Reaction Slowly In Progress

Friday, January 13, 2017
What To Do?
Short Term
Short-term bears should hold short positions and lower stops to Tuesdays high as marked on the intra-day chart.
Short-term bulls should be looking for long candidates and be prepared to act.
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: Down
Short Term: Down
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave opened slightly higher and then traded slightly lower the rest of the day in quiet trade.  Volume was at the same level as the last few days.
The Wyckoff Wave closed slightly lower today, and the price spread and volume showed a little supply on the market once again.
The Technometer is registering a neutral reading.
The Nasdaq and S&P 500 were both slightly higher today.

A review of the intra-day waves shows the Wave opened higher then drifted slighly lower the rest of the day.  The O-P traded at a new recovery high at the opening with the Wave lagging behind once again.  We thought maybe the O-P holding up the last few days might ignite  a rally in the Wave, but so far that has failed to materialize.  We think this will now lead to more downside in the days ahead.
The Optimism-Pessimism Index closed higher today.
The Force Index closed higher again today but continuing to exert downside pressure.
On Tuesday, the Technometer is in a neutral condition once again.

Today, the Wyckoff Wave closed slightly lower again on average volume.  We still feel there is more downside coming in the immediate days ahead.  We do not want to see a rally above Tuesdays highs, and we would like to see the Wave fall further back into the trading range from here.  Being short has been a tiring process and very little reward.
As we mentioned a week ago, the alternative scenario is that we are backing up to the previous highs for a Last Point of Support.  For all the reasons we have mentioned over the last few weeks, we see this as a very low probability.  If the Wyckoff Wave can continue higher with an increase in volume, then that would be a bullish scenario and we would discuss in more detail.
As we have been continuing to acknowledge, the rally from “S” to “Z” did not have the volume and price spread we was expecting from a Jump Across The Creek, but appeared more as a test of the upper limits of the trading range.  Lets see if we can fall further back into the trading range here as expected.
 

Good Trading,
Todd Butterfield