Still Sideways at Top of Range….

Monday, December 19, 2016
What To Do?
Short Term
Short-term bears should stay short and use stops at recent highs.
Short-term bulls 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: Neutral
Short Term: Up
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave, opened higher in the first 20 minutes which basically set the high for the day. Then the Wave spent the rest of the day trading in a narrow range, and closing slightly higher for the day.  Volume was considerably lower today then previous days.
The Wyckoff Wave closed slighlty higher on the day with volume much lower then recent days..  The Technometer is once again sitting on the neutral level.  The price spread and volume showed lack of demand today.
The Nasdaq and S&P 500 was both slightly higher as well today.

A review of the intra-day waves confirms the above.  After opening higher on the day, the Wave made its high of the day within the first 20 minutes.  At that point, volume dried up the rest of the day while the Wave fluctuated in a narrow range, and closing slightly higher on the day.   Volume was much lower today on the rally.
The last 5-6 days of action has brought the Wyckoff Wave to an apex, which usually means we are preparing for a quick move out of the apex.  Volume is also contracting as the apex comes to an end.  If you we make a new high it will be interesting if we get any follow through, or experience an upthrust.
The Intra-day Optimism-Pessimism Index rallied late yesterday and early today.  It is moving in harmony with the Wave and nothing to else to report.
The Optimism-Pessimism Index closed slightly higher.
The Force Index closed higher today.
On Tuesday, the Technometer will open in a neutral condition once again.

Today, the Wyckoff Wave traded slightly higher on a decrease in volume.  The reaction we have been expecting over the last few weeks still is having trouble getting started.  We would expect to see this reaction continue to lower levels.  The recent rally to “X” has not had a dramatic increase in spread or volume, and does not appear we had a Jump Across The Creek, but more so a test of the upper end of the trading range.  Todays rally did nothing to change these observations.
This suggests the Wyckoff Wave will react back towards the middle/bottom of the minor trading range.  For this to happen we would expect this reaction to continue a few more days, and then a minor rally to test the recent highs at “X”, before a more meaningful correction takes place.  The Technometer is back to a neutral reading, so we have to be prepared for the reaction to possibly be short and shallow, and give us another test of the recent high.
The reduced probability of a successful Sign of Strength also indicates the Wyckoff Wave will not experience a Last Point of Support on the reaction.  This suggests the Wave is expected to react back into the trading range and test the previous support at point “W”, “U”, and the more important lows at point “S” in a normal correction.

Good Trading,
Todd Butterfield