Be prepared to cover shorts…

Their are no short-term opportunities to the upside.

Short-term positions to the downside should be maintained. However, if strong demand comes into the market tomorrow they should be closed.

Intermediate and long-term bulls should maintain existing positions.

There are no intermediate or long term opportunities to the downside.

Market Trends:

Intra-day: Changed to Up.

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 upper quarter 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 while demand was present during the first hour and 55 min. of the trading day, it was being withdrawn during the afternoon hours.

After a small gap opening to the upside, demand came into the market and the Wyckoff Wave rallied strongly to point L. While it attempted to continue the rally, it made little progress and demand was completely withdrawn at point M. Supply returned during the last 35 min. of the trading day.

The Wyckoff Wave saw demand dry up as it approached the resistance line drawn from point P. While this is a logical place for supply to commander the market, if the Wyckoff Wave was going to continue to advance, stronger demand needed to be present and absorb that supply.

Even so, the intra-day trend of the market is changed to up and the new trend channel has been drawn in blue.

Since the channel was created, the Wyckoff Wave has not unable to reach its supply line.

This, in addition to the drying up of demand, suggests the Wyckoff Wave will not move into new high ground and will react and at least test the supply line of the new intra-day up trend channel.

The Optimism – Pessimism Index rallied. It remains in an overbought position relative to its upward trend channel. There still is a short-term negative divergence with the Wyckoff Wave when compared with point R. The longer-term negative divergences D, B, Z and X remain in place.

The Force Index reacted and is producing moderately negative readings. It is also becoming relatively weaker than the Wyckoff Wave.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave ignored yesterdays supply and made another attempt to rally back to the top of the trading range.

While the price spread was a reasonable, today’s volume was relatively low. All the volume levels, since point R, have all been relatively low. This suggests a continued lack of demand.

As mentioned above, after a strong start, demand dried up and some late supply did return. This relative lack of demand suggests the Wyckoff Wave will have a difficult time moving through the top of the trading range. This suggests the Wyckoff Wave will either react or continue to move sideways.

This scenario continues to be supported by the negative O-P Index divergences and a weakening Force Index.

Regardless, if strong demand comes into the market tomorrow, short-term positions to the downside should be closed.