Interesting commentary this morning from Zacks Research:

During the 1920’s, two savvy investors who utilized technical analysis became prominent. Jesse Livermore traded the tape. Three times he made a fortune and then lost it. His life ended in a coat room of a New York hotel.

On the other hand, Richard Wyckoff developed a method of technical analysis that is followed by many today. His writings (and the writings of his successors) are mandatory reading for all students of technical analysis. As a matter of fact, knowledge of the Wyckoff Method is required in the curriculum for the Chartered Market Technicians designation by the MTA (Market Technicians Association).

Using Wyckoff’s schematic for pattern analysis, the U.S. equity markets are very similar to the classic Wyckoff accumulation phase B.

The creek is a hand-drawn line connecting the tops during the accumulation phase. At some point, price rises above the creek in a SOS (Sign Of Strength), commonly referred to as “jumping the creek.”

Monitor the market versus the Wyckoff schematic. Entry points are at LPS (Last Point of Support).

However, fair warning: the DeMark daily count on the S&P 500 is a 9-13 sell on today’s opening.

For those who do not use DeMark counts, they are a method to discern when a move comes to a point of exhaustion, which is followed by a reversal. In today’s case, the basis of the DeMark sell is a Set Up of 9 consecutive closes above the close four days earlier, followed by a Count of 13 closes above the close two days earlier.

If the market fails to rise above the creek in a SOS, the DeMark sell signal should dominate the market’s action in the short-term.