Nb. Our comment from the 06/07/22
Well, it promised so much but, after that seismic move down in the zone, the SPX has just stalled.
Although, we did suspect that it was pure and simple a reset, and so we also think that the true nature of this market is yet to emerge.
It was more to do with the sudden shock of hitting R2 on the very first day, the resultant subsequent rebound forcing the radical zone move, rather than a more deliberate market motivation that caused the reset we think.
Once the zone had moved, and the market was above it, had there been any further aspirational bulls out there, they really could have had the mother of all parties.
Still could of course, as R1 is still a massive distance away at 4505, but there just doesn’t seem to be the belief.
Oddly however, we are also not seeing the zone want to move away from where it is. Which is a bit bizarre, because this index has stalled around the low 4100’s, which is in the virtually non-existent Y1 ratio gigantic bandwidth, and yet it hasn’t forced the zone to settle around it.
There may well be technical, or even economic reasons for this torpor but, from a derivative perspective, there is no reason at all as the market should be fizzing about with 2 or 3% moves.
On a positive note, the level of activity has been ok throughout, so we feel certain this particular doldrum won’t last much longer.
At the very least, next week is the rollover and expiry, so this alone should start to agitate this market and get some volatility out there.
So, same as last week, the R ratios below the zone should provide some support, but it has been there already this trip so will be no stranger to what’s there.
On the other side of the coin, there is still an absolute vast swathe of Y ratio above it, so all it would need it a gentle shove in that direction, but what in the current climate could provide said shove we have no idea.
Range: 4005 to 4505
Nb. Our comment for 06/14/22
Well, we certainly got our 2 to 3% moves, and right on cue into the bargain.
The only question that now remains, is will derivatives reassert their authority for the rollover and expiry?
Interestingly, the zone has still not moved. Nor are we seeing any likely successor making a move.
However, in glorious hindsight, it really was a very big warning when the zone didn’t move up despite the market trading for so long in the low 4100’s.
In fact, reading what we said above, back on the 7th (before the market opened), and again in hindsight, all the signs were there and mentioned, we just didn’t state the probability, sadly.
Anyway, the rollover is this Wednesday but, in all likelihood and considering the magnitude of the move, it will more than likely be down to the actual expiry on the Friday.
It is still a tall order, as emotions are running high naturally, but at least it’s not new news that is spooking the market. Actually, one has to wonder why the same old chestnuts are being regurgitated yet again to explain this recent market move, as this is not something that the market hasn’t been aware of, and for some considerable time. Curve-fitting really, as nobody really wants to explain how it is that this is actually very predictable and yet they still don’t expect it.
On to more important issues, and the move down in R3 and DR below the zone actually happened yesterday, the 13th.
So, just like the FTSE and 7650, the deep incursion below 3745 tells its own story, as does the close, which was just back above it.
Out of interest, the level of ratio at the intraday low yesterday of 3734.30 is not now found today until 3715/3720.
Going to be another epic triple witching expiry, and we would expect no less of course.
Range: 3645 to 3745 or 3745 to 3895
Type: On balance just bearish