Big play for the SPX as the chain has moved but it’s back to 4th and inches.
Nb. Our comment from 02/04/20
The writing was on the wall when the intraday high on the day of our last comment was 3293.47, and, more importantly, the close was below R1 at 3290.
Very interestingly, today, R1 has moved back to 3280, so definitely a level to watch.
However, hopefully you have not been too disappointed with the level of volatility, as you should have been expecting it.
Although a 43.11-point whipsaw on Thursday 30th was quite extreme.
Our only disappointment is that, so far at least, the expiry low is 3214.68, so less than 10-points away from the zone.
This is however tempered by the fact it is just 9.68-points, hardly anything on a three-thousand-point index, and, especially so, after a fall of 123.09-points.
Furthermore, as we have continuously pointed out, that there is still a stupid amount of Y ratio around, and even Y1 ratio, so there is actually a case for arguing the zone itself could be 3150 all the way up to 3230.
With just over two and a half weeks still to go this trip, there is still plenty of life left in the Feb expiry.
And, although, it is good to see the ratios building below the zone, they have also done so above it, so both bullish and bearish.
But, at the end of the day, there is still just over 200-points of Y ratio bandwidth, which is colossal.
So, for us at least, volatility is still the name of the game, as is the risk, as please don’t forget the corresponding R ratios below the zone don’t kick in until 3070, so the main course could still be to come.
Range: 3205 to 3280
Type: On balance bearish
Nb. Our comment on 02/11/20
It is probably difficult to remember back to last Tuesday the 4th February, but that was the day of our last comment, which happened to coincide with the rather large fiscal stimulus made by the Chinese government.
The end result was an opening gap up of about 32-points, which more importantly, took the open to 3280.61, which was above R1, then at 3280.
That left R2 as the last remaining resistance, and (yet) another opening gap up, this time a more moderate 29-points, got the market safely above that by starting the day off at 3324.91.
Essentially the situation hasn’t changed, as the Y ratio bandwidth is pretty much the same, its just the that it too is moving up with the market.
In US Football they call it moving the chain, making it first down again with ten yards to go.
The only issue here is that the chasm of very minimal ratio remains beneath this market.
Albeit, the zone has moved up, but as we explained previously, moving up into a level of minimal ratio is not the hardest task to achieve, and is almost self-fulfilling if the underlying is so far ahead in the distance as well.
One difference that perhaps may be worth considering, is that after recent events the bulls may not be as resilient as they once were?
Great its moving up, great the zone is as well, and great the ratios are reacting, but really not so great is the Y ratio bandwidth hasn’t shrunk and that the rollover starts next week.
Don’t get fooled, the risk are still there, and perhaps the bulls resolve might not be what it once was.