If there was any doubt Monday’s high of 2578.08 was a test of Y2 in the SPX then yesterday’s action dispels it.
If there was ever a better opportunity with a rampant DJX to at least re-test it then that was it and yet it hardly reacted.
For us then we see this index as looking towards the safety and comfort of its zone rather than anything else, but as we said yesterday the decision may not be theirs.
Activity has settled down and the ratios continue to strengthen below the zone and weaken ever so slightly above, both of which are actually bullish.
Range: 2555 to 2595
Type: On balance bearish
Meanwhile the NDX is quietly going about its business and from our viewpoint pretty much ignoring the other two.
The low yesterday was 6057.69 which makes it strike 2 of the bottom boundary.
However, the high of 6090.89 was also a test of the upper boundary which gives us a NZ bandwidth test so it could well break out today.
As we said it is acting normally, or rationally, and although activity has settled a bit here as well it is still decent.
Range: 6050 to 6100
We do take great pains to just stick to derivatives but the DJX is just taking the pi**.
So please giving Caterpillar and 3M as the excuse to go up 168-points on a fundamental argument is just insulting, this index is so way past any form of fundamental justification people need to start calling it what it is and that is rampant, with the stress on the first syllable.
However, as we have said, even as early as last week there is no ratio and so therefore nothing to stop it, or at least make it work for it, until 24000, and this is a far better and justifiable reason than any measure of possible future earnings.
Range: 22700 to 24000
Activity: Only just registered