S&P 500: Should Traders Read Yesterday's Late-Day Buying Spree as a Bullish Sign?

investing.com:

Stocks were down yesterday, but a $6.5 billion buy imbalance sent S&P 500 screaming higher into the close. Yesterday was month end, which can create large buy or sell imbalances. Generally speaking, the quarter ends generate enormous imbalances, but yesterday’s was almost equal to larger, driving the market higher in the final 30 minutes of trading.

These imbalances build over the day, starting at 2 PM on the NYSE, and so if you can see the imbalances and it builds up, you can get a sense of the size sometimes. By 3:30, it was obvious to those with the better seats that it would be large. The problem is that the real totals aren’t released until 3:50 PM ET, when all market or limit-on-close orders are published.

I can tell you from real-life experience that when you are a “real” trader on a “real” buy side or sell side desk, and you see a market imbalance with 1 million shares of something to buy at 3:50 PM, and there are only 600,000 shares on the tape, you had better take the stock up to get the volume in or try to offset the imbalance, or you are going to have one angry PM calling you at 4:01 asking you what happened.

OK, and so how much did you buy?

Yeah, I can tell you from experience the conversation (“screaming”) didn’t go well.

This happens when the imbalances are released in full, and all those VWAP and “participating at 10% of the volume” traders have to catch up.

For me, yesterday’s price action changed very little, and the late-day rebound was pretty as expected because if that was the start of wave one down, then the move higher could mark a wave 2. What was nice about this, too, is that the wave two retracements ended right at the 61.8% level of wave 1.

Meanwhile, the Nasdaq 100 futures appear to be a