No changes, stay short

Click Here For Wyckoff Wave Chart 01-05-2016

No changes from yesterday

Short Term:
Short term bears should maintain their positions.

There are no new short-term opportunities to the upside.

Intermediate & Long Term:
Intermediate and long-term bulls should maintain existing positions.

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

Market Trends:

Intra-day: Down.
Short Term: Up.
Intermediate Term: Down, but weakened and in a slightly overbought position.
Long Term: Neutral.

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed near the top of a slightly narrower price spread, in a high neutral 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 After a gap opening to the upside the Wyckoff Wave rallied to point K and reacted to point L. Demand was withdrawn. The supply that came into the market was present, but not particularly overpowering.

The Wyckoff Wave then rallied to point M. Good demand was present on the last intra-day wave that ended at point M.

However, it was not sustained and the Wave reacted. The reaction was more on a lack of demand then a lack of supply. Demand did return during the last 35 min. of the trading day. However, it did not make much progress to the upside compared to the high volume.

The Wyckoff Wave returned to its intra-day down trend channel. The relatively poor quality of the rally off point H and the early presence of some supply, suggest it will have a difficult time moving through the trend channel to the upside.

There is a good probability that the Wyckoff Wave will react and test the lows at points J and H.

The Optimism – Pessimism Index rallied. It is in negative divergences with the Wyckoff Wave when compared with points D, B, Z and X. The longer-term negative divergences also continue.

The Force Index rallied and is producing moderate positive readings.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave continued to rally after testing the lows at point C. Today’s lack of demand suggests the rally is already exhibiting poor quality.

Most striking is the tremendous effort shown by the O – P Index. It is at a higher level than any other point on the attached chart. That includes last May’s high at point F. As the Wyckoff Wave is 12% lower than it was last May, this is a significant negative divergence.

This negative divergence continues when the Wyckoff Wave is compared to the Force Index. Force Index is noticeably higher than that at points D, B, C and X. However the Wyckoff Wave still remains in the area of point C. Despite the strengthening Force Index, this is not a positive indication.

All this continues to suggest that while the Wyckoff Wave may continue to advance, that will not last long and the Wyckoff Wave should react and test the lows at points U and Q.

Charts of the Wyckoff Wave are attached.