Ready To React?

Monday, July 25, 2016

Click here to open the attached charts

What To Do?

Short Term:
There are no short-term opportunities to the upside.
Short-term positions to the downside should be maintained.

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: Neutral
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on decreased volume. It closed in the upper half of a narrower 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 suggests a split day. The first two hours and 15 min. of the trading day was dominated by supply. Some demand was present during the afternoon, but became stronger during the last 45 min. of the trading day.

After a small gap opening to the downside, supply drove the Wyckoff Wave down to its low for the day at point X on the intra-day chart. The reaction was on relatively good price spread and volume.

Then, the Wyckoff Wave rallied, but while some demand was present it was not sustained until the last 45 min. of the trading day.

Despite the presence of the afternoon demand, the Wyckoff Wave was unable to recover all of the ground lost during the morning reaction. This continues to suggest relative weakness and this should make it difficult for the Wyckoff Wave to return to the distribution trading range.

This would also suggest that point W is an intra-day Last Point of Supply and the Wyckoff Wave should continue to react.

The Optimism – Pessimism Index reacted. It continues to test the supply line of its upward trend channel and remains in harmony with the Wyckoff Wave.

The Force Index also reacted and is producing positive readings.

Tomorrow, the Technometer will open in a neutral condition.

Today the Wyckoff Wave continued its “roll over”. Today’s morning supply and the relatively poor afternoon rally, gives the Wyckoff Wave the opportunity to make a definitive reaction and test the resistance at the top of the trading range.

Tomorrow is an important day. If the Wyckoff Wave is going to react through the resistance and return to the trading range, it is important to see good supply in the presence of wider spread and higher volume.

If the Wyckoff Wave reacts on narrower price spread and reduced volume, this will suggest it will be supported at the top of the trading range.

While previous market action suggests this scenario has a lower probability of success, it should not be ignored.