Prepare to exit shorts…

Their are no short-term opportunities to the upside.

Aggressive short-term bears should maintain their positions. They should also begin to study their selections for appropriate exit points, should the reaction bottom out and good demand comes into the market. If the Wyckoff Wave rallies on poor demand, short positions can be maintained.

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, but in an overbought 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 at the top of a wider price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest a lack of supply.

A review of the intra-day waves confirms the above. After a wide gap opening to the downside at point C, the Wyckoff Wave attempted to rally. The rally ended at point D, when supply came into the market. The attempt to react was unsuccessful and supply dried up at point E.

This gave the Wyckoff Wave another chance to rally and it did so on reasonable demand to point F. There, demand dried up and the Wyckoff Wave moved sideways until the last 15 min. of the trading day. Then, demand returned and the Wyckoff Wave rallied.

The Wyckoff Wave has moved into an overbought position relative to its intra-day down trend channel.

Today the Wyckoff Wave attempted to move in both directions and was unsuccessful. Neither supply or demand has been able to sustain a clarifying move.

Today’s lack of demand, during the last hour of the trading day, suggests the Wyckoff Wave will have a difficult time continuing its rally. While it may continue a minor advance, the inability of demand to come into the market and be sustained, continues to suggest the Wyckoff Wave will react and return to the intra-day trading range.

The Optimism – Pessimism Index rallied. It remains in an overbought position relative to its upward trend channel. It continues to be in harmony with the Wyckoff Wave.

The Force Index rallied, but is still producing moderate positive readings.

On Monday, the Technometer will open in a low neutral condition.

Today the Wyckoff Wave found some initial support slightly above the top of the trading range. However, not much demand came into the market today and what did was not sustained.

Today’s market action does provide for two short term scenarios.

1. The Wyckoff Wave could continue to rally and test the high at point V.

Today’s market action, like the last few trading days, did not include good and sustained demand. Unless things change dramatically, a test of point V has a strong probability of being successful. The Wyckoff Wave would then react, find support and continue to move sideways.

2. The second scenario is that the Wyckoff Wave will continue to react and test the lows at points U and S. This is also supported by a lack of demand.

The O-P Index Technometer and Force Index are not providing clues as to which scenario will succeed.

The first scenario has a higher probability of success, simply because little supply is present. Without supply it is difficult to sustain a reaction.

While this is interesting and fun to watch, intermediate and long-term traders should be content to let the trading range work itself out and wait for ending action.