New Positions to Downside

Their are no short-term opportunities to the upside.

Short-term traders should consider new positions to the downside. If positions have already been taken, they should be maintained.

Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Up, but weakened and in an oversold position relative to the trend..

Short Term: Down and in an overbought position relative to the trend

Intermediate Term: Neutral

Long Term:  Neutral

The stock market, as measured by the Wyckoff Wave, experienced an intra-day failure to the upside. It closed, on decreased volume, near the bottom of a narrower price spread, in a clearly overbought condition relative to the Technometer. The intra-day failure suggests a lack of demand.

A review of the intra-day waves confirms the above. After a small gap opening to the upside, demand continued and the Wyckoff Wave rallied to point J. There, demand was withdrawn and the Wyckoff Wave reacted for the rest of the trading day.

While some supply was present, it was relatively modest. Today’s reaction was also helped by a lack of demand. When some demand did return, late in the trading day, it was immediately met by supply.

The Wyckoff Wave is now in an oversold position relative to its upward trend channel. While the Wyckoff Wave reached the channels supply line at point H, it was unable to do so at point J. The inability of demand to be sustained, opened the door to the reaction.

While the Wyckoff Wave will probably continue to react, any rally should be watched carefully to see if the Wyckoff Wave can return to its intra-day up trend channel. A failed attempt would, most probably, indicate a change in the trend.

One way or the other, it will be difficult for the Wyckoff Wave to continue its advance and it is expected to react back towards the lows at points F and D.

The Optimism – Pessimism Index rallied slightly and remains in an overbought position relative to its upward trend channel. It is in a negative divergence with the Wyckoff Wave when compared to both points X and V.

The Force Index rallied and is producing low negative readings. There is a slight mitigating impact on the clearly overbought Technometer.

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

Today, the Wyckoff Wave attempted to continue the rally off point Z and test the high at point X. The attempt failed as demand was withdrawn.

The Wyckoff Wave did not meet supply as much as it ran out of demand. While this could give the Wave an opportunity to rally tomorrow, it continues to be difficult to forecast the Wyckoff Wave rallying past point X.

The Technometer remains in an overbought condition. While the strengthening Force Index may have an impact on any reaction, it will be difficult for the Wait to continue to rally as long as the Technometer is overbought.

The Optimism – Pessimism Index has rallied into new high ground, but the Wyckoff Wave has made little progress to the upside. This negative divergence indicates that although a great deal of effort has gone into trying to move the Wyckoff Wave to the upside, the results have been dismal, at best. This also supports the reaction scenario.

The Wyckoff Wave is vulnerable to react and return to the short-term down trend channel and, at least, test the lows at point Z. It will be important to watch the amount of supply present if the Wyckoff Wave returns to its short-term down trend channel. Not only will this be seen in price spread and volume, but also the ability of the Wave to test the channels support line.