Market Update For Week Ending 2/26
Background on dark pools can be found at this link.
Recap from Last Week
Monday was a market holiday. Tuesday showed another $5.5B at SPY 393 and a large VXX print ($119M for the day). After seeing that VXX print, I unloaded all high beta longs and picked up a little UVXY. Wednesday, Thursday, and Friday had another $8B at SPY 392. The boys appeared to be selling the market every day and then would let off when they hit a $3 target. They were also selling volatility when that $3 SPY target was hit. Combining SPY prints at the highs for 2 weeks gives us about $35B total. At the end of day on Friday, they printed another VXX trade for about the same amount as Tuesday at the exact same price. Then price hit an old demand zone and they printed about $15B in that demand zone (at the lows of the week).
For next week, watch that late Friday print as a pivot. If price continues to go over that and the pivot holds, we have started another accumulation phase, and could see another 5% gain in SPY before another distribution.
This Week
So those Friday prints look to be more distribution for a total of $50B, and Monday's prints add to that for $56B. That is a lot. Tuesday, Wednesday, and Thursday, they really didn't spend much ammunition whipsawing everyone. It looked like we were out of the woods on Wednesday and many people went long only to have the HFT's dump the market. The dark pools only distributed about $3.6B at those highs. Maybe they are running out of ammo. On Thursday and Friday, they appear to be creating another demand zone in the 380 to 382.5 range (about $13.2B). Price is currently below those levels, so it would not be advisable to load a boat with SPY until the pivot and R1 are cleared and tested.
One troublesome development this week is VXX. They have been printing VXX all week long in small tranches. This is atypical. Price continues to reside over those prints. One could assume that they still hold those VXX positions. Sometimes, they let go of these positions when the market turns up. Sometimes they let go on the way down. The data tells me they still hold high levels of VXX. Caution is warranted.
My favorite index to follow is SPY. That's were we get the most data. Note that the boys have been monkeying with QQQ in a big way this week. QQQ and big tech just piled up more losses than in a long time. The boys seem to have rotated out of big tech, and I wonder when they will get back in.
One other thing I noticed this week is that the setups that follow my pattern discussed here held up very well this week. WWE was one of those, and it didn't really seem to mind that the market was in turmoil.
I've gotten a few questions about seeing these prints in real time. I would be willing to set up an email system that provides near real time updates on VXX and SPY for a $20 monthly Venmo payment. That would also include access to the Google sheet with the data if Google provides authentication to your email system. The fee would mainly cover my costs and effort in putting the system together. Ping me at brian@royseonline.com or @brianbalance on Twitter if you are interested.
Note that I plan to continue provide a weekly SPY update and post publicly for no charge. People have given to me my whole life, and I'm happy to give something like this back.
Weekly Pivots
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