Weak Technicals Clouding the Markets

Update on US Markets after Fed announcement:

Weak demand for S&P 500 can been seen on fake break (Upthrust) and as observed in FFI (Fund Flow Index) diverging trend from the index.

Thus, despite last night's late buy up, caution remains on the overall market with close watch on trendline and any incoming market supply.

Dow theory is also displaying weak or bearish technicals. Dow Jones Transportation has broke critical neckline (fell thru the Ice) as Dow Jones Industrial broke its uptrend line.

Upon DJI breaking its neckline, downtrend for US markets will be confirmed.

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Wyckoff's Law of Effort

Law of Effort Wyckoff's Law of Effort states that on any single trading day (or week depending on time frame), huge volume (effort) push by participants should see huge price movement, resulting in a wide spread (long body). This is a basic principle of effort and result. However, as per Singtel's case study, we saw huge selling volume on 11 May, yet the price action only shows a narrow spread (small body). This divergence of effort and result in Wyckoff's Law of Effort principles, indicates possible exhaustion in selling or hidden buying. Thus, with a lack of weakness, Singtel should continue trading range bound for the coming days or weeks till further strength or weakness is observed. Swing Traders who trades range can consider positions at 3.70-3.72, with exit target 3.76-3.78.

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