Emotionless SPX

Nb. Our comment from 04/12/19

Since our last comment on the 4th it has indeed been all about R2, which back then was at 2885 as you can see in the left-hand column in the above table.

Furthermore, exactly as we also said back then (please see above comment), this ratio was slipping, so if you had taken notice then all the price action in this index over the last week would have been perfectly understandable.

The top of the DJX’s zone was 26500, and their intraday high, and so far, expiry high, back on Friday 5th was 26487.

So, taking yesterdays close the DJX has lost 344-points, whereas, here in the SPX, it is down just 4.92-points.

As we said “it just keeps banging on that (R2) door” and we even mentioned 2995, so really you just can’t get better than that.

What we did get wrong however, was that the rollover and expiry wasn’t “next week” it is now next week.

But worth noting that R2 is now 2925, but there is what we call a step-up at 2905, which was R2 in-between publications.

The SPX has laid out its stall, and we believe it will still be sensitive to a still receding R2, so, for us, it all now boils down to the DJX, and the top of its zone, and the NDX.

The fact that the rollover and expiry are large on the horizon also means this market is still very susceptible to anyone saying “boo”.

Range:            2805  to  2885        or        2885  to  (2905) / 2925

Activity:          Poor

Type:               On balance bearish

Nb. Our comment on 04/17/19

Well it never really managed to become as courageous as it was, and therefore never really challenged R2 again.

In our last note R2 was at 2925, and as you can see today it has barely shifted, now residing at 2945.

Nevertheless, in the intervening period, the highest this market has got was intraday and 2916.06.

But, although R2 hasn’t moved much, the really significant move has been the huge expansion of the Y ratio bandwidth, which now stretches all the way up to 2930.

The fact the ratios have hardly filled in underneath, means this is more by default, or by a distinct lack of interest either way really.

The end result, is that the zone could easily flip to anywhere in the Y1 ratio bandwidth, and probably even Y2, the ratios are receding so fast.

Our money is on it shifting to 2895-2905, as back at the start of this expiry this was R2, nudging on R3, so that is a precipitous fall in the ratio down to Y1.

Admittedly, this index has been knocking on the R2 door, each time forcing it higher, but it hasn’t really filled in underneath, and leaving the zone to move right at the end is more about curve-fitting than rampant bullishness.

So, this index is still very scarily susceptible to anything going “boo”, but in the absence of such it is in default mode, trudging higher without any conviction that we can discern. In fact, quite the opposite.

Range:           2805  to  2930

Activity:         Moderate

Type:              On balance bearish

April 17th, 2019 by