Testing Important Support

Wednesday, November 2, 2016

What To Do?

No changes from yesterday

Short Term:
Short-term bulls should continue to maintain their positions. In addition, new positions can be considered to the upside.

There are no short-term positions to the downside.

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: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on decreased volume. It closed in the lower half of a narrower price spread, in a clearly oversold 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. Today’s market action was interesting in that supply came into the market on several occasions, but dried up each time. That was followed by some demand which had been noticeably absent over the last few trading days.

After a very small gap opening to the downside, some supply came into the market and the Wyckoff Wave reacted over the next 90 minutes. As supply dried up, demand returned and the Wyckoff Wave rallied to point N.

Once again, supply came into the market and the Wyckoff Wave put in a long slow, 2 hour and 25 minute, reaction to point M. Here the Wyckoff Wave successfully tested the support line drawn from point V.

Demand returned and the Wyckoff Wave rallied sharply to point N. Supply came back, one last time, and the Wyckoff Wave reacted for the last 35 minutes of the trading day. The lack of progress, coupled with high volume, suggests demand was again coming into the market.

The Wyckoff Wave remains in its intra-day down trend channel.

The intra-day O-P Index is in a positive divergence with the Wyckoff Wave when compared with point M, K and A.

Today’s market action suggests a drying up of supply and the successful test of the support line suggests the Wyckoff Wave is ready to rally. While there may be an early reaction to test the low at point M, look for the Wyckoff Wave to rally and weaken the intra-day down trend channel.

The Optimism – Pessimism Index reacted. Today’s O – P Index reaction has placed it in a positive inharmonious action with the Wyckoff Wave, when compared with points Q and K.

The Force Index rallied slightly, but is still producing high negative readings. The mitigating impact on the oversold Technometer remains in place.

Tomorrow, the Technometer will open in an oversold condition.

Today, the Wyckoff Wave reacted and tested the support line drawn from point D. Today’s market action continues to suggest supply has been taken in and the Wyckoff Wave is vulnerable to rally.

This observation is supported by the clearly oversold Technometer and the O-P Index’s relative weakness, when compared with the Wyckoff Wave. The O-P Index has put in significant short-term effort to the downside. That was not been matched by the Wave’s price movement.

While the high negative readings from the Force Index will probably have an impact on the strength of the rally, as mentioned yesterday, the Wyckoff Wave may rally off the support and then react one more time before making its move to the upside.

The scenario that has the Wyckoff Wave testing the highs at point E remains in effect.