Summer Dullness Continues

Monday, August 29, 2016

Click here to open the attached charts

What To Do?

Short Term:
Today’s poor quality rally suggests that new short-term position to the upside should not be taken.
Aggressive short-term bears should maintain their positions.

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: Down
Short Term: Neutral
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed in the upper half of a narrower price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest a lack of demand.

A review of the intra-day waves confirms the above. After a small gap opening to the upside, the Wyckoff Wave put in a long, slow, 3 1/2 hour rally, until it reached point V on the intra-day line chart. The rally was on relatively narrow price spread and decreasing volume.

Then, the Wave spent the rest of the trading day in a long slow reaction. Some supply was present. During the last 20 min. of the trading day the Wyckoff Wave tried to rally, but made little progress. The lack of progress and high volume suggested the presence of supply.

The Wyckoff Wave is in a intra-day negative divergence, with its O – P Index, when compared with point V.

The intra-day support line, that began at point E has been changed to include the support at point U.

The Wyckoff Wave has moved into a significant overbought position relative to its intra-day down trend channel. Today’s lack of demand suggests it will react and attempt to return to that channel.

The Optimism – Pessimism Index rallied. It is moving into an intermediate term negative inharmonious action, with the Wyckoff Wave, when compared with point E. It continues to test the supply line of its upward trend channel.

Tomorrow, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave tried to rally off the mid-August support of the sideways movement. This is marked as point H on the three-month vertical line chart.

The rally was not of particularly good quality. In addition, as Friday’s low was below point H (point E on the intra-day line chart), it may need to be retested.

A successful test of Friday’s low would give the Wyckoff Wave an opportunity to rally and at least test the resistance in the area of point F.

As today continued the summer dullness, there is a reasonable probability that this will continue through the Labor Day weekend.