Again hardly convincing in the SPX but while the market is acting like this is an extra week derivatives are certainly not.
Considering the total move in three days is just 8 points is bad enough but what is worse is that the average daily range over this period is also just 8 points, or 0.31%, which really is awful.
We highlight this as normally when this market is becalmed then activity dries up and at the moment the absolute opposite is the case.
Basically don’t get lulled into a false sense as that much money does not get put into play without a very good reason and expectation.
Range: 2480 to 2515
Type: On balance decidedly bearish
It was a strange day in the NDX although it started conventionally enough.
It went as low as its upper boundary, at last, and then rallied until mid afternoon when it returned to 5950.
This resulted in it getting back inside its zone with the low of 5927.70 but it managed an almost perfect inverted head & shoulders pattern with the neck line on (have a guess) 5950 to finish down just 17 points.
The odd part was why and from where the sudden bullishness and subsequent battle to get it back above the zone.
So although there was no hint that there was this potential it may just be the spark this index needs.
Range: 5950 to (6025) / 6125
The DJX has gone back to sleep so it is perhaps worthwhile to recap what has happened here as we believe activity will be the key.
Firstly though we have instigated the use of our new category of activity, which is fairly self explanatory.
The big amount came on Monday and although not all one-way it was “definitely bullish” and then Wednesday we did have one-way traffic that was bearish and “average”.
The problem with so much activity at the start of an expiry is it makes it virtually impossible to define as rather than rollover a position it could just be one(s) that have been allowed to expire and then opened anew.
Judging by the market movement so far this week our guess it is this rather than a new position, and if so the time horizon is a lot greater so yesterday’s activity will probably play a more active role for the remainder of this week even if it is dwarfed by Monday’s level.
Range: 21900 to 22700
Activity: Only just registered