No Rumble Yet, But Probably On The Way

Wednesday, July 27, 2016

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What To Do?

Short Term:
There are no short-term opportunities to the upside.
As the Wyckoff Wave did not react, as expected, but rallied and tested the highs of its intra-day trading range, short-term position to the downside should have been closed. Presently, there are no new opportunities to the downside. New opportunities could arise if the Wyckoff Wave successfully tests point E.

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 Up and in an overbought position relative to the new trend channel.
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on increased volume. It closed in the middle of a wider price spread in a neutral condition relative to the Technometer. The price spread and volume suggest the presence of demand.

A review of the intra-day waves indicates that both demand and supply were present during the morning hours. The afternoon featured a lack of demand.

After a small gap opening to the upside the Wyckoff Wave rallied to point C on good demand. At the top of the trading range demand was withdrawn, supply returned and the Wyckoff Wave reacted to point D.

Then, the Wyckoff Wave spent most of the afternoon. in a poor quality rally to point E. Once again it encountered supply and reacted.

This would suggest the Wyckoff Wave will continue to react. However, point E was higher than point C. This indicates a poor quality test of the previous high. That suggests the Wyckoff Wave will need to retest the high at point E before any reaction scenario can’t be confirmed.

The Wyckoff Wave rallied past the support line drawn through the bottom of the trading range from point G through point Q. This eliminated the Sign of Weakness scenario, has the Wyckoff Wave has returned to its trading range.

The higher lows at points X, Z and B, coupled with a higher highs at points C and E, change the intra-day trend from neutral to up. The Wyckoff Wave is now in an overbought position relative to its intra-day up trend channel.

Regardless of the afternoon’s poor quality rally, the Wyckoff Wave did show relative strength. All short position, to the downside, should have been closed and it would be wise to retreat to the sidelines.

The Optimism – Pessimism Index rallied. It continues to test the supply line of its upward trend channel. The short-term negative divergence with the Wyckoff Wave when compared with point E continues.

The Force Index rallied and is producing positive readings.

Tomorrow, the Technometer will open in a neutral condition.

For the second day in a row, the Wyckoff Wave tried to go up, tried to go down and closed in the middle on increased volume. This continues to suggest a more significant move is in the near future.

Today, the Wyckoff Wave surprised and rallied instead of experiencing the expected reaction. It is now testing the top of its intra-day trading range.

The fact that, this morning, it encountered supply and experienced a poor quality rally during the afternoon continue to suggest it’d be difficult for the Wyckoff Wave to move past point E and continue the rally from point D.

The Technometer’s high neutral condition suggests it will quickly become oversold on any rally. These negative divergence with the O – P index supports that scenario.

Because the Wyckoff Wave did not perform as expected, short-term traders should retreat to the sidelines until the market sends more definitive signals as to its future direction