9/2 Day in Review

The primary had opened very strongly, but wasted some of its upside energy on filling the gap; as SW moved from +1600 to ~ +400. At noon price has reversed and SW started increasing, so as the change. New up cycle is identified.

The secondary has flipped up and in transition.

MP up on the day.

VXX MP pretty much has identified the double bottom, so as the dynamic of VXX price.

SPY liquidity - slightly up, (to note: a spike into close)

SPY algos - unchanged

SPY Dark Pools - higher, a very big spike into the close.

SPY chart:

Today we saw an important reversal with a filled gap and a breakout above yesterday's highs / today's open. Given the strong SW at the close (+1495) and change (+49) that remained very positive the entire day, we are probably leaving the scenario of filling the cyan volume null on the 2-year chart and retracing until the support at 188-189, at least for now.

The Primary has closed at -3144, which still leaves plenty of room for the upside, supported by the positive divergence on the Secondary (lower price, higher change). This upside potential could be released in even greater amounts, if we gap up tomorrow and break the resistance at $199.5, where multiple failed breakouts have previously happened.

MP slightly rose today, but liquidity doesn't support the move yet.

BOTTOM LINE:

The most likely scenario right now is the gap fill into $197.6, IMO given the meaningless of the gap-down yesterday, that should happen rather quickly. It would be easier to judge further possibilities after knowing how much upside potential we would use for the gap closure, but breaking the resistance at $199.5-200 and moving into the purple volume null (ends at $205.36) is critical, and the faster that happens - the better. Otherwise, we might see ranges with lower prices, and possibly below the yesterday's low at $190.73.

Given the strong reversal today and a strong close, I would expect a higher open tomorrow somewhere in the gap-down volume null, which would retrace slightly lower - dependent on the SW. However, a bigger magnitude of a gap up - near the gap closure area and that could translate into one of these "constant grinding higher" days.

In the unlikely scenario of a gap-down I would expect it to be filled quickly. I can't imagine an absence of at least 0.3% gap tomorrow morning, but that would truly be the trickiest scenario among all.