Still near the top of the trading range

This past week the Wyckoff Wave was fractionally lower for the week.  After opening higher on Monday, it tested the previous weeks upthrust, and then traded slightly lower for the week.  Volume was slightly lower on Monday’s test and heavier on Thursday’s selloff.   Price and volume show some supply present.

The Technometer is at oversold levels at Friday’s close.

The S&P  was down .5% for the week while the Nasdaq was down over 2%.

The Wave began the week with a rally on Monday to point “Z”, which tested the upthrust at “X”.  Then it traded Tuesday/Wednesday before some supply came in Thursday.  Then Friday we had a lackluster trading day before the holiday weekend.  The Wave is still holding near the top of the range which is encouraging, and the Technometer is still registering an oversold condition.  This tells us the Wave is continuing to be vulnerable to a rally here.

The O-P spent the week continuing in its downtrend and closed at its lowest levels for the week on Friday.

The Force Index closed the week at -395, which is considerable downside pressure.  This pressure is what kept the Wyckoff Wave from rallying this week, even in face of an oversold condition on the Technometer.

We still have a few shorts on and expected more of a pullback here.   Something has to give this week we feel, as the O-P and Force is in downtrends, but for now the Wave is trying to hold at higher levels.

We continue to hold a few longs as well and have identified other stocks still outperforming to the upside.

The Wyckoff Wave Growth Index (WWG) chart had considerable more downside action last week as we expected.   This poor action kept us from jumping on the Wyckoff Wave’s oversold Technometer.  The Wyckoff Wave Growth Index Technometer is now finally off of overbought and nearing an oversold reading as well.  Its Force Index is also in a downtrend so we want to be careful buying its oversold Technometer to early.  It could possibly spring its previous low from three weeks ago, and also nearing its longer term support line.

The bond market experienced large losses last week at an area which we feel is not good for the Bulls.  You can see we rallied up to the 50% retracement  on the longer term chart and met strong selling.   We would like to see a short term rally this week to establish short positions.

Good Trading,

Todd Butterfield

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