The watch and wait situation continues.

Even though the Wyckoff Wave is testing the top of the mini trading range, the risk/ reward ratio is not conducive to new short-term position to the downside

Aggressive short-term bulls should continue to identify new opportunities to the upside. However, today’s rally indicates that any new opportunities to the upside will not present themselves for several days.

Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Up

Short Term: Neutral

Intermediate Term: Down

Long Term:  Neutral

The stock market, as measured by the Wyckoff Wave, traded higher on decreased volume. It closed near the top of a narrower price spread, in a high neutral 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. After a wide gap opening to point J, which took the Wyckoff Wave through the resistance line drawn from point S, strong supply returned for one intra-day wave.

Then the Wyckoff Wave rallied to point K. The rally was on decreasing price spread and lower volume.

After the move to point K, the Wyckoff Wave was unable to make any progress and move sideways for the rest of the trading day.

Almost 2/3 of the days upside progress was found in the gap opening.

The Wyckoff Wave is in an overbought position relative to its intra-day up trend channel. It is also encountering some overhanging supply as it approaches earlier highs at points B back to point K.

Today’s lack of demand and its overbought position, as the Wave approaches the overhanging supply, suggests the Wyckoff Wave will not be able to continue its rally. It is expected to react and at least test the now support line drawn from point S.

If the Wyckoff Wave does react, the amount of supply that comes into the market tomorrow, will provide an excellent indication as to the length and depth of any reaction.

The Optimism – Pessimism Index reacted. It remains in a slight short-term negative divergence with the Wyckoff Wave when compared with point L. It is in harmony with points J and H.  It is in a more significant negative divergence with points D, B, Z and X.

The Force Index rallied slightly and is producing moderately negative readings.

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

Today, the Wyckoff Wave rallied and is approaching the resistance at the top of the mini trading range.

The rally’s lack of demand and the negative O – P Index divergences suggest it will be difficult for the Wyckoff Wave to continue to rally through the top of the range.

That would suggest there is an opportunity for short term positions to the downside. While this could be true for aggressive short-term bears, there isn’t a great deal of room for a strong reaction within the mini trading range.

This would change if the Wyckoff Wave upthrust mini trading range. While that scenario does not have a high probability of success, it still should be closely watched.

The most likely scenario continues to have the Wyckoff Wave react and test the bottom of the mini trading range. There was a great deal of supply on Wednesday and Thursday, as the Wyckoff Wave reacted to point M. This probably needs to be dried up before the Wyckoff Wave can return to the top of the major trading range. That’s why any reaction off the top of the mini trading range should be closely watched.