Is The Secondary Test Completed?

Tuesday, October 18, 2016

What To Do?

Short Term:

Short term bulls, who have already entered the market, should maintain their positions.
It continues to appear that the Wyckoff Wave is putting in a successful Secondary Test. Therefore, new short-term positions to the upside can be taken.
There are no short-term positions to the downside.

Intermediate & Long Term:

As it appears the Wyckoff Wave is putting in a successful Secondary Test, new positions to the upside can be taken
Long-term positions to the upside should be maintained.

There are no intermediate or long term opportunities to the downside

Market Trends:

Intra-day: Changed to Up
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, experienced an intra-day failure to the downside. It closed, on decreased volume, in the middle of a wider price spread, in a low neutral condition relative to the Technometer. The intra-day failure suggests a lack of supply.

A review of the intra-day waves confirms the above. After a gap opening to the upside there was a brief, five-minute, follow-through to point P. Then, supply came into the market and the Wyckoff Wave reacted on good price spread and volume to point R. The reaction lasted for 45 minutes.

Supply was withdrawn and the Wyckoff Wave rallied until the last hour of the trading day. Then supply returned and the Wyckoff Wave reacted. Despite the relatively high volume the Wyckoff Wave did not make a great deal of progress to the downside. This suggests that some demand was coming back into the market.

The intra-day trend is changed to up. The new trend channel is drawn in blue. Presently the Wyckoff Wave is testing the channels support line and may weaken it tomorrow.

Even if the trend channel is weakened, today’s lack of supply suggests the Wyckoff Wave will continue to advance and rally through the high at point K.

The Optimism – Pessimism Index rallied and is back in short-term harmony with the Wyckoff Wave. The longer-term positive inharmonious action, when compared with point D, remains in place.

The Force Index rallied, but is still producing moderately negative readings.

Tomorrow, the Technometer will open in a low neutral condition.

Today, the Wyckoff Wave attempted to rally off the Secondary Test of the Spring at point O. The rally, which was on a lack of supply, continues to suggest supply has dried up and good demand will return to the market. However, while the price spread was slightly wider then on Monday, the move to the upside did not meet expectations.

Despite today’s somewhat disappointing performance, there is still a reasonable probability that the Wyckoff Wave has completed its Secondary Test and will rally.

However, today’s market action introduces a second scenario. It suggests the Wyckoff has not yet completed its secondary test of the spring at point O.

If that scenario plays out, the Wyckoff Wave should react tomorrow on reduced price spread and volume. If the “ready to rally “scenario prevails, there will be wider price spread to the upside, coupled with increased volume.

Regardless of which scenario plays out, there is a strong probability the Wyckoff Wave will complete a successful Secondary Test of the Spring and begin an important rally.