9/3 in review

9/3 - SPY up by 0.07% 

Secondary:  new up cycle, +78.

Primary: SW: +866, Slope: +382, Change: -30, Value: 3082.

SPY MP: flat

SPY Liquidity (All): slightly higher

SPY Algos Liquidity: flat

SPY Dark Pools Liquidity: strongly lower

VXX MP: collapsed

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The Secondary barely had enough SW to flip today - the SW exceeded the limit by 66 points at the close, which translated into a new up cycle - but just by 3 points.

As the Change approached low double and single digits at noon, SPY retraced the whole move up and went back into the yesterday's range. A dramatic decrease in SPY MP with Algo liquidity should have given a clue. SW moved from its highs at +2000 to its lows in +800's.

While SPY Liquidity is slightly higher, there is a noticeable divergence between the accumulator and the price.

Overall, nothing which was unexpected has happened - I outlined that the most probable scenario would be:

"the gap fill into $197.6, IMO given the meaningless of the gap-down yesterday, that should happen rather quickly. 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. "

As the gap fill happened, I knew that:

"It would be easier to judge further possibilities after knowing how much upside potential we would use for the gap closure"

Well, after the price has retraced back into support level after the successful gap closure, the Change was at +19. At that time SPY MP has collapsed, VXX MP has been rising and Algos were selling. So:

"Otherwise, we might see ranges with lower prices"

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I view today's price action as a reasonable reaction to what has happened. Price traded in a volume null, which was caused by 4 rather large gaps in the past 10 days, which I discussed in the intra-day post in detail:

Those who were caught by the gap were willing to sell into the fill, while those who bought the dip underneath didn't want to miss out on profits. These two sentiments resulted in today's price action, which could also be fueled by a long-weekend Friday tomorrow.

BOTTOM LINE:

There are many things to consider: new (weak) up cycle on the Secondary coupled with the down-side energy on the primary, long weekend, liquidity divergence and the volume null.

I think that underneath support (in the form of large volume and price) should limit any downside movement tomorrow (unless we gap down beyond - but that's another story). 

Ideally, the Secondary would remain in the up cycle tomorrow, while the Primary loses high values in its Slope. Then the next week's opening would define where we go next - and I am sure, that it will be wild.

I expect (depending on the conditions) that any move down would get faded tomorrow, which is in line with the current up cycle on the Primary - the support should hold; movement should occur in the boundaries of the volume null (outlined in the picture above). Besides this, there are many contradictory signals out there at the moment, including "pre-weekend" trading, that make any prediction of the ahead price movement quite hard.

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P.S.

At the same time, the Secondary still identified a new up cycle with a huge divergence in the Change value; and there are some other divergences that are noticeable at the moment.

Lastly, if looked in a complete information vacuum, S&P is getting squeezed with each day: