Some Demand Returns

Thursday, September 1, 2016

Click here to open the attached charts

A reminder that I will be traveling on Friday to watch my granddaughter play in her first college soccer game. Papa wouldn’t miss it for the world. Tomorrow’s Pulse of the Market report will be published on Sunday.

What To Do?

Short Term:
There are no short-term opportunities to the upside. If the Spring scenario prevails, new positions could be taken on a successful secondary test.
Short-term bears a position to the downside should be maintained. However, they should be closed if strong demand comes into the market. If the Wyckoff Wave puts in a successful Last Point of Supply, new positions can be taken to the downside.

Intermediate & Long Term:
Their are no intermediate or long term opportunities to the upside.
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 lower on noticeably increased volume. It closed in the upper half 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 indicates today was a demand driven day. After a small gap opening to the upside, supply came into the market and the Wyckoff Wave reacted to point E, on the intra-day chart.

Supply dried up, demand returned and the Wyckoff Wave rallied to point F. Then it reacted to point G on a lack of supply. The Wave finished the day with a nice intra-day rally on good price spread and strong volume. That rally lasted for 30 min.

This relatively strong rally moved the Wyckoff Wave in an intra-day negative inharmonious action with its O-P Index, when compared with point V.

On the reaction to point G, the Wyckoff Wave was unable to return to its intra-day down trend channel. The end of day rally moved the Wave above the previous high at point F. This changes the intra-day trend from down to up. The new trend channel is drawn in blue

Today’s market action appears to give the Wyckoff Wave an opportunity to continue its rally off point E and test the intra-day support, now resistance line drawn from point U.

Yesterdays comments continue to prevail as there is a good probability the Wyckoff Wave will rally tomorrow and test that resistance line drawn from point U. The quality of the demand will determine if the Wyckoff Wave is able to penetrate that resistance or if the demand will be withdrawn and a more significant reaction will begin.

The Optimism – Pessimism Index rallied and has moved into new high ground. It is in a short-term positive divergence with the Wyckoff Wave when compared points G and H. It is in an intermediate negative divergence with the Wyckoff Wave when compared with point E. The O-P Index continues to test the supply line of its upward trend channel.

Tomorrow, the Technometer will open in a neutral condition.

Today, it appears more supply needed to be dumped on the market. That happened during the morning. Then demand dominated the market for the rest of the trading day..

Today’s market action delayed yesterdays observations by a day. The Wyckoff Wave is expected to rally tomorrow. It is the quality of the demand that will determine its future direction.

If today’s demand, especially that in the last 30 min. of the trading day, is sustained, the Wyckoff Wave will have an excellent opportunity to return to the sideways movement that began at point G.

If demand dries up, the Wyckoff Wave should react back into the trading range and initially test the low at point D. This would be the Last Point of Supply scenario.

Another scenario is now possible. As tomorrow is the day before a holiday weekend, demand could be reduced. If the Wyckoff Wave rallies on increased price spread and reduced volume, that would suggest a lack of supply. This would also be a positive that supports the Spring scenario.