No changes from Monday

Short term bears who took positions to the downside should maintain them. New positions can also be considered. The weakening of the short-term uptrend channel is another sign of weakness.

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.

Short Term: Up, but weakened.

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 lower on very slightly decreased volume. It closed at the top of a wider price spread, in an 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 fairly wide gap opening to the downside, supply remained as the Wyckoff Wave reacted to point G. This encompassed the first 35 min. of the trading day.

Then, the Wyckoff Wave spent the rest of the trading day in another poor quality rally.

While good demand appeared on the first intra-day wave following point G, it was not sustained. While the Wyckoff Wave continued to rally, it was on reduced price spread and volume.

The last wave of the trading day was the strongest to the upside. However, although it lasted for 60 min. on rather high volume, the Wave only gained 120 points. This would suggest some supply is coming into the market.

The Wyckoff Wave was unable to reach yesterdays high at point F. That, and today’s poor quality rally, continues to suggest a reaction continues to have the strongest probability of success.

The Optimism – Pessimism Index rallied. It remains in an overbought position relative to its upward trend channel. It is in a very short-term negative divergence, with the Wyckoff Wave, when compared with point P. The O – P Index’s longer-term negative divergence, with the Wave, when compared with points, B, Z and X also remains in place.

The Force Index reacted slightly, and is still producing low negative readings. There is a very slight mitigating impact on the overbought Technometer.

Tomorrow, the Technometer will open in an overbought condition.

Today, the Wyckoff Wave made an initial effort to react. Unfortunately, for the bears, the reaction was primarily on the gap opening and there was very little follow-through.

The good news, for the bears, was that, while the Wyckoff Wave rallied for the rest of the trading day, the rally was of poor quality.

Today’s reaction also weakened the short term uptrend channel and put the Wyckoff Wave in an oversold position relative to that channel. This continues to show relative weakness and support the reaction scenario. However, due to the lack of good supply and the inability of the Wyckoff Wave to react past last Thursday’s low the reaction scenario cannot yet be confirmed.

It is still supported by the overbought Technometer and the negative divergences between the Wyckoff Wave and the O – P Index.

While the Wyckoff Wave continues to move sideways, there are no indications that demand is prepared to move the Wave back into the short-term uptrend channel.