A Poor Start To The Testing Rally

Tuesday, August 9, 2016

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What To Do?

No changes from yesterday

Short Term:
There are no short-term opportunities to the upside.
Aggressive short-term bears should maintain their positions.

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: Down, but continues in an extremely oversold position.
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed in the lower half of a narrower price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest a lack of demand.

A review of the intra-day waves indicates that today was more of a lack of supply day. After a gap opening to the upside, the Wyckoff Wave continued to rally to point Y. Then, it reacted slightly for the rest of the trading day.

The move to point Y was on relatively narrow price spread and reduced volume. This started the day with a lack of demand. However, the long five hour and 45 min. reaction, that took up the rest of the trading day, was on a lack of supply.

Interestingly, some demand came in during the last 25 min. of the trading day, but the Wyckoff Wave made little progress to the upside. This suggests a continued presence of some, but not dominant, supply.

The intra-day O-P Index is in a negative divergence with the Wyckoff Wave. Note that the intra-day rally to point Y placed the Wyckoff Wave above yesterdays high at point W. This negative divergence suggests that while an effort was being made to advance the Wave, the results were disappointing, at best.

This continues to suggest that, while the Wyckoff Wave may attempt to rally and return to its intra-day down trend channel, the reaction from point E will continue.

The Optimism – Pessimism Index reacted and continues to test the supply line of its upward trend channel. It continues in long-term harmony with the Wyckoff Wave, but is showing relative strength. The short-term, intraday divergences are mentioned above.

Force Index reacted and is producing positive readings.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave tested Friday’s and Monday’s lows and put in a poor quality rally.

However, the Wyckoff Wave may have found some support, which will give it an opportunity to further rally and test the resistance in and around the resistance line that formed the top of the trading range.

Today’s long intra-day reaction, which was on a lack of supply, gives the Wyckoff Wave another opportunity to rally. However, as mentioned above, it does not appear to be strong enough to move the Wyckoff Wave substantially through the resistance line.

As mentioned yesterday, if the Wyckoff Wave is able to successfully test that resistance line drawn from point C, it will continue its reaction back into the trading range and probably test the low at point D.