The watch and wait situation continues.

There should be no short-term opportunities to the downside.

 If there is a successful back up to the Creek, new short-term positions can be taken to the upside. Otherwise, there are no opportunities to the upside.

Intermediate and long-term bulls should maintain existing positions.

There are no intermediate or long term opportunities to the downside.

Intra-day: Changed to Neutral.

Short Term: Neutral

Intermediate Term: Down

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 high neutral condition relative to the Technometer. The price spread and volume suggest a lack of supply.

A review of the intra-day waves confirms the above. After a small gap opening to point M, the Wyckoff Wave reacted, on reducing price spread and narrowing volume, to point N. This weakened the intra-day up trend channel.

The Wyckoff Wave made an attempt to return to that channel as a rally to point D. While the one intra-day up wave was on good price spread and volume, there was no follow-through. Demand was withdrawn and the Wyckoff Wave reacted.

This broke the intra-day up trend channel and change the trend to neutral.

The last intra-day wave lasted for 10 min. and the Wyckoff Wave made very little progress on high volume. While end of day volume is normally high, the strong volume and little progress to the upside could be a clue that supply is returning.

This would suggest the Wyckoff Wave will react on Friday.

The Optimism – Pessimism Index moved sideways. It remains in an overbought position relative to its upward trend channel. It is in a negative divergence with the Wyckoff Wave when compared with points D, B, Z, X and V.

The Force Index reacted and is now producing moderately negative readings.

Tomorrow, the Technometer will open in an overbought condition.

Today, the rally off the bottom of the mini trading range was paused and the Wyckoff Wave reacted back towards the top of the range.

While this scenario cannot be eliminated, it is still difficult to justify a Sign of Strength and back up to the Creek, based on the weakness of the rally through the top of the range.

In addition, Friday will open with the Technometer in an overbought condition. This, in conjunction with the negative O – P Index divergences and the resistance that is expected at the intermediate-term downtrend channel’s supply line, reduces the scenario’s probability of success.

However, today’s reaction on reduced price spread and volume, was clearly a lack of supply. This means the scenario could play out. Tomorrow’s market action should be closely watched.

As there is little room between today’s close and the top of the trading range, any reaction on Friday would need to be on a very narrow price spread and reduced volume.

Another possibility would be an intra-day failure to the downside. The Wyckoff Wave would react on reduced price spread and volume, but strong demand came into the market and the Wavelet rally.

The second scenario, has the Wyckoff Wave reacting through the support/resistance line drawn from point L and returning to the mini trading range.

If this happens, this mornings high would become another resistance point in the mini trading range.

Based on the above, the reaction back into the trading range scenario continues to have the highest probability of success.