Wait For Test of Support

What To Do?

There are no opportunities to the downside

Short-term bulls should continue to consider new opportunities to the upside. However, they should wait for either a successful test of resistance, now support, at point J or the support at the bottom of the trading range.

Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Changed to Down

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 upper half of a narrower price spread, in a 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 the upside, the Wyckoff Wave reacted briefly and then rallied to point O. Then, it spent the next 3 hours and 50 min. reacting to point P. The reaction was on reduced price spread and volume. That indicated a drying up of supply.

During the last 55 min., the Wyckoff Wave put in a rather undistinguished rally.

The rally to point O broke the steep intra-day up trend channel. As the Wyckoff Wave put in lower tops and lower bottoms on the reaction to point P, the intra-day trend is changed to down.

While the Wyckoff Wave respected the new trend channel, the late rally off point P did slightly weakened the intra-day down trend channel. So far, the rally’s poor quality suggests the best it can do is test the high at point K.

Despite today’s lack of supply, the Wyckoff Wave still has a good probability of reacting and testing the low at point H.

Like yesterday, the Optimism – Pessimism Index rallied rather slightly. It continues in its negative divergence with the Wyckoff Wave is compared with points B, X, V, T, and B. It is testing the supply line of its upward trend channel.

The Force Index rallied and is producing low negative readings.

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

Today, the Wyckoff Wave reacted off yesterdays high. It was difficult to continue the rally in the face of yesterday’s overbought Technometer.

The reaction began on reduced price spread and volume. It is expected the reaction will continue. It should encounter some support at the top of the mini trading range that began at point G, on the daily chart.

A successful test would confirm that the move from point K, to yesterdays high, was a minor Sign of Strength and the reaction a Last Point of Support. Remember, trading range ending action does not require a Spring.

If that happens, there is enough count on the 100 Point and Figure chart to take the Wyckoff Wave back through the top of the trading range.

It is also quite possible that the Wyckoff Wave will continue to react and test the lows at point G. There is an extremely low probability it will react through the bottom of the trading range.

If this mini trading range is confirmed, it will not be distribution. Thursday’s and Friday’s lack of supply should eliminate any Upthrust or Sign of Weakness scenarios.

The scenario with the Wyckoff Wave successfully testing the support at point J or the lows at the bottom of the trading range have a high probability of success.