No Changes from Thursday

Their are no short-term opportunities to the upside.

Today’s market action offers short-term bears another opportunity to take new positions to the downside.

Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Neutral

Short Term: Neutral.

Intermediate Term: Changed to Neutral

Long Term:  Neutral

The stock market, as measured by the Wyckoff Wave, experienced and intra-day failure to the downside. It closed, on increased volume, near the top of a wider price spread, in a neutral condition relative to the Technometer. The intra-day failure suggests the presence of demand.

A review of the intra-day waves confirms the above. After a wide gap opening to the downside, supply continued for the next 15 min. Then demand returned and was in control for the rest of the trading day..

The gap opening and subsequent supply allowed the Wyckoff Wave to react and test the low at point O. The test was successful and the Wyckoff Wave rallied. It is now in a position to test the intra-day highs at points P and J.

Today, for the first time in several days, demand came into the market.

Monday will be an important day. If the Wyckoff Wave is going to continue its rally, it will need to move past point P on wider price spread and higher volume than we saw today.

Based on this week’s lack of demand, that scenario has a relatively low probability of success. Look for the Wyckoff Wave to successfully test point P and react.

The Optimism – Pessimism Index rallied and remains in an overbought position relative to its upward trend channel. The short-term negative divergence with the Wyckoff Wave, when compared with point R, remains in place. The same is true for the longer term negative divergences with points D, B, Z and X.

The Force Index rallied slightly, but is still producing moderate negative readings.

On Monday, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave started to continue the reaction off point T. It encountered demand and instead, rallied to a strong close.. This gives the Wyckoff Wave another opportunity to test the recent highs at points T and R.

The Wyckoff Wave is performing in a similar manner as it did after the October rally to point V. It then moved sideways and then rallied to point X. This began a sideways movement that lasted for almost 2 months. Finally the Wyckoff Wave began to react after reached point D.

There are similarities between points V and P and the subsequent rallies to test the top of the trading range.

There is one major difference. The Wyckoff Wave broke its short-term upward trend channel on the rally to point R.

If a trend channel was drawn with support at points Q and U and a parallel supply line at point T, the Wyckoff Wave would’ve remained in that trend channel until after it began its reaction off point D. The trend channel was finally broken at point F.

The fact that the Wyckoff Wave is already broken its short-term uptrend channel suggests relative weakness. A logical next step would suggest the sideways movement will not be as long and the Wyckoff Wave will react back into the trading range.

This suggests that next week, the Wyckoff Wave will successfully test the top of the trading range and react.