SPX , NDX and DJX Ratio Table 20th Nov 2017
The Dec expiry is difficult to call just by the very nature of its size, but for the SPX there is also the not inconsiderable fact of Thanksgiving.
This is in effect the US’s “Santa rally” and then on Black Friday it is normally a warm welcome back all the time compounded by very thin markets as everyone is away for the holidays.
The fact that the SPX is starting inside its zone is good, and at least satisfies the requirement to visit it at least once per expiry.
Also, it is good, albeit unusual, that there is still Y ratio either side of the zone, and in fact 2445-2555 can’t yet be ruled out as it may resume being the zone.
So, there is a lot to consider but because of the time of year and because of the increase in overall activity generated by Dec we suspect this time we will see a test of R2 at 2605, and hopefully the NZ will again limit the downside, but please take note that the corresponding level of R2 does not appear until 2495.
Range: 2570 to 2580 or 2580 to 2590
Type: On balance just fractionally bearish
The NDX last trip was where it was all happening so we have to assume more of the same.
Therefore, Y2 at 6325 is going to be the first test for this index, although from its close then the open may well play a significant role here as well.
So, we better mention the step-up level which is 6375, as if it starts off all aggressive then what little ratio there is above the zone is in for a torrid time.
However, all this does is hide the elephant in the room which is the NZ down at 5975-6025.
So, for us the big question is when their zone will move up, not forgetting how compliant this index was on the rollover in Nov, and hopefully it will be soon as all 3 have precious little ratio underneath them, but at least the other two have their NZ’s as a safety net not too far below.
Range: 6025 to 6325 or 6325 to (6375) / 6425
Type: On balance only just bullish
If we thought the other two were difficult the DJX is even worse, and if only because we don’t know which hat it is going to wear.
In the November expiry just gone the NZ was 23400-23600 and the settlement price for this index was 23403, so it hung in there by the proverbial skin of its teeth.
Tremendous effort, but does this now mean it is back in the fold?
If it is going to start acting rationally again then it will find itself in a 500-point R1 ratio bandwidth courtesy of the Dec NZ starting at 22900-23100.
This should be “uncomfortable” for it so 100-point trading ranges depending on the open, with the zone and R3 bookmarking the ends.
So, nothing on one side and a scary amount the other, but thin markets, so we can easily see a test of 23600 but it will be a very nervous time when or if the market tests its NZ and whether or not that will hold.
Range: 23100 to 23600