Short-term bears can continue to identify candidates to the downside

Click Here For Wyckoff Wave Chart 06-06-2016

Short Term:

Their are no short-term opportunities to the upside.

Short-term bears can continue to identify candidates to the downside. It might be best to wait to take positions until good supply confirms the Wyckoff Wave will not advance through the resistance. It also might be helpful to wait for a secondary test of the highs.

Intermediate & Long Term:

Intermediate and long-term bulls should maintain existing positions. However, this is a good place to close trades that have reached objectives and eliminate any underperforming positions. Cash should be held in preparation for ending action and a move to the upside.

There are no intermediate or long term opportunities to the downside.

Market Trends:

Intra-day: Up

Short Term: Neutral

Intermediate Term: Neutral

Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed near the top of a narrower price spread, in an extremely overbought condition relative to the Technometer the price spread and volume suggest a lack of demand.

A review of the intra-day waves confirms the above. After a fairly wide gap opening to the upside, demand came into the market, as the Wyckoff Wave rallied to point V.

There was a minor reaction to point W, on moderate supply. Then the Wyckoff Wave attempted to rally. However, demand dried up and the Wyckoff Wave was unable to move past the highs at point V.

Some supply returned during the last 20 min. of the trading day and the Wyckoff Wave reacted back into the upper portion of the intra-day down trend channel.

It is important to note, that although it is not shown on the intra-day chart, the Wyckoff Wave has encountered a important resistance level that is shown on the daily chart. More on this below.

Today’s lack of demand continues to suggest that the Wyckoff Wave will react back into and possibly through the intra-day up trend channel.

The Optimism – Pessimism Index rallied and is in an extremely overbought position relative to its upward trend channel. It is now in a negative inharmonious action with the Wyckoff Wave when compared with point V.

The Force Index reacted, but is still producing low positive readings. There is still a mitigating impact on the extremely overbought Technometer.

Tomorrow, the Technometer will open in a dangerously overbought condition.

Today the Wyckoff Wave continued its rally and is testing the high at point V. Point V now marks the resistance line at the top of the trading range. This is a critical situation, as the Wyckoff Wave closed at the resistance line.

The extremely overbought Technometer and the negative inharmonious action with the Wyckoff Wave continues to suggest it will be difficult for the Wyckoff Wave to advance strongly through the resistance. However, it was also expected to react last week.

Tomorrow is a critical day. There are a couple of different scenarios that may play out.

1. The Wyckoff Wave could upthrust the trading range and began a significant reaction.

This scenario has a low probability of success as little supply is coming into the market. A lack of demand is not usually an indicator that an upthrust is about to take place.

2. Despite the above comments, the Wyckoff Wave could rally strongly through the resistance and rally back towards the 2015 highs.

This scenario also has a low probability of success. It is extremely difficult for demand to come into the market and drive the Wyckoff Wave upward, in the face of an extremely overbought Technometer. The mitigating impact of the Force Index relates to a reaction, not a continuing advance.

3. The Wyckoff Wave will react off the top of the trading range. It could react back into its short-term down trend channel. It could also back off slightly and then re-test the resistance line.

This scenario has the highest probability of success.