The SPX zone will move as will R3, so best be aware.
Nb. Our comment from 11/06/19
The top end of our trading range before Thanksgiving was 3165, and we must apologies, as we forgot to mention what we call a “step-up” in the ratios at 3155.
This is where, within a bandwidth, in this case R3, the actual numerical ratio is closer to the next level up, as opposed to the one below.
Quite often, as the ratios move, these levels get revealed as a level in their own right.
This is what has happened here, as the step-up at 3155 on the 26th has become R3 in its own right.
We mention this as this index, intraday on the 27th, reached 3154.26, so it has already been here once, so knows what to expect, although back then it was a lot nearer to DR than it is today.
This just highlights what we said last time, the ratios below are building, and those above the zone slipping, both of which are bullish.
The static zone is not, nor is the fact it is over 100-points below the current level.
But, don’t forget that this is the mighty Dec expiry, so it is absolutely massive, and this year is the biggest we have seen for some time.
Although it hasn’t yet reached the proportions of last year, but easily swamps the preceding 4 years before that.
We mention this as it is very unusual, considering its size, to see any Y ratio at all, and, on top of which, the B ratios only appear at 3230, and then only above the zone.
So, despite its magnitude, it is a very thin index where the ratios are concerned, so, as we gallop towards the expiry, the moves may, probably will, become extreme.
Range: 3105 to 3155
Type: On balance only just bearish
Nb. Our comment on 12/12/19
The static zone is but a minor concern, as with so much Y ratio around it will move, it is really just a matter of when.
As we have mentioned the Dec expiry is the biggest of the big, and considering the volumes we are seeing this year, it could actually beat last year, making it one of the biggest ever.
However, one of the drawbacks of this gargantuan volume, is that it doesn’t move very quickly, hence the static zone.
Furthermore, it is just as well it keeps knocking on the R3 door, as if it got a shock, as things stand, the zone at 2995-3005 is a very long way away indeed, and nothing but Y ratio in-between, and for a triple, that is tantamount to no ratio, which means no support.
Again, and as we mentioned last time, that this market has been to 3155 before (3154.26 on 27th Nov), and despite it remaining at R3, you know the market knows what to expect should it go there again.
Additionally, you also know, that with R2 slipping 25-points, and DR 10-points, either side of it, that the ratios above the zone are in full retreat mode, so don’t expect it to hold for much longer.
Therefore, it might be worth knowing that 3175 is what we call a “step-up”, so that will soon become the next R3 level.
Past experience suggests to us, that in, or by, next weeks rollover and expiry, the zone will settle at 3095-3105, which is still a way below the current market, so please bear this in mind, especially as the rollover is now but 4 trading days away.