Cover shorts, identify longs.

Short Term:  Short-term positions to the downside should have been closed. There are no new opportunities.

Today’s gap opening precluded the taking of new position to the upside. However, short-term bulls should continue to identify candidates and be prepared to take new positions..

Intermediate & Long Term:  Intermediate and long-term bulls should maintain existing positions.

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

Intra-day: Down.

Short Term: Neutral

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 increased volume. It closed in the upper half of a narrower price spread, in a low neutral condition relative to the Technometer. The price spread and volume suggest the presence of demand.

A review of the intra-day waves confirms the above. However, the demand was not dominant or sustained.

After an extremely wide gap opening to the downside (point B), which contained two thirds of the day’s reaction, the Wyckoff Wave put in a poor quality rally to point C.

This opened the door for supply to come in and for the reaction to continue. That didn’t happen. Instead the Wyckoff Wave put in a minor reaction to point D. It then spent the rest of the day rallying off the low.

While demand was present, it did not behave like “demand off the bottom”. This suggests the Wyckoff Wave may not be ready to put in a good rally on Tuesday.

For the third time, the Wyckoff Wave was unable to reach the support line of the intra-day down trend channel.

In addition, while we are seeing lower lows at points Y, B and D, the Wyckoff Wave put in a higher high at point A. This continues to suggest that while the Wyckoff Wave may not rally strongly on Tuesday, there is little room left to the downside.

The Optimism – Pessimism Index reacted. It has returned the harmony with the Wyckoff Wave when compared with point C. The short-term positive divergences, when compared with points J, Y and W, continue.

The Force Index reacted and continues to produce high negative readings.

The stock market is closed on Monday.  On Tuesday, the Technometer will open in a low neutral condition.

Today, the Wyckoff Wave reacted. The bulk of the reaction was contained in the gap opening to the downside. After the gap opening, the Wyckoff Wave made little progress and rallied during the afternoon. This indicates the meeting of support.

In fact, the Wyckoff Wave did test point U and found the expected support.

However, as mentioned above, the demand was not dominant and the Wyckoff Wave could continue to react.

If the reaction continues next week, it is expected to be on relatively decreased price spread and volume. There appears to be little, if any, room left to the downside.

This scenario is supported by the positive divergences with the O – P Index. In addition, if the Wyckoff Wave reacts, the Technometer will become oversold.

The most important part of today’s market action was the lack of supply. While demand was not particularly strong, supply, with a couple of minor exceptions was not present.