Supply Finally Arrives

Tuesday, March 21, 2017
What To Do?
Short Term
Short-term bears should stay short stocks with relative weakness.   We are continuing to hold shorts looking for lower prices.
Short-term bulls should 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: Down
Short Term: Down
Intermediate Term: Up
Long Term: Neutral
The stock market, as measured by the Wyckoff Wave opened slightly higher and then met waves of supply to close sharply lower.  Volume was much higher today on the selloff.  Price and volume show heavy supply present.
The Technometer is near a neutral reading.
The Nasdaq was down 1.82%, and the S&P 500 was down 1.24% today.
 


A review of the intra-day waves shows the Wave opening slightly higher, and supply came in heavy for the rest of the day.  The O-P continues to trade heavy as we had been mentioning on these daily updates.
The Force Index closed lower today, and continues to apply downside pull on the Wyckoff Wave as well.  A reading of -293 will continue to favor more downside price action.
On Wednesday, the Technometer will open in a neutral reading.
 

 
Today we finally witnessed the supply that we have been expecting for weeks.  Volume picked up and was the heaviest we have seen in three months.  The O-P and Force has continued to deteriorate here so we should still see more correction.  The Technometer is not near oversold so it also should allows more downside in the days ahead.  Today’s action broke the red trend channel, and should return the markets to more sideways action at a minimum.
 

 
We had mentioned in our “Week In Review”, that the IWM (Russell 2000) had been leading us to the downside and today was no exception. The Small Cap index was down a sharp 2.74% today on a large increase in volume.  It is now at a support shelf so it will be interesting to see how it acts at this level.  We would expect a continued move lower in this index.  It is oversold on the Technometer, but with today’s price action we would be looking for an area to add to shorts when this condition is relieved.
 

 
We had also shown on the “Week In Review”, how the Wyckoff Wave New was giving indications of a sell signal as well.  This index has now broken support and should have more downside ahead.
 

 
Bonds were up nicely again today, and we are on the sidelines.
Good Trading,
Todd Butterfield