At least the SPX has (so far) held above its zone.

Nb. Our comment from the 04/29/20

Sadly, this is just the scenario we are afraid of.

Basically, the market isn’t going up because everybody believes the crises is over, it’s going up because there is no ratio to oppose it.

Again, the regulators should be aware of market dynamics, and take great pains to avoid exactly this sort of situation, as it only leads to false, and therefore misleading, interpretations.

The fact of the matter is, R1, above the zone, still does not kick in until 3205.

Where this is a distinct improvement from 3305 (on the 24^th), what it means in practice, is that this index could easily recover back up to the 3300’s.

And that, to us at least, is dangerous, as it will be as if nothing has happened, and even the most isolated person in the world, knows that this is just not the case.

Take into consideration that we were looking for a 10% contraction anyway, this being how overstretched it had become, means that if this is the case, then there has been no adjustment for the economic impact that we have witnessed in the last 6-weeks at all, which is madness.

The astute may want to take note of the fact the corresponding R1 ratio does not appear until 2595, so this could most easily become a two-way street.

However, this time, there is no B1 at 2195 to come to the rescue.

It may be worthwhile comparing this index to the FTSE, as at least that has some ratio, and is reacting to it, so, you know, that there is money, and therefore, belief, backing that move.

Contrast that to the activity registered here, and perhaps worth knowing that yesterday, it was “moderate”, so hardly representative of players falling over themselves to get involved.

Hopefully, we are wrong, but this is just the sort of move, that screams beware to us, as it should, but won’t, to the regulators.

Range:            2805  to  3205         

Activity:          Only just registered 

Type:              On balance bullish

Nb. Our comment for 06/06/20

Essentially, this index is just treading water, which is a good thing.

Especially in light of our comments above.

In the meantime, since we last commented, the market went back above 2900, but significantly seemed to struggle in the Y2 ratio.

Back on the 29^th April don’t forget, Y2 started at 2905.

Today, it starts at 2955, and although we didn’t calculate the ratios between our comments, it seems remarkably coincidental that the intraday high in this period was 2954.86.

Whatever, the fact that Y2 is, or has, slipped, is bullish, as is the fact that the ratios below the zone are building.

The caveat to all this, is that the increase below the zone is hardly rampant, and, above it, although Y2 has slipped, all the other ratios have come in, in other words also increased.

Don’t also forget, that back on the 22^nd and 23^rd April, this index closed inside its zone (2799.31 & 2797.80).

And, on Monday this week, its intraday low was 2797.85, which we are happy to take as another test of its zones bottom boundary, especially considering it came at the end of a nigh on 50-point drop.

It has plenty of room for manoeuvre within its Y1 ratio bandwidth, and, at the end of the day, we are surprised to see it react so sensitively to the minimal Y2, but we just report what is, not speculate as to why.

So, don’t get fooled, as the way this market is acting is not particularly bullish, and it is running out of support at 2795, having tested it three times already, but what action there is, is keeping it in bullish territory, so this is its predilection at the moment.

Range:            2805  to  3165     

Activity:          Moderate     

Type:              On balance bearish