That Pesky Supply

Friday, September 30, 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: Neutral
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 in the middle of a narrower price spread, in a neutral condition relative to the Technometer. The price spread and volume suggest the presence of supply.

A review of the intra-day waves confirms the above. After a gap opening to the upside, demand remained and the Wyckoff Wave rallied to point L. Then, demand was withdrawn and the Wyckoff Wave moved sideways for the next 3 1/2 hours. During that time, some supply began to come back into the market.

The move to point M was one final attempt to rally. That failed and the Wyckoff Wave reacted sharply for the last 20 min. of the trading day.

The late high volume created an intra-day positive divergence with the O-P Index, when compared with yesterday’s close.

The Wyckoff Wave continually encountered supply as it rallied to point F, H, L and M This presence of supply suggests the Wyckoff Wave is not yet ready to rally. It needs to take in more supply before it can make a move to the upside.

Look for the Wyckoff Wave to react and, once again, test the lows at points E and I.

The Optimism – Pessimism Index reacted, but remains in a positive inharmonious action with the Wyckoff Wave, when compared with point D.

The Force Index reacted sharply, but is still producing moderate negative readings.

On Monday, the Technometer will open in a neutral condition.

Today, the Wyckoff Wave made another attempt to rally and, like yesterday, the attempt failed.

As mentioned above, the Wyckoff Wave still has more supply that has to be taken in before it can rally.

This continues to suggest that the Wyckoff Wave will react and test the lows at points M and possibly the support line drawn from point D.

As the Wyckoff tools are not presenting any significant signals, which is common in a sideways movement of this type, it will be extremely important to watch the price spread and volume.

If the Wyckoff Wave reacts, it will be helpful to watch how the price spread and volume compares with that on the reaction from point L to point M.

That reaction signaled a significant drying up of supply. It will be important that next weeks market action does the same.

Today’s final chart offers a longer-term market perspective.