Market Update For Week Ending 2/12

  



Background on dark pools can be found at this link.

Recap from Last Week

SPY reacted strongly to the daily SMA 50 and blasted right through the SMA 20 to reach ATH's. Everyone on Twitter turned bullish.  Friday did not have abnormally high activity on volatility instruments, but we could see late prints on Monday.  From past experience, they like to distribute around $30 billion at highs before letting go.  Volume is decreasing on the rise, and the boys at mission control are not using much ammunition on this rally.  This week, the data doesn't show us a clear picture of the future.  Use the pivots as a guide and be careful.  

This Week

My portfolio continues to be long, and I've been concerned about a dump coming soon.  SPY has risen too far, too fast since bouncing off the daily 50 SMA.  About $2B came in as late Friday prints totaling $4.2B at 388.  Then they bounced most of the week between 388 and 392 with a short squeeze on Friday.  The range is getting tighter and the prints are starting to add up after very low volume lately.  My scanner shows $11.2B at 390.5 and $10.3B at 392.

What's Next?

SPY seems to work different than an individual stock.  Rarely do you see massive volume at the bottom.  They like to accumulate in tranches during the rise and take profits as SPY goes up.  Then you see $20 - $40 billion in prints at a high, and it's time to get worried.  We are at $21.5B total at Friday's close and the direction is unknown.

What about volatility?  VXX activity has been elevated this week, but the data below doesn't clearly show a direction.  They could be accumulating VXX at the lows or the prints could be short covering.  You typically see heavy VXX at the bottom of an index dip, rather than the top of a trend.  Just like SPY, it seems like they accumulate in tranches and then sell at the highs (typical VXX high = SPY low).  Sometimes a giant VXX print shows up at the top of SPY, maybe $100M - $200M, but they don't do that all the time.


I recommend watching the pivots closely next week.  Look at how price bounced off the 388 support twice.  That means 388 is an important spot.  

Weekly Pivots

392       Pivot
390.5    S1
388       S2
386       S3
383       SMA20
376       SMA50 (strong support)

If you want to look at the data for yourself, a Google sheet can be found this link.  Retweet or follow me if you want to see more posts like this.

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