Short term bears maintain short positions

Click Here For Wyckoff Wave Chart 01-06-2016

No changes from yesterday

Short Term:
Short term bears should maintain their positions.

There are no new short-term opportunities to the upside.

Intermediate & Long Term:
Intermediate and long-term bulls should maintain existing positions.

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

Market Trends:

Intra-day: Down, but weakened and in an oversold position..
Short Term: Up, but weakened and in an oversold position.
Intermediate Term: Down.
Long Term: Neutral.

The stock market, as measured by the Wyckoff Wave, traded lower on increased volume. It closed in the middle of a wider price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves confirms the above. After a wide gap opening to the downside, the Wyckoff Wave continued to react to point H. It then rallied, on unimpressive price spread and volume, to point O.

There supply came into the market and the Wyckoff Wave reacted through the support at point H to its low for the day, at point P. The Wyckoff Wave then rallied, but at market’s close had made little progress.

The penetration of support at point H could have been an intra-day Spring. However, so far little demand has come into the market to confirm a Spring. The intra-day move to point P ended at 3 PM. This gave demand one hour to come into the market. So far, that hasn’t happened. The rally off point P has not been of good quality.

In addition the Wyckoff Wave was unable to return to its intra-day down trend channel on the rally to point O. This also suggests the Wyckoff Wave will continue to react.

The Optimism – Pessimism Index rallied slightly. To the upside it is in a significant negative short term divergence with the Wyckoff Wave, when compared with points D, B, C and X. However, to the downside, it is now in a slight short-term positive divergence with the Wave when compared to point C. In my view the negative divergence, which reflects the substantial effort to the upside, without seeing results, it is more significant.

The longer-term negative divergences also remain place.

The Force Index reacted and is producing low positive readings.

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

Today, the Wyckoff Wave reacted on good price spread and volume. It tested the low at point C and rallied slightly off the low. It also returned to its intermediate-term downtrend channel and moved into an oversold position relative to its short-term uptrend channel

While the Wyckoff Wave could certainly continue its rally off point C, conditions do not favor that scenario.

The Technometer is nearly overbought and will become overbought if the Wyckoff Wave rallies. It is bearish for an index or stock to become overbought near the bottom of a trading range or sideways movement.

In addition, the negative divergences with the O – P Index do not support any significant rally.

While the Force Index is relatively strong, it is also in negative divergences with the Wyckoff Wave when compared with points D, B, Z and X.

All this continues to suggest that the Wyckoff Wave will continue to react and possibly test the lows at points U and Q.

Tomorrow, I will be attending a funeral on Cape Cod. The report may be slightly delayed, but will be sent tomorrow evening.

Charts of the Wyckoff Wave are attached.