Sign of Strength Scenario Probability Reduced

Friday, November 25, 2016

What To Do?

Short Term:

Short-term bulls should continue to maintain their positions. They should be closed if supply comes into the market
Short-term bears should begin to identify candidates to the downside. Positions can be taken if supply comes into the market.

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: Changed to 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 near the top of a narrower price spread, in an overbought condition relative to the Technometer. The price spread and volume suggest a lack of demand. If today’s volume was prorated over a normal trading day, it still would have been less than Wednesday’s volume.

A review of the intra-day waves confirms the above. After a slight gap opening to the downside, and a brief follow-through, the Wyckoff Wave began to rally. The rally lasted for the entire trading day.

With the exception of the last 15 minutes, the rally was on a lack of demand. Some demand did come into the market near the end of the trading day.

The intra-day O-P Index is in harmony with the Wyckoff Wave.

The Wyckoff Wave continued the poor quality rally that has been going on for the last few trading days. As the Wave continues to advance, even though it has weakened its intra-day up trend channel, the intra-day trend is changed back to up, from neutral.

The poor quality rally and the inability of the Wyckoff Wave to remain in its intra-day up trend channel, continues to suggest the Wyckoff Wave is prone to react. The reaction scenario discussed over the last several days remains in place.

The Optimism – Pessimism Index rallied it is in a negative divergence with the Wyckoff Wave when compared with point E.

The Force Index also rallied and is still producing moderate negative readings. There is no mitigating impact on the overbought Technometer.

On Monday, the Technometer will open in an overbought condition.

Today, the Wyckoff Wave continued its poor quality advance. The lack of demand, over the last several trading days, diminishes the Sign of Strength within the trading range scenario. It is difficult to justify a Sign of Strength when a portion of the rally is on a lack of demand.

This suggests the Wyckoff Wave will, at some point during the next few days, begin to react back towards the bottom of the trading range.

The reduced probability of a successful Sign of Strength also indicates the Wyckoff Wave will not experience a Lack Point of Support on the reaction. This suggests the Wave is honorable to react back to the bottom of the trading range and test the low at point S.

The negative divergence with the O-P Index and the overbought Technometer support this scenario. Today also suggest that it will be difficult for the Wyckoff Wave to move past the resistance at the top of the trading range.

The Wyckoff Wave is expected to begin its reaction somewhere between today’s close and the top of the trading range.