Nb. Our comment from the 07/28/20
Well we have to hold our hands up here, as there is no way we would expect just 20 or 30-point daily moves in the SPX whilst it is this neck-deep in the minimal Y1 ratio.
Actually, it gets worse than that, as the opening price on this expiry was 3224.29, so, on last nights close, all it has done is move an insignificant 10-points.
We think it is lucky, insomuch as there is such a huge degree of apathy, as the Y ratio bandwidth now stretches for a massive 425-points.
That’s 13% overall, but if you look at it from where the market is currently, there is 81-points upside, but 344-points downside.
Lucky if you’re a bull that is, not so much if you are a bear.
Eventually, this market will snap out of its doldrums, so please don’t get lulled into this false sense of serenity, as when it does, it really could move.
Otherwise, it is pretty much the same as it was last week.
The zone will eventually move, probably to 3195-3205, and the ratios continue to weaken above it.
The small change, is the rate of weakness has dropped noticeably, and the ratios below the zone have stopped rising, and are now static.
Small, but perhaps significant, although only time will tell us if this is due to a change in sentiment, or just the result of the all-prevailing apathy.
It is worth mentioning, that in our trading range below, the bottom is the upper boundary of this index’s zone, and we have all seen how influential this has been in the FTSE recently.
The other point, is we haven’t mentioned Y2 at 3280, slipping from 3265, as a market this sensitive, could easily react to even this minor level of ratio.
Range: 3105 to 3320
Nb. Our comment for 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