Sideways Trading Continues…

Wednesday, February 8, 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: Down
Short Term: Neutral
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave opened lower today, and then spent the rest of the day trying to recover from the early losses.  Volume was unchanged from Tuesday’s trading.  The price spread and volume showed some supply present.
The Technometer is close to an overbought reading, and should reach it on any further rally attempt.
The Nasdaq and S&P 500 were both basically unchanged today.


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

The last few weeks, the Wave has been slowly working lower from the resistance at the top of the trading range.   Volume has been lackluster and volatility low.  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) Friday.  We have had a nice quick rally the last few days, but we expected stocks to pullback in this type of environment.  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 the last three days.

Good Trading,
Todd Butterfield