Essentially, this index is just treading water, which is a good thing.
Especially in light of our comments above.
In the meantime, since we last commented, the market went back above 2900, but significantly seemed to struggle in the Y2 ratio.
Back on the 29th April don’t forget, Y2 started at 2905.
Today, it starts at 2955, and although we didn’t calculate the ratios between our comments, it seems remarkably coincidental that the intraday high in this period was 2954.86.
Whatever, the fact that Y2 is, or has, slipped, is bullish, as is the fact that the ratios below the zone are building.
The caveat to all this, is that the increase below the zone is hardly rampant, and, above it, although Y2 has slipped, all the other ratios have come in, in other words also increased.
Don’t also forget, that back on the 22nd and 23rd April, this index closed inside its zone (2799.31 & 2797.80).
And, on Monday this week, its intraday low was 2797.85, which we are happy to take as another test of its zones bottom boundary, especially considering it came at the end of a nigh on 50-point drop.
It has plenty of room for manoeuvre within its Y1 ratio bandwidth, and, at the end of the day, we are surprised to see it react so sensitively to the minimal Y2, but we just report what is, not speculate as to why.
So, don’t get fooled, as the way this market is acting is not particularly bullish, and it is running out of support at 2795, having tested it three times already, but what action there is, is keeping it in bullish territory, so this is its predilection at the moment.
Range: 2805 to 3165
Type: On balance bearish
Nb. Our comment for 05/13/20
Look it’s not by design, and nor is it coincidence, that our last comment was when the market closed at 2868.44, and the one before that was 2863.39, and this is 2870.12.
Basically, it just highlights that this market is trying very hard to make it look, and more importantly feel, like it is exciting and going somewhere.
The most significant thing to re-mention, is how sensitive this market is (see above), and as it had already tested Y2 at 2955 with the intraday high of 2954.86, the fact that Monday and Tuesday fell a bit short is symptomatic of a market that doesn’t want to encounter even that minimal dynamic delta futures selling again.