Rally Off Support?

Friday, November 4, 2016

What To Do?

Short Term:
Short-term bulls should continue to maintain their positions. In addition, new positions can be considered to the upside.

There are no short-term positions to the downside.

Intermediate & Long Term:

Intermediate and 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 from Down to Neutral
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on slightly increased volume. It closed in the lower half of a wider price spread, in a clearly oversold 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 strong during the morning, supply controlled the afternoon.

After a very narrow gap opening to the upside, the Wyckoff Wave continued to rally to point R. This intra-day rally significantly weakened the intra-day down trend channel.

The Wyckoff Wave also took out Thursday’s high at point P. This changes the intra-day trend from down to neutral.

The afternoon supply caused the Wyckoff Wave to react. So far the reaction has been on good price spread and volume. However, there is a high probability supply will begin to dry up again and the Wyckoff Wave will confirm the breaking of the intra-day down trend.

This is supported by the O – P Index’s intra-day positive divergence with the Wyckoff Wave when compared with points A and, M, O and Q.

On Monday the Wyckoff Wave should complete the reaction off point R. This will give it an opportunity to rally and test today’s high at point R..

The Optimism – Pessimism Index reacted. It is in a positive divergence with the Wyckoff Wave when compared with points D, K, O and Q.

The Force Index rallied slightly, but is still producing high negative readings. There is still a mitigating impact on the clearly overbought Technometer.

On Monday, the Technometer will open in an oversold condition.

Today, the Wyckoff Wave continued the rally off the support line drawn from point D. As mentioned above, it encountered some afternoon supply and reacted.

The high negative readings, from the Force Index, are an indication that supply is still present. That is why these readings have a mitigating impact on an oversold Technometer.

Even though the Technometer is clearly oversold and the O-P Index is in a positive divergence with the Wyckoff Wave it will have a difficult time making strong progress to the upside as long as the Force Index continues these high negative readings.

However, as the supply dries up, the Force Index should become less negative. This will be a signal that the Wyckoff Wave is ready to complete the expected reaction that would take it back to the highs at point E.