Watch And Wait Continues

Monday August 1, 2016

What To Do?

Click here to open the attached charts

Short Term:
There are no short-term opportunities to the upside.
There are no short-term opportunities 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, experienced an intra-day failures to both the upside and the downside. It closed, on decreased volume, in the middle of a wider price spread, in a nearly oversold condition relative to the Technometer. The intra-day failures, cancel each other out and, suggest a lack of supply.

A review of the intra-day waves indicates that while both demand and supply were present, supply held the upper hand. After an extremely small gap opening, supply came into the market and the Wyckoff Wave reacted to point I. The reaction only lasted for 5 min.

The Wyckoff Wave spent the next hour and 35 min. rallying to point J. Good demand was present and price spread and volume were consistent with a nice move to the upside.

However, at point J, supply returned and the Wyckoff Wave reacted sharply to point K. The reaction lasted for one hour and 10 min. Both the rally and reaction, while reasonably strong, were short-lived.

The Wyckoff Wave spent the afternoon attempting to rally, but was only able to gain 150 points. Although the Wyckoff Wave made little progress to the upside, volume increased. This suggested supply was coming into the market.

Today’s market action confirmed that point H was not an intra-day Spring. The support line of the intra-day trading range has been adjusted to include point H.

The inability of the Wyckoff Wave to aggressively rally to the top of the trading range, and this afternoons apparent appearance of supply, gives the Wyckoff Wave another opportunity to test the low at point H.

If the Wyckoff Wave can react past point H, the intra-day trend will be changed to down.

The Optimism – Pessimism Index reacted and is in a slightly overbought position relative to its upward trend channel. It remains in its short term negative divergence with the Wyckoff Wave when compared with point E.

The Force Index also reacted.

Tomorrow, the Technometer will open in a neutral condition.

Today, in another lackluster trading day the Wyckoff Wave continued to move sideways. As often happens, in a prolonged sideways movement, the Wyckoff tools are beginning to display contrary indications. The short-term negative divergence with the O – P Index is not supported by the nearly oversold Technometer.

When this happens it is always important to analyze price spread and volume. The extremely small down move from point E has been on relatively narrow price spread, but increasing volume. This does not suggest a drying up of supply. Rather it suggests the presence of overhanging supply.

As the Wyckoff Wave has not been able to rally strongly into new high ground, the reaction back into the trading range scenario continues to have the highest probability of success.