To us it is a very complacent SPX that we are seeing, almost as if just because it is expected it will just happen.
By which we mean the move up in the NZ, as now it is 85-points below the market where it is, and in no scenario, is that good or healthy.
The appearance of Y2 at 2625 obviously signals the choice but to achieve this it really needs to pull the finger out and stop leaving it to someone else.
Yesterday R3 was at 2665 and this is still a level to be reckoned with, but beware of opening gaps, otherwise from where it is now the ratios start climbing rapidly and at this stage of an expiry, tax bonanza or not, it should not be challenging these levels.
Range: 2630 to 2670
We don’t expect very much from Jan, or at this stage, but the level of activity we are seeing really is disappointing.
However, it is not so much the lack thereof but rather the fact it is negative, and as there is so little to begin with it seems churlish to take money off the table.
However, it has caused the R ratios to slip above the zone, but as we say above the market the day before rollover should not be taking on R3 and here we are in Jan and not only is that as high as it goes you will have to take motorised transport to reach it.
Range: 2630 to 2660 or 2660 to 2690
Activity: Very poor
Type: On balance not bullish
To be honest all that trouble they took in the NDX to keep it inside its NZ last week made us think that this would be it for this expiry.
Therefore, the suspicion is that this is equity led as the final nail was yesterday as after the strong open on Friday it was reined in and was still within spitting distance, but not anymore.
However, we do not think derivatives are that bothered as it looks a shoe-in that the NZ will return to 6375-6425, and very probably by tomorrow, after all it is inside a mammoth Y1 ratio bandwidth.
Range: 6425 to 6525
Type: On balance only just bearish
Regarding the Jan expiry where we use the term “bothered” above that pretty much sums up this expiry currently, as in a big “not”.
Activity bears this out and actually even in the Dec expiries activity is really quite low, but two out of the three in Jan haven’t even made it onto the scale they are so bad.
Considering there is still 400-points of Y1 ratio either side of the zone in this expiry really anything could happen.
Range: 6325 to 6725
Activity: Did not register
It is a very big day for the DJX as it has R3 directly ahead and the rollover tomorrow.
The difference between this index and the SPX is that this index has been doing this all year, so best hope it will not be a case of being better to travel than arrive.
Here the NZ is a cool 1300-points below the current market, but by now this index is so blasé about it all it is making no pretence whatsoever to adjust its zone.
However, this is the mighty Dec expiry so if anything is going to pop a bubble this is it, either that or total and utter capitulation, and judging by the activity it may have already decided.
Range: 23600 to 24500
Activity: Did not register
Basically, our closing comment from yesterday “However, B1 at 24900 dispels any notion that this bubble is over” essentially says it all for Jan.
If Dec does result in total and utter capitulation it doesn’t just mean that’s it, as what is happening here testifies.
It means they can do what they like.
Range: 24300 to 24500