Will There The A Trading Range Reaction?

Friday, November 10, 2016

What To Do?

Short Term:

Short-term bulls should continue to maintain their positions.

There are no short-term positions to the downside.

Intermediate & Long Term:

Intermediate and long term positions to the upside should be maintained.

There are no intermediate or long term opportunities to the downside

Market Trends:

Intra-day: Up.
Short Term: Neutral.
Intermediate Term: Neutral
Long Term: Neutral

The stock market, as measured by the Wyckoff Wave, traded lower on relatively high, but decreased volume. It closed in the upper half of a narrower price spread, in an overbought condition relative to the Technometer. The price spread and volume suggest a lack of supply.

A review of the intra-day waves indicates today a standoff between demand and supply. After a gap opening to the downside, supply remained and the Wyckoff Wave rallied, on good price spread and volume to point C.

The rally to point D was on a lack of demand. Then the Wyckoff Wave moved sideways to point E. The price spread and volume suggested a lack of supply.

At point E demand returned and the Wyckoff Wave rallied for the last hour of the trading day. The rally was on good price spread and increasing volume.

The intra-day O-P Index is in harmony with the Wyckoff Wave.

The morning supply returned the Wyckoff Wave to its intra-day up trend channel. However, it was unable to reach the channel support line before demand returned. This is a positive indication.

This gives the Wyckoff Wave an opportunity to test the highs at point B.

The Optimism – Pessimism Index rallied. It remains in a negative divergence with the Wyckoff Wave when compared with points N and J.

The Force Index moved sideways and is still producing moderate negative readings. This supports the overbought Technometer.

On Monday, the Technometer will open in an overbought condition.

Today, the Wyckoff Wave encountered some early supply and late demand. Despite the late demand and a potential of a continued small move to the upside, it appears yesterday’s high marked the end of the move off point S and the beginning of a normal corrective reaction, within a trading range.

This scenario is supported by an overbought Technometer, negative divergences with the O-P Index and a Force Index that continues to produce moderate negative readings.

The Force Index readings continue to suggest the presence of supply and that the expected reaction, as forecast by the overbought Technometer, will not be a minor blip.

The halfway point of the rally from point S to yesterdays high is in the area of point L. If the expected reaction holds at or above point L and is on reduced price spread and volume, this could be a Last Point of Support within a trading range.

This would give the Wyckoff Wave the opportunity to rally sharply through the top of the trading range and into new high ground. It would also be an excellent buying opportunity.

This scenario has a moderate probability of success. If the Wyckoff Wave reacts it will be extremely important to monitor its price spread and volume. For this scenario to be successful, supply needs to dry up. This will offer little resistance as the Wyckoff Wave attempted to advance.

I would like to take this opportunity to sincerely thank all our veterans for their service and the sacrifices they have made our country.

In 1969, after returning from Southeast Asia, I had a not so friendly encounter with the person protesting the war. My only response was a line from a Kenny Rogers song – “it wasn’t me who started that old crazy Asian war, but I was proud to go and do my patriotic short.”

Blessings to every veteran who did just that.