Nb. Our comment from the 07/31/20
The SPX still hasn’t really gone anywhere, and this expiry is now two weeks old.
However, it has become a bit more exciting, as at least a bit more volatility has returned, exactly as anticipated.
Although, we would describe this as just warming up, or a slow awakening, as 40 or 50-point daily moves are really nothing considering how much scope this index really has.
And this remains our greatest concern, especially considering on the first day of this expiry, Monday 20th July, the open was 3224.29 and the close, 3251.84, and yesterdays were 3231.76 and 3246.22 respectively.
At least we have seen the move up in the zone, to 3145-3155, but we fully expect 3195-3205 to be very soon.
In fact, it really could move anywhere within the Y1 ratio bandwidth at present, and that is the problem, as it is vast.
Basically, the Y1 ratio bandwidth runs from 3000 all the way up to 3300, scary, truly.
At the moment, it is creeping higher, and the bullish case is somewhat supported by the rising ratios below the zone, as well as those above falling.
But it seems to us that this is more a case of neglect, rather than by design, as, just like many automatic cars, when in neutral it is designed to creep forward.
The fact that the Y ratio bandwidth overall has increased, from what was a mammoth 425-points, to the current 435-points, is really what one should be concentrating on.
Of course, we don’t know what the spark will be, or even if there will be one, but make no mistake, and just like the FTSE, this market could easily traverse its entire Y ratio bandwidth, so be warned.
Range: 3155 to 3330
Type: On balance bearish
Nb. Our comment for 08/04/20
Look, it may feel exciting, but really the SPX hasn’t shown its real colours yet.
Basically, it is hardly an achievement to move ahead, or in either direction in fact, while you are in the middle of the absolute minimal Y1 ratio.
It was very possibly the very first time this index has even challenged Y2 yesterday, and this expiry in now into its third week. NB. Intraday high was 3302.73.
This is hardly aggressive stuff, in reality, the fact it has only been moving 30 to 50-points a day, under these conditions, it is actually rather pathetic.
The lack of interest aside, the other aspects are all rather bullish.
The zone has moved up to where it was expected to, and, more to the point, it doesn’t look like it wants to stop, with 3320-3330 and 3345-3355 both on the cards now.
Also, below the zone the ratios are rising, and above it, they continue to fall.
The problem is that this is all happening by default, as the lack of involvement is acutely apparent, which means it could turn in the blink of an eye, especially as there is no commitment behind it at all.
Therefore, the problem remains, the Y ratio bandwidth is still 410-points wide.
OK, so that has narrowed slightly, but not by much, as it is as if this bandwidth is moving up as a block, rather than be pressured by the ratios below rising far faster than those above are falling.
Considering it hardly takes anything to shift Y1, and the fact that this bandwidth is so wide, these levels are so far away from where the market is, it really is a grave concern this total lack of activity.
With Y2 now just above, and R1 not that much further on, we should see soon enough if there is any depth at all to this move, but evidence so far suggests not.
Range: 3205 to 3345
Type: On balance bearish