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Here's the update from the Wyckoff SMI, after fridays market action on the S&P.

http://wyckoffstockmarketinstitute.com/course.htm

The stock market, as measured by the Wyckoff Wave, traded lower on decreased volume. It closed near the top of a narrower price spread. The price spread and volume suggests a lack of supply.

However, an analysis of the intra-day waves suggests good supply was present throughout much of the day. However, some demand did appear towards the end of the day and this, coupled with the day's reduced spread and volume could make the Wyckoff Wave vulnerable to a rally on Monday morning.


After a long sideways movement, the Wyckoff Wave has fallen through the long term resistance line drawn from the 2011 spring highs. The reaction was mitigated by the large gap opening to the down side which resulted in a narrower price spread than we saw yesterday.

This move created a definitive weakness of the up trend channel. Therefore, the short term up trend must be changed to neutral.

While, as mentioned above, the day's action still gives the Wyckoff Wave an opportunity to rally, it would need to do so on widespread and volume and return to the short term up trend channel. In my opinion, this demand would need to come in strongly on Monday so it would be a continuation of the demand we saw at the end of today's trading. If this demand does not come in, the Wyckoff Wave will be extremely vulnerable to a continued reaction.

While the possibility of a Monday rally cannot be ignored, it appears this could well be the beginning of the long anticipated reaction. Presently there is a count of 1,400 of the Wyckoff Wave Point & Figure chart.



What To Do?

Short term short-sellers should maintain their positions, but begin to determine an exit strategy, especially if the expected down move progresses.

There are no short-term opportunities to the long side.

Intermediate and long-term traders to the upside should hold their positions and watch the market action as next week develops.

The short term trend of the market is now neutral.

The intermediate term trend of the market is also neutral.




cheers