Watch and Wait

Click Here For Wyckoff Wave Chart 01-25-2016

We are in a watch and wait situation. With the exception of the intra-day trend changing to down, there are no changes from Friday.

Short Term:

There are no opportunities to the downside

While Short-term bulls could continue to consider new opportunities to the upside, it might be best to wait for a successful test of the trading range lows.

Intermediate & Long Term:

Intermediate and long-term bulls should maintain existing positions.

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

Market Trends:

Intra-day: Changed to Down

Short Term: Down

Intermediate Term: Down, but weakened and in an oversold position.

Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on decreased volume. It closed near the bottom of a slightly narrower price spread, in an oversold condition relative to the Technometer. The price spread and volume suggest a lack of supply.

A review of the intra-day waves indicates the presence of supply. However, while supply was present during the trading day, it was not dominant or sustained. The morning’s market action was on a lack of supply. The fact that supply came in during the afternoon instead of continuing to dry up suggests the Wyckoff Wave has more room to move toward the downside.

The intra-day trend is changed to down. Presently the Wyckoff Wave is testing the support line of the new intra-day down trend channel.

After a gap opening to the downside, the Wyckoff Wave reacted to point P. The reaction was on a lack of supply. After a brief attempt to rally failed at point Q, supply came into the market and the Wyckoff Wave reacted for the rest of the trading day.

The Optimism – Pessimism Index reacted. It is in an oversold position relative to its upward trend channel. The O – P Index is also in a positive divergence with the Wave when compared with point U. It is also in a positive inharmonious action with the Wyckoff Wave when compared with point Q.

The Force Index reacted and continues to produce high negative readings. There is a mitigating impact on the oversold Technometer.

Tomorrow, the Technometer will open in an oversold condition.

Today, the Wyckoff Wave appears to have begun to react and test last week’s low at point G. Presently there are no significant clues as to the success or failure of this test.

The Wyckoff Wave was unable to reach the supply line of its short-term down trend channel. This suggests it may weaken the channel tomorrow or Wednesday.

The oversold Technometer is a positive indication for the bulls. Although the high negative Force Index readings suggest a rally will be difficult, the Wyckoff Wave should have a hard time reacting when the Technometer is in an oversold condition.

It will also be important to watch the O – P Index readings as the Wyckoff Wave approaches point G.

Charts of the Wyckoff Wave are attached.