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Waiting For A Spring October 2, 2015

Posted by Tom in Thoughts.
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What many “Wyckoffians” are waiting and watching for is a “Spring” in this market.  This would be a sign that the market environment has (likely) shifted from selling / distribution to the very early stages of buying / accumulation.  Now the classical formation of a Spring is a test (preferably below) the Selling Climax (sc) price level.  Also that Spring bar would ideally be of a wide spread and on light volume.

Why?  Well because a Spring bar is a test for supply; a test for any more sellers.  That test for sellers is provided by driving prices lower, but the result of that is low volume (there aren’t many sellers remaining).  The question is, did we see that on Tuesday with that significant swing and close near that selling climax low and was Friday the turn?

NASADAQ

Now that could be, because rarely are price structures perfect textbook.  What concerns me is that volume was not really that light; in fact it was above average (red line) indicating more sellers coming into this market.  Or in other words, the selling has not “dried up” yet.  Sentiment remains bearish for now as is the big distribution volume indicated by that red line above the green.  My gut feel is that this was just a “test” of that selling climax low and not a true Spring.  I would not be surprised if we rally back to the upper ranges (4900 or so) before we fall back lower.

Monday and Tuesday may give us a handle on this structure.  If we see prices higher on increasing volume we may (just may) have had a Spring.  If prices advance erratically (as before) on light volume, then it was likely just a test in the Distribution structure.

I’ve posted my monthly newsletter in that tab (above) if you wish to see the strength pie charts and sector strength tables.  I’m cautious in here; no need to be a hero by taking unconfirmed risk.  Have a good week.  ….  Tom  ….

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