Supply Returns

Tuesday, October 4, 2016

What To Do?

Short Term:
Short term bulls, who entered the market, should maintain their positions.
There are no short-term positions 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 Down, but weakened at the close.
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, experienced and intra-day failure to the upside. It closed, on increased volume, in the lower quarter of a wider price spread, in a nearly oversold condition relative to the Technometer. The intra-day failure suggests the presence of supply.

A review of the intra-day waves confirms the above. After a gap opening to the upside, some demand remained and the Wyckoff Wave rallied quickly to point P. There it encountered supply and reacted to point Q.

The following rally to point R was a successful test of point P. Then, supply returned and the Wyckoff Wave reacted for the rest of the trading day.

The market action from the opening to point R only lasted for one hour and 20 minutes.

This presence of supply and the resulting intra-day reaction changed the intra-day trend from neutral to down.

The intra-day Optimism – Pessimism Index is in harmony with the Wyckoff Wave.

On the reaction to point U, the Wyckoff Wave was unable to reach the trend channel’s support line. It also weakened the trend channel during the last half hour of trading.

This suggests the new trend channel is in danger of being broken. However, some supply continues to be present and the Wyckoff Wave could certainly continue to react and test the lows at points K and I.

The Optimism – Pessimism Index reacted. It has returned to short-term harmony with the Wyckoff Wave. It is in a longer-term positive divergence with the Wyckoff Wave when compared with point D.

The Force Index reacted and is still producing moderate negative readings.

Tomorrow, the Technometer will open in an oversold condition.

Today, for the fourth consecutive day the Wyckoff Wave attempted to rally and encountered resistance. Today’s resistance was in the form of sustained supply as the Wyckoff Wave reacted.

While the increased price spread and volume suggest the Wave may continue to react, the nearly oversold Technometer supports the reaction ending at or above the support at either point M or point D scenario.

If the Technometer moves into an oversold condition, at the present time, the moderately negative Force Index readings would not have a mitigating impact on the oversold condition.

Look for the Wyckoff Wave to continue to react, test support and then make another effort to rally back towards the high at point E.