A Rally Off Support?

Thursday, August 25, 2016

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What To Do?

Short Term:
Aggressive short-term Bulls could consider new positions only if the Wyckoff Wave Springs the sideways movement. These are aggressive positions as there is not much of an objective area to the upside.
Aggressive short-term bears should maintain their positions. They should be closed if the Wyckoff Wave Springs the sideways movement, that began at point G and strong demand returns.

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 lower half of a narrower 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 today was a lack of supply day. However, demand was present early and supply late.

After a very small gap opening to the downside, the Wyckoff Wave rallied to point R. It then began a long slow intra-day reaction to point S. The reaction lasted for three hours and 55 min., but the Wyckoff Wave only lost 195 points.

The Wyckoff Wave attempted to rally during the last hour and 5 min. of the trading day. It made little progress on relatively narrow price spread and higher volume. This suggests the presence of supply.

The late day rally helped the Wyckoff Wave return to its intra-day down trend channel.

The Wyckoff Wave is testing the low at point E. The presence of the late supply and the negative intra-day inharmonious action with the O – P Index, when compared with points R, P and N, suggests the Wyckoff Wave will react through the support at point E.

This could result in a poor quality intra-day test, that would require retesting, for this amount look or, if demand comes into the market, a Spring of the support marked by point E.

The Optimism – Pessimism Index reacted and remains near the supply line of its upward trend channel. It is in intermediate and long-term harmony with the Wyckoff Wave.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave reacted and is testing the lows of the sideways move that began at point G. This creates a few scenarios that need to be considered.

1. The Wyckoff Wave could Spring the sideways move and rally back towards point E.

2. The Wyckoff Wave could simply test the support and rally back to the top of the sideways move or even to the resistance in the area of point F.

3. The Wyckoff Wave could react strongly through the support and move into a position to test the low at point D.

Scenario #3 has the lowest probability of success. While supply has been present, it has not been particularly strong or sustained. If the Wyckoff Wave is going to react back into the trading range, it probably already would have done so.

Scenarios #1 and #2 have an equal probability of success. If the Spring scenario plays out, tomorrow morning will see early supply. Then strong demand will come into the market and the Wyckoff Wave will rally.

If the test scenario plays out, the Wyckoff Wave will hold above the support and rally. The rally will be on moderate demand.

The Wyckoff tools do not provide any clues as to which scenario will prevail. It will be important to watch tomorrow’s opening and early price spread and volume.