Sideways at Top of Range….

Friday, December 16, 2016
What To Do?
Short Term
Short-term bears should stay short and use stops at recent highs.
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: Neutral
Short Term: Up
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave, opened unchanged on average volume, then slowly drifted lower the rest of the day. Volume was slightly higher then the day before, but below the levels of Wednesday.
The Wyckoff Wave closed lower on the day on a slight increase in volume, once again in a neutral condition relative to the Technometer.  The price spread and volume did not give many clues today.
The Nasdaq and S&P 500 was both down slightly as well today.

A review of the intra-day waves confirms the above.  After opening unchanged, the Wave slowly drifted lower on a slight increase in volume.  Some volume was present for the last few waves, but no dramatic movement in price.  Volume increased slighlty with today’s selloff.
The Intra-day Optimism-Pessimism Index made a new low for this recent sell off of the last 5-6 days, while the Wave did not experience a new low below Wednesdays low.  We need to get these two working together on the downside if we are going to get more of a correction that we have been looking for.
The Optimism-Pessimism Index closed slightly higher.
The Force Index closed lower today.
On Monday, the Technometer will open in a neutral condition once again.

Today, the Wyckoff Wave traded lower on a slight increase in volume.  The reaction we have been expecting over the last few week has trouble getting started.  We would expect to see this reaction continue to lower levels.  The recent rally to “X” has not had a dramatic increase in spread or volume, and does not appear we had a Jump Across The Creek, but more so a test of the upper end of the trading range.
This suggests the Wyckoff Wave will react back towards the middle/bottom of the minor trading range.  For this to happen we would expect this reaction to continue a few more days, and then a minor rally to test the recent highs at “X”, before a more meaningful correction takes place.  The Technometer is back to a neutral reading, so we have to be prepared for the reaction to possibly be short and shallow, and give us another test of the recent high.
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 into the trading range and test the previous support at point “W”, “U”, and the more important lows at point “S” in a normal correction.

Good Trading,
Todd Butterfield