Let's look at at least one consequence of all the stuff above--It might relate to number 3 and 4 above primarily, but it doesn't really matter. Here, I'm looking at the actual tape instead of falling back on some bullshit concept of "seasonality" and hoping for some magical return of buyers in September (which I don't expect).
If you take the lower level TICK readings, between +/- 200 and establish a running 5 day average, you get something that looks like the chart below. The lower level TICK readings reflect more organic buying and selling the market. Algos have increasingly used large buys and sells (large TICK readings) to push the market directionally, thus, I'm isolating the lower end of the activity to parse this out. This lower level activity does follow the large pushes and pulls, but also occurs consistently in the ABSENCE of large TICK readings.
Here we are...
Notice that up until the flash crash we generally had a normal pattern of + TICK activity (buys) outpacing - TICK activity (sells). I'm only showing activity going back to 08/09 here just to make a point on what's going on.
At the flash crash date notice that something happens. We no longer have peak areas where buys outpace sells (aka: a pullback), but something else begins. Notice that the buys and sells are essentially tracking one another VERY CLOSELY. There have been perhaps 3 "bursts" in buying activity since the flash crash, but they are short lived and muted to say the least. If you look back historically this does not specifically occur in other "pullbacks", nor does this specifically coincide with "seasonality".
Bottom line, on the short and intermediate term, there is not really an edge to the market right now.
One thing to watch for is decreased intraday volitility, and more persistent uptrends. We might see this in the coming month, but historically August is not a gang buster, specifically for particular sectors. Another tactic that is useful is to watch specific trending statistics in sectors.
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