A Possible Rally Off Support

Tuesday, August 30, 2016

Click here to open the attached charts

What To Do?

Short Term:
Aggressive short-term bulls can consider new opportunities to the upside
Aggressive short-term bears should consider closing their positions, especially if good demand comes into the market tomorrow.

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
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on slightly increased volume. It closed in the bottom quarter of a wider price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves confirms the above. However, the supply that was present was not particularly strong.

After a narrow gap opening to the upside, supply came into the market and the Wyckoff Wave reacted to point W. It put in a poor quality rally to point X and reacted to point Y.

The intra-day reaction from points X to Y was long and slow. Then, the Wyckoff Wave moved sideways for the last 2 hours and 25 min. of the trading day.

Despite today’s supply, the Wyckoff Wave was unable to react through the support at the previous low at point U. So far, the Wyckoff Wave is successfully testing the support.

It was also unable to return to that its intra-day down trend channel. If the Wyckoff Wave is able to rally tomorrow, the channel will be broken and the trend changed to neutral.

While the Technometer remains in a neutral condition, there is an intra-day positive divergence with its O–P Index, when the Wyckoff Wave is compared to point Q and S. There is a positive inharmonious action when compared with point U.

All this suggests there is a good probability the Wyckoff Wave will rally off the support and move past the previous high at point X. If it does so on good price spread and volume, the Wyckoff Wave should be able to continue to rally and test the resistance at the top of the chart.

The Optimism – Pessimism Index reacted. It remains in the upper portion of its upward trend channel. It is in a short-term positive divergence with the Wyckoff Wave, when compared with point H.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave reacted and, once again, is testing the bottom of the sideways movement that began at point G. The rather moderate supply that was present today suggests the Wyckoff Wave is prepared to rally off the support, as described in the intra-day analysis above.

Despite the fact that the Wyckoff Wave has moved sideways, with a slightly downward bias, for the last 18 trading days, the gap created on the reaction to point G is still expected to be filled.

Once again, the Wyckoff Wave had an opportunity to react through the sideways movement. Once again supply was not strong enough to do so. This also suggests that some sort of rally is in the immediate future.