9/4, and 8/31 - 9/4 in review

9/4 - SPY down by -1.51%

Secondary:  back in transition

Primary: SW: -1601, Slope: -528, Change: -4, Value: -606 

SPY MP: down all day.

SPY Liquidity (All): down all day, extended.

SPY Algos Liquidity: down all day, extended.

SPY Dark Pools Liquidity: flat, range trading.

VXX MP: up all day.

Key components for the trading day:

• Failed breakout at 10:30 with strongly negative Change/SW. (short opportunity for the entire day)
• Algo liquidity has sold into the bounces; strongly down until the reversal (short)
• SPY MP/VXX MP perfect inverse, sharply down (short)
• The reversal was marked by a fade on the Change (-30), flattening SPY MP and the reversal in the Algo liquidity.

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The S&P 500 has opened with a big gap down, partially filled the gap, moved lower and bounced in range-trading. The close is just -0.13% lower than the open, which makes SPY to be pretty much unchanged on the day. A fact to note - the distance of the "open to high" and "open to low" is equal - $1 range.

8/31 - 9/4 Review:

The range of the S&P 500 is in contraction, so as the duration of cycles on the Primary. Previous down-cycle has lasted ~2.5 days, and last up-cycle only lived ~1.5 days. Therefore, I wouldn't expect the current down-cycle to last for more than a day at most, which would get mostly defined by the Tuesday open. The Primary has some upside potential at the moment, its value sits at -1136 and could easily get to -2k at least before a slope change.

I would define the next two points as being critical for the upcoming week: 1975 and 1903. Combined range in between is 3.8%. 

I wouldn't be counting on a continued breakout through the absolute resistance levels (cyan lines), but a break of either intermediate support/resistance levels would definitely bring lower or higher ranges to us. Currently, price is 0.5% below the mid-point of the absolute ranges and 0.9% below the mid-point of the intermediate ranges.

However, there is only 0.94% in between the upside intermediate/absolute ranges in comparison to 1.93% for the downside. 

The Secondary continues to express positive divergence and didn't close down by much. But there is no buying on Liquidity accumulators, which brings some serious concern about the duration of any future up cycle.

BOTTOM LINE:

A gap-up on Tuesday would have a much higher chance of a fader, than a gap-down, which would likely put us below the intermediate support line and would bring lower ranges.

I would expect the Primary turn on Tuesday on a gap-up, price should continue higher trading in the volume null, that ends at 197 SPY. There are huge volumes on SPY in the zone of 192-194.5, which I would expect to be supportive.

Again, Tuesday would give us much more clues about the direction/duration....but I would not be surprised to see SPY close anywhere in between of 194.5-198 next week, which prices in at least a 1% weekly gain since the Friday's close.

Key points:

• How strong and constant the positive levels of SW will be.
• Algo liquidity.
• A break of Friday's lows would probably release the downside potential of the intermediate support level (lethal).