Again the SPX tested its Y2 ratio, this time getting as low as 2417.35 before recovering, however we do feel that this was more to do with the DJX and 21600 (see below) rather than this index so it is perhaps not as solid as one may think.
Nevertheless that is strike 2 so we wouldn’t expect it to hold for a third time anyway.
Hardly any changes in the ratios so being in a 75 point Y ratio bandwidth all we can say is expect volatility and whipsaw.
That is unless it drops down to test R2, it holds, and generates bullish activity and momentum.
Not so much today but 2445-2455 and 2420-2430 are still threatening to be the next NZ.
Range: 2395 to 2470
Type: On balance bearish
Rather perturbing considering the level of activity but there has been no further development in the NDX ratios today so this index is still stuck inside a massive Y ratio bandwidth.
Therefore just like the SPX above all we can say is under these circumstances expect volatility and whipsaw, or more of what we saw yesterday.
There is however one interesting development which is 5775-5825 is making moves towards being the next NZ, although we suspect this is not so much by design but rather where the market seems to be entrenched and the fact it was very low ratio to begin with, but it would mix things up nicely for sure.
Range: 5625 to 5875
Activity: Very good
As we said yesterday in the DJX “21600 is going to be a key level” and so it proved with the low of 21600.
Actually it approached this level with some caution but when it did eventually attack it was repulsed rather thoroughly, so most definitely strike 1.
We say that as the rebound only took this market as high as 21718 which is not the sign of a rampant bull market, rather one that we call “in an uncomfortable ratio position”.
Therefore the open will be crucial in determining which 100 point bandwidth it is likely to trade in until one or the other decide to force the issue, or of course unless the ratios change.
Range: 21600 to 22500