Nb. Our comment from the 06/12/20
As we said, “it is just a question of when?”. Or, did we hear a “Boo”.
Actually, we also said that the zone in all likelihood will move to 2995-3005, so we were hardly surprised to see that is exactly where the market eventually ended up.
Albeit a week early (expiry is next week) and the fact the zone hasn’t actually moved yet, but small matters really.
For us, the real battle came at 3205, on the day of our last comment.
The fact that the market finished below R2 that day was the most significant thing that happened this week.
Then yesterday, when the market broke down below R1, and back into the Y ratio bandwidth, it just did everything exactly by the ratio book.
Now it is back in the Y ratios the only thing that we can say with any certainty, is expect volatility, or more pointedly, the continuation of, and whipsaw.
The potential bad news, if you are a bull that is, is that 2795-2805 hasn’t been filling in with ratio.
So, it is not beyond the realms of possibility, that the zone could drop 100-points as easily as it could jump a hundred.
Which is very probably why it hasn’t already moved to 2995-3005, which is still the favourite, but now only by a nose.
The rollover is next week, with the expiry on Friday, then we are back into the intermediary ones.
So, the real issues will be, firstly, have they now adjusted, and, secondly, their disposition, as in, will we still have a gargantuan Y ratio bandwidth?
Let you know next week.
Range: 2905 to 3155
Activity: Very poor
Type: On balance only just bearish
Nb. Our comment for 06/16/20
Absolutely by the book, and exactly as we said; “Now it is back in the Y ratios the only thing that we can say with any certainty, is expect volatility, or more pointedly, the continuation of, and whipsaw”. Please see above.
Volatility, check, and whipsaw, probably one of the biggest ever, being from down 76-points to being up 38-points for a 114-point swing, so definitely, check.
Actually, our other expectation has come in as well, with the zone moving to 2995-3005.
Probably helped the bulls’ case, as when it went north it very likely passed the market going the other way.
It is still in a stupidly wide Y ratio bandwidth, which now makes 3155 rather significant.
However, at the end of the day, if you lob a several trillion-dollar hand grenade into the market during the rollover and expiry week, what do you expect.
The sincere concern, is that the powers that be remain so totally ignorant of natural market forces, that when they see the market get repulsed by R2 and head back towards its zone, they panic.
It was foreseeable, therefore predictable, and if you don’t believe this then just read our comments for this expiry, and, so therefore, a perfectly normal market reaction.
No need to panic, as if that is what they have done, and we believe so, then it not only reveals a total lack of understanding, but the fact that what they are doing is misguided, and therefore also wrong.
Your decision then, stimulus vs. rollover.
Range: 2795 to 3155
Type: On balance bearish