continue to suggest the Wyckoff Wave will have a difficult time moving past point P and testing the top of the trading range.

In addition to the above, there appears to be a fair amount of overhanging supply, as the Wyckoff Wave is having a difficult time moving through the sideways movement, at the top of the trading range, that began at point V.

Today’s market action does nothing to change the reaction back towards the bottom of the trading range scenario.