The real test was on Thursday 14th
Feb when the intraday low was 25308, but more importantly, the close was 25439,
so the fact it was fought over and the bulls won tells its own story.
The first point to address is the fact
that last time the zone was 24400-24600, but at that very same time, the Feb
expiries zone was 25100-25400, so March just basically joined Feb’s, so no
surprise or drama there.
Fast forward to the current, and
although R1 is at 26200, it is plainly obvious to us this has been fighting a
tactical retreat, and at least from 26100.
26100 was where R2 was back in the
rollover, so has always been a significant level.
Anyway, seeing this means we now
perfectly understand why the DJX’s intraday highs since Friday have been 26052,
26241, 26155 and 26039.
Also, why the close on those days have
been 26031, 26091, 26057 and 25985.
We don’t see the move up in the zone
here as bullish, more like a correction, but the receding R ratios are,
although the failure of this index to surmount the futures selling generated by
the dynamic delta isn’t.
On top of which, the Y ratio bandwidth
is now 2800-points wide, so the ratios certainly are not filling in underneath.
So, just like the SPX, we are exceedingly nervous….and still two weeks to go.
Type: On balance bearish
Nb. Comment from 03/08/19
The most pleasing aspect about our
comment back on the 28th February was our trading range of 25300 to
Since then, the intraday high has been
26155, and the intraday low from yesterday was 25352, and you can’t say fairer
Actually, you can, as back when this
index was persistently trying to get above R1 our zone was lurking down at
25100-25300 (hence the bottom of the range of course) and not many would have thought
that just before the rollover this index would be even close.
Anyway, we are not counting our
proverbial chickens yet, as the observant will have noticed that in today’s
ratio table above, R1 has gone, leaving R2 at 26600 as the new first line of
This will bring a whole new level of
significance to the zone, and perhaps 25100.
First up, of course, it has to get back
into its zone, and it might even be willing to relax in it until the rollover
If not, then, in one of those
potentially seminal moments, whether it breaks out above (bullish territory),
or below and into bear territory.
We are not going to guess what will happen, but you now know the significance of 25300 and also 25100, so you can react accordingly.