Holding at the top of the trading range

This past week the Wyckoff Wave was fractionally higher for the week.  After opening higher on Monday, it then spent the rest of the week trading in a narrow range. Volume was above normal levels Friday due to expiration.

The Technometer is at overbought levels at Friday’s close.

The S&P  was flat for the week while the Nasdaq was down almost 1%.

The Wave began the week with a rally on Monday, then traded in a tight range for the remainder of the week.  Not much new to add to analysis.  The Wave is holding at the top of the range which is encouraging, but the Technometer is overbought and we would still expect some type of pullback to relieve this condition.

The O-P gave no strong clues this week but it is finally showing some positive volume coming into the market.

The Force Index closed the week at -77, which is not providing much help.

No changes in our positioning from the previous weeks.  We have a few shorts on and expect a pullback from these levels.  We are still holding shorts of weak performing stocks, and also holding a few longs on outperforming stocks.   We would continue to look for stocks that are outperforming to the upside, and could lead us higher after this correction has run its course.

We have included the chart of the Wyckoff Wave Growth Index (WWG).   This chart appears to give us a perfect example of the “Shell Hunters Tragedy”.  Here is the link if you would like to watch our video discussing Robert Evans “Shell Hunters Tragedy”  https://youtu.be/DC8wDcBC4uc
The Index could not rally to the overbought line of its uptrend as it was showing signs of  being tired.  It then broke through the support line of the uptrend on increased volume.  It is now back to resistance at that line which was a 50% retracement.
We can see the O-P has hit another new high for the move while the WWG is well below the previous high.
The Technometer is also now registering overbought.  All these condition put us on the look out for another leg lower.

The bond market experienced a nice rally for the week.  We had warned of a expected bounce coming in last week’s “Week In Review”, and because of that gave a buy signal to our ProTraders during Mondays session.  We purchased at $124.56 as marked on the following chart.  You can see how the Wyckoff Tools gave us the trade setup.  The Force Index had made a new low for the move while the price has held at much higher levels.  When the Technometer registered an oversold reading, it gave you a low risk entry for a buy.  We have raised our stop to breakeven, and will watch the action for the next few days closely.  We would expect continued strength to higher levels.

Good Trading,

Todd Butterfield