Sideways Trading Continues…

Friday, February 10, 2017
What To Do?
Short Term
Short-term bears should hold original short positions and keep stops as previously directed.  Be prepared to add to shorts as Technometer reaches overbought once again on this rally.
Short-term bulls should 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: Neutral
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave opened higher today, and then continued the rally until the last two hours of the day, where it retraced a portion of the days early rally.  Volume was unchanged from Thursday’s trading.  The price spread and volume showed some demand present.
The Technometer is close to an overbought reading, and should reach it on any further rally attempt Monday.
The Nasdaq and S&P 500 were both up .35% today.
 

A review of the intra-day waves shows the Wave opening slightly higher, and the O-P making continued new highs for the recent rally, which it has been doing for the past week.  The Wave continues to lag on the rally.
The Force Index closed higher today as well.
On Monday, the Technometer will open near an overbought reading.  This combined with the O-P divergence should keep the Wave on the defensive.

 
For the last few months, the Wave has been slowly working sideways/lower from the resistance at the top of the trading range.   Volume has been lackluster and volatility low.  It was reported that the S&P hasn’t had a 1% intraday move since December 14th.  This is the longest period of intraday calm in history.  We would expect this to change, and for the reaction to continue to the downside and pickup speed.
Our Wyckoff indicators gave us the low in the TLT (20 yr. treasuries) last Friday.  We had a nice start to a rally last week, but we expected stocks to pullback as bonds rally.  So far stocks have continued to hold firm, but we still are of the belief that stocks will work lower from here, as bonds and the TLT continue their rally of last week.
 

Good Trading,
Todd Butterfield