Since our last comment on the 4th
it has indeed been all about R2, which back then was at 2885 as you can see in
the left-hand column in the above table.
Furthermore, exactly as we also said
back then (please see above comment), this ratio was slipping, so if you had
taken notice then all the price action in this index over the last week would
have been perfectly understandable.
The top of the DJX’s zone was 26500, and
their intraday high, and so far, expiry high, back on Friday 5th was
So, taking yesterdays close the DJX has
lost 344-points, whereas, here in the SPX, it is down just 4.92-points.
As we said “it just keeps banging on
that (R2) door” and we even mentioned 2995, so really you just can’t get better
What we did get wrong however, was that
the rollover and expiry wasn’t “next week” it is now next week.
But worth noting that R2 is now 2925,
but there is what we call a step-up at 2905, which was R2 in-between
The SPX has laid out its stall, and we
believe it will still be sensitive to a still receding R2, so, for us, it all
now boils down to the DJX, and the top of its zone, and the NDX.
The fact that the rollover and expiry are large on the horizon also means this market is still very susceptible to anyone saying “boo”.
to 2885 or 2885
to (2905) / 2925
Type: On balance bearish
Nb. Our comment on 04/17/19
Well it never really managed to become
as courageous as it was, and therefore never really challenged R2 again.
In our last note R2 was at 2925, and as
you can see today it has barely shifted, now residing at 2945.
Nevertheless, in the intervening period,
the highest this market has got was intraday and 2916.06.
But, although R2 hasn’t moved much, the
really significant move has been the huge expansion of the Y ratio bandwidth,
which now stretches all the way up to 2930.
The fact the ratios have hardly filled
in underneath, means this is more by default, or by a distinct lack of interest
either way really.
The end result, is that the zone could
easily flip to anywhere in the Y1 ratio bandwidth, and probably even Y2, the
ratios are receding so fast.
Our money is on it shifting to
2895-2905, as back at the start of this expiry this was R2, nudging on R3, so
that is a precipitous fall in the ratio down to Y1.
Admittedly, this index has been knocking
on the R2 door, each time forcing it higher, but it hasn’t really filled in
underneath, and leaving the zone to move right at the end is more about
curve-fitting than rampant bullishness.
So, this index is still very scarily susceptible to anything going “boo”, but in the absence of such it is in default mode, trudging higher without any conviction that we can discern. In fact, quite the opposite.