Recent downtrend broken…

Tuesday, April 25, 2017
What To Do?
Short Term
Short-term bears should stay short stocks with relative weakness if stops have held thus far.   We have been stopped out of majority of shorts on the recent rally for small losses.
Short-term bulls should stand aside.  We have a list of stocks that we were watching for purchase but never got the levels that we was looking for on the correction.  We will continue to watch the list on the next pullback.
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: Up
Short Term: Up
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave opened  sharply higher today and then spent the rest of the trading session moving sideways.  This is the exact same action from Monday’s session.  Volume has been slightly higher on the rally of the last two days.  Demand has been present but not in a major way.
The O-P and Force are in downtrends and finding it hard to rally much.
The Technometer is registering a neutral reading.
The Nasdaq and S&P 500 were up approximately .60% today.
 


A review of the intra-day waves shows the Wave opening sharply higher, and digesting the gains for the rest of the afternoon.  Today’s strong rally took out the supply line of the recent downtrend.  We have stayed in the correction camp for weeks, and we are continuing to stay there even with the last two days action.  We are concerned with the lagging nature of the O-P.
The O-P/Wave intra-day divergence we spoke of beginning a week ago Tuesday continued into Wednesday’s close, as well as last Fridays.  The O-P made lower lows while the Wyckoff Wave was holding onto small gains.  We expected this intraday divergence to give us a rally for a few days, but not one that took out the previous downtrend line at “N”.   But we have now replaced the bullish divergence with a negative divergence.  The Wyckoff Wave’s strong rally has occurred without the O-P confirming.  There is not much up volume coming in on the rally which leads to the divergence.  We are anxious to see how the Wave performs in the next couple days since it has penetrated the previous resistance at “N”.  We feel with the divergence we could possibly upthrust this area.
The Force Index closed slightly higher today.  The Force closed at -260 which is a level we have been trading out for many weeks.  This level should exert some downside pressure still on the Wave.
On Wednesday, the Technometer will open in a above neutral reading.  A couple days rally from here will get us close to an overbought reading quickly.
 

 
The divergence and near oversold reading of the Techometer last week has lead to the recent rally.  We wasn’t expecting as strong as rally that has occurred but still want to see how we trade as we are still stuck in a sideways correction.
 

 
Bonds traded sharply lower the last two days, and we are on the sidelines.
Good Trading,
Todd Butterfield