News and the Wyckoff Wave

Wednesday, November 9, 2016

What To Do?

Short Term:
Short-term bulls should continue to maintain their positions. Stops can be moved to protect early profits
.
There are no short-term positions to the downside.

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: Changed from Neutral to Up and in an overbought position.
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

There is an old Wyckoff axiom that says “news doesn’t make the market move in a particular direction, it just gets it there faster”.

That happened today as the stock market, as measured by the Wyckoff Wave, bolstered by the news of Donald Trump’s election, traded substantially higher on high volume. It closed in the upper quarter of a wider price spread, in an overbought condition relative to the Technometer. The price spread and volume suggest the presence of demand.

A review of the intra-day waves confirms the above. After a small gap opening to the downside, strong demand came into the market and the Wyckoff Wave rallied to point X. Then, it reacted, on a lack of supply, to point Y.

Demand returned at point Y and the Wyckoff Wave began a long, slow four hour and twenty-five minute rally to point Z. As the rally progressed price spread and volume decreased. This suggested demand was weakening and the Wyckoff Wave was becoming vulnerable to the reappearance of supply.

Some supply did return and the Wyckoff Wave put in a mild reaction during the last one hundred minutes of the trading day.

Today’s strong rally moved the Wyckoff Wave back into its intra-day up trend channel. It is now in an overbought position relative to the channel.

The Wyckoff Wave put in an intra-day Sign of Strength on the move from point S to point V. Point W is a Last Point of Support.

While the Wyckoff Wave will probably put in a minor rally and return to its intra-day up trend channel, the overall outlook is bullish.

The Optimism – Pessimism Index rallied sharply. It is in a negative divergence with the Wyckoff Wave when compared with point N.

The Force Index also rallied, and is producing moderate negative readings.

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

Today, the Wyckoff Wave rallied strongly on election news. Enough demand came into the market so that it is no longer necessary to react and take in more supply.

Today’s market action gives the Wyckoff Wave an opportunity to continue its rally and test the highs at point E and the resistance at the top of this long trading range.

However, this will probably not be a straight line rally. The O-P Index is already in a negative divergence, mentioned above. The Technometer has moved into an overbought condition. Finally, the Force Index is still producing moderate negative readings. This suggests some overhanging supply is still present and ready to come into the market.

The signals from these Wyckoff indicators do not suggest a reaction is imminent. It does suggest this rally will be more gradual and have a few temporary setbacks before reaching the top of the trading range and, quite possibly, beyond.

It is expected that one of these minor reactions will allow for the establishment of a short-term uptrend channel.