A look at the close

In case you didn't catch the significance of the article I posted toward the end of the day, it was simply this, in a low volume trading environment, Wall Street looses one of their avenues of revenue, volume rebates, a kickback to send their order flow through certain channels. With the SPY being close to an area in which limit orders are piled up and in a low volume environment, it doesn't take a lot of money or expertise to trigger those orders, this making a few bucks on the volume, but for our purposes, this also is a good place to sell or short into retail demand crating a sort of bull trap, this is why reversals are so commonly preceded by a false breakout. Even without a healthy supply of shorts, the losses incurred by longs as price breaks back below the trend line (breakout zone) creates a supply, snowball effect. In an environment where there's little short interest you can magnify that effect as there aren't any shorts to provide a bid in a falling market.

Take a look at the end of the day breakout via volume and 3C in the SPY where it appears most of the spark was provided.

 Looking at a 1 min chart, nothing jumps out at you with regard to volume during the late day rally.


 Expand the view to an hourly chart and a volume price pattern emerges, the downside or lateral volume is twice that of the breakout/rally volume.

 a 15 min chart provides a bit more detail. After the breakout, volume declines. Any healthy rally should see expanding volume. When price gets to the white arrow it forms a star and volume picks up, this is churning. After that (even though volume isn't as important on a decline), volume picks up into declining prices near the close.

 as for 3C, it makes the lowest low of the day on a 1 min chart...

 Here's the same chart zoomed out a bit for perspective so you can see it was already in a bad position and the low in 3C is a multi day low (I can only zoom out 2.5 days, so the low could have been even greater then 2.5 days).

On the 5 min chart, we saw an early change in character mentioned earlier today, but look at the continuous lower highs/lows even into a late day rally.

From what we see here, it looks like this rally was used for what I assumed it was used for when I first mentioned it and that would be distribution into demand and setting up a little bull trap. The only way bull were buying was if a significant technical level was taken out, I showed you this was not just an intraday high, but a multi day resistance point so it looks like it's served its purpose.