Wyckoff analysis of a market top
Market tops can be confused with Bullish flags so its worth looking at the opportunity to trade, what could be a move in either direction.
There is mounting evidence that this may be a market top. Weakening economic data, inverting yield curve, weakness in the MClellan Volume summation index, Put/Call ratio rising.
Historically patterns may repeat themselves and endless studies have been conducted to look for repeating patterns. Wyckoff studied market tops in particular and describes the behavior looking at actions and reactions during the topping process. The topping process has not been completed yet and may turn to be a bullish flag. We could see further upthrusts or last points of supply before the correction. What sways my belief more than any other factor that we are in a topping pattern is the volume associated with each particular major up or down move. Down move volume looks very much higher than up move volume which would imply major institutions are in a process of distribution rather than accumulation.
So how far will the move go? It could move quite quickly if it crushes major volume resistance points at 2700 and 2600 and end up quite easily back at 2000 if the the economic data is not supportive because there is very weak market supporting volume after 2600/2700 resistance levels.
There is mounting evidence that this may be a market top. Weakening economic data, inverting yield curve, weakness in the MClellan Volume summation index, Put/Call ratio rising.
Historically patterns may repeat themselves and endless studies have been conducted to look for repeating patterns. Wyckoff studied market tops in particular and describes the behavior looking at actions and reactions during the topping process. The topping process has not been completed yet and may turn to be a bullish flag. We could see further upthrusts or last points of supply before the correction. What sways my belief more than any other factor that we are in a topping pattern is the volume associated with each particular major up or down move. Down move volume looks very much higher than up move volume which would imply major institutions are in a process of distribution rather than accumulation.
So how far will the move go? It could move quite quickly if it crushes major volume resistance points at 2700 and 2600 and end up quite easily back at 2000 if the the economic data is not supportive because there is very weak market supporting volume after 2600/2700 resistance levels.
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