The SPX mirrors our sentiment from
London, as we wished we had published last week, although it was perhaps not
quite so compelling here.
Although, when one gets to see all three
US indices together, then the argument becomes more convincing.
The pertinent bit is that R1 back on the
20th was at 2845, and that very day, after we had published mind,
the intraday high was 2843.54.
Today, R1 is at 2855, but as the
intraday highs on Thursday and Friday last week were 2860.31 and 2846.16
respectively, so we suspect that change has happened this week.
Worth noting that R2 has been at 2865
No harm in the bulls being aggressive,
but ultimately, they will have their limit as to how many futures they can buy
that have been forced out due to the dynamic delta.
This trip, this looks like R2.
So, what else can the ratios tell us?
The upside is what you can see, but
below the zone there is another story altogether.
If there was a strong bullish upswell we
would expect the ratios down here to strengthen (come in), so we are nervously
watching Y2 weaken (move out) to 2720.
R1 has held its own at 2695, but if the
bulls were in total control, as we say, that should be rising.
This, also, throws up the intriguing
possibility of the zone moving down to 2770-2780, which would be bearish of
So, to us, it is not all bullish here,
and with 150-points of Y ratio still, the risks are plain for everyone to see.
But, as always, in the US, it best to check if the DJX has an agenda first, as you can’t escape the correlation naturally.
Type: On balance just bearish
Nb. Our comment on 04/04/19
The SPX is still all about R2.
At the start of this week the intraday
high on Monday was 2869.40, so we suspect the hitherto unchanged R2 was still
However, that day the market closed at
2867.19, which is a fairly blatant sign that either the market had breached R2,
or, and more likely, that it had slipped.
Today, it is at 2885, and as yesterday’s
intraday high was 2885.25, it’s a fair assumption that it was here then.
Obviously, it is slipping, and this index
just keeps banging on that door until it opens and move back to the next line
It will probably hold in the morning,
but we would be rather more circumspect later on.
2895 is the next R2 line of resistance,
but 2905 is where it takes a big step-up.
But, don’t forget, next week is the
rollover and expiry AND it is a 4-day week.
And, more importantly, the zone is still
way down at 2795-2805, and is sandwiched in a sea of Y ratio, so if someone
says “boo” to this market, there is no support underneath for a very long way
However, as always, best to keep an eye on the DJX as they seem to be the ones happy to force the pace.