Resistance At Top Of Trading Range

Monday, December 12, 2016
What To Do?
Short Term
Short-term bears should stay short if you have not been stopped out.  Otherwise identify possible shorts and be prepared to enter shorts again, if we find resistance at top of trading range as expected.
Short-term bulls stand aside.
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 unchanged, quickly rallied to a slight new high for the move, then back to unchanged where it spent the majority of the day.  Volume was at the same level of the previous few days.
The Wyckoff Wave closed higher once again on the day, in an overbought condition relative to the Technometer.  The price spread and volume suggested more of a lack of demand day.
The Nasdaq was lower today, and the S&P 500 was basically unchanged.

A review of the intra-day waves confirms the above.  After a unchanged opening, the Wave rallied to another new  high with no volume behind it, then reacted back to unchanged for the day.  It then spent the afternoon at those levels with no wide price spread or volume.  Volume was the same as Friday, and showed lack of demand on the rally.
The Intra-day Optimism-Pessimism Index continues to show a slight divergence with the high of the Wyckoff Wave the last three days.  Price has went to a new high all three days, while the O-P is minus ever so slightly.
The Optimism-Pessimism Index closed almost unchanged.
The Force Index closed basically unchanged as well today.
On Tuesday, the Technometer will open in an overbought condition.

Today, the Wyckoff Wave traded slightly higher on average volume.  The reaction we have been expecting over the last week has failed to materialize.  Todays rally once again, did not show that large spread and increase in volume we would like to see for a Jump Across The Creek.  It is once again still lacking on the volume.  We feel that the top of the trading range will prove resistance for this rally and the Wyckoff Wave is vulnerable to some type of correction.
This suggests the Wyckoff Wave will react back towards the middle/bottom of the minor trading range.
The reduced probability of a successful Sign of Strength also indicates the Wyckoff Wave will not experience a Last Point of Support on the reaction.  This suggests the Wave is expected to react back to the bottom of the trading range and test the previous support at point “U”, and the more important lows at point “S” in a normal correction.
This weeks action suggest that it will still be difficult for the Wyckoff Wave to move past the resistance at the top of the trading range.   The overbought Technometer still supports this scenario.

Good Trading,
Todd Butterfield