Testing Resistance

Monday, November 7, 2016

What To Do?

Short Term:
Short-term bulls should continue to maintain their positions. Stops can be moved to cover costs.
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: Changed from Neutral to Up
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on increased volume. It closed near the top of a narrower price spread, in an oversold condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves suggests that while some supply was present, today was a demand day.

After a wide gap opening to the upside, which consisted of 59% of the days total gain, demand remained and the Wyckoff Wave rallied to point T. Notice that point T was at the top of the intra-day trading range and a natural place to encounter resistance.

There the Wyckoff Wave reacted to point U. Demand returned during the last 30 min. of the trading day and the Wyckoff Wave rallied through the resistance to a strong close.

Today’s move to the upside changes the intra-day trend to up.

While today’s rally was certainly a positive indication, the intra-day O-P Index is in a negative divergence with the Wyckoff Wave when compared with point F.

From an intra-day perspective, the Wyckoff Wave is in a “needs to go and go now” situation. If good demand is not come into the market tomorrow morning, there is a good probability the Wyckoff Wave will react back into the trading range.

The Optimism – Pessimism Index rallied slightly. It continues in a positive divergence with the Wyckoff Wave when compared with points Q, O, K and D.

The Force Index rallied, but is still producing high negative readings. There is a mitigating impact on the oversold Technometer.

Tomorrow, the Technometer will open in a slightly oversold condition.

Today, the Wyckoff Wave finally put in a strong move to the upside, as it rallied off the support line drawn from point D. Despite today’s positive market action, the Wyckoff Wave may run into some difficulty as it tests the highs at points P and N.

There, the Wyckoff Wave could encounter a negative divergence with its O-P Index. In addition, the continued high negative Force Index readings should have a mitigating impact on this potential rally.

While the Wyckoff Wave is expected to make its way through the top of the trading range and test the highs at point E, it may have to react and retest point S, before continuing its move to the upside.