Nb. Our comment from the 09/11/20
We really ran out of space, rather than omit, to tell you, back on the 9th, that the moves in the zone were likely far from over, and that 3395-3405, was looking bit of a shoe-in.
As with everything in hindsight, this was a mistake, as not only did the bulls put up a fight, this is exactly where the market rallied to.
But not only that, it changes the complexion of it all, especially in light of yesterday’s fall.
Of course, when it moved, it gave a strong signal, and target, to the bulls.
But, when the market failed to hold, it also gives a lot more credence to the bears, as if the zone was still at 3345-3355, then yesterday’s drop was just in keeping with where the natural market gravitational forces would direct it.
However, now comes the really difficult part, as both, or either, could still be the zone.
It will take a day or so, for one or the other, to cement its claim, and as it is rollover and expiry next week, we are plumb out of time.
The only way we can think of understanding/explaining this situation, at least for today, is to think of the zone going from 3345 all the way up to 3405.
Normally, this would be an amazing 60-points worth of zero ratio, astonishing in a triple really, but as markets are just so weird at present, we do not think that this will make that much difference, bizarrely.
In these brave new times, we still have a Y ratio bandwidth of 410-points, inside of which, the Y1 ratio bandwidth stretches for 260-points, so calling 60 of those zero, when they are already just above absolute minimum, will not make a great deal of difference we suspect.
Aside from this, worth noting is that below the zone the ratios (apart from R2 & R3) haven’t changed, but above, they have strengthened, which is a first for this expiry, and, therefore, very noteworthy.
The upshot is, that bears are in control, and flexing their muscles, but when it comes to next week, anywhere in this ridiculously massive Y ratio bandwidth, is absolutely fine, so big moves, whipsaw and volatility are the name of the game, enjoy.
Range: 3095 to 3395
Type: On balance only just bearish
Nb. Our comment for 09/16/20
As today is the rollover, therefore the expiry is this Friday, please don’t get hung-up on the fact the zone has reverted to 3345-3355.
There is a time lag in the movement of the zone, which is essentially why we have Y1 and Y2 ratio levels, which we constantly refer to as minimal.
The overriding point therefore of these minimal levels is to indicate, as early as possible, the rate of change, and therefore the potential next move.
The trouble is, that in a triple, the direction may be obvious, but it just may take a bit of time for that amount of activity to actually facilitate the move.
So, for this expiry, the move was signalled way back when, but when it did eventually move, the SPX had turned around and was mid process of losing 247.14-points.
So, no wonder it thought twice, and reverted, but, again in the meantime, 3395-3405, looks like the target.
And anyway, the old bottom boundary, 3345, did its job, as one could easily see its influence on the market at the tail end of last week, and we for one, are not overly surprised that the market bounced from this region.
The other point to make, is in our last FTSE note, we pointed out that this index losing 247 while the FTSE rose 233, realigned the markets and their ratios, putting both about 2% below their respective zones heading into the final week, so it was fascinating how each has gone about achieving a similar aim from a similar starting line.
Needless to say, and rather in keeping, the SPX raced ahead, achieving it essentially in one day, whereas the FTSE, is still struggling, and being very pedantic.
Now it will be all about trying to take the steam out of the market, as we often liken this amount of Y ratio to an ice-rink (very little impetus goes a very long way), so to end in its zone is similar to a beginner trying to land a curling stone in the bullseye.
Nevertheless, it will be revealing how this market reacts to Y2, as it should reveal how committed the bulls actually, and, don’t forget, R1 is not that far above.
Range: 3355 to 3405
Type: On balance bearish