No Follow Through To The Upside

Thursday, September 29, 2016

What To Do?

Short Term:
Short term bulls, who entered the market, should maintain their positions. Today’s reaction provides another opportunity to take new positions to the upside. However, if strong supply comes into the market early in the trading day, all long position should be closed.
There are no short-term positions to the downside.

Intermediate & Long Term:
Their are no intermediate or long term opportunities to the upside.
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 to Neutral
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, experienced and intra-day failure to the upside. It closed, on slightly increased volume, in the lower quarter of a wider price spread, in a neutral condition relative to the Technometer. The intra-day failure suggests the presence of supply.

A review of the intra-day waves confirms the above. After a small gap opening to the downside, some demand appeared and the Wyckoff Wave rallied to point F. There it encountered supply and reacted to point G. The subsequent rally was unable to reach the point F high. This made the Wyckoff Wave vulnerable to react. The reaction took the Wyckoff Wave all the way down to point I, which is back in the area of the resistance, now support, line at the top of the intra-day trading range.

The Wyckoff Wave rallied off the support to point J. However, the rally only lasted 45 min. and was on relatively low volume. Once again, this opened the door for supply to commander the market and the Wyckoff Wave reacted for the rest of the trading day.

Today’s supply suggests the Wyckoff Wave will again test the resistance, now support, line drawn in green.

There is a positive inharmonious action with the intra-day O-P Index between today’s close and point I and also between point I and point E. This suggests there was not a great deal of effort in the reaction to point I. That could mean the Wyckoff Wave could successfully test the lows at points C and A and, once again, attempt to rally.

However, if strong supply comes into the market early in the trading day, the Wyckoff Wave should react through the top of the intra-day trading range. If that happens, positions to the upside should be closed.

The Optimism – Pessimism Index reacted slightly. It continues in a positive inharmonious action, with the Wyckoff Wave, when compared to point D.

The Force Index also reacted and is producing moderately negative readings.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave briefly continued yesterday’s rally. Unfortunately, for the Bulls, once again the Wave ran into supply and reacted. It is now in a position to test the support at point M.

Today’s wide price spread, relatively high volume and weeak close suggests there will be some follow-through to the downside. The intra-day analysis indicated that the Wyckoff Wave was testing the top of the intra-day trading range. That resistance, now support line is not shown on the daily vertical line chart.

Instead, the main support line drawn from point D appears on the vertical line chart. While the Wyckoff Wave certainly can continue to react, at this point, it appears doubtful it will be able to move through that support line and continue to react back into the major trading range that began in August 2015.

This observation is supported by the positive inharmonious action with the O-P Index and a relatively strong Force Index.

More importantly, the reaction from point L to M showed a drying up of supply. There is a very low probability that a large amount of sustained supply will come into the market after a reaction on a lack of supply.

Look for the Wyckoff Wave to either continue to react on reduced price spread and volume and successfully test point M, or simply begin to rally back towards the top of the range at point E.