Nb. Our comment on 12/19/22
We certainly got that exciting end to the December expiry that we hoped for.
Firstly, we sincerely hope you caught the test of DR at 7550 with the intraday high of 7553.36 on Tuesday 13th.
After that it was all about whether or not it would manage to breach the zones upper boundary at 7450. It failed to do so on rollover Wednesday, but this had as much to do with the SPX spending this day around their zone, at 4000.
On the Thursday it did manage it but, we suspect this was a very short-lived sense of achievement, as having broken through it obviously found it even harder to try and stay within it.
The settlement price was 7350.08, so they did do it, but only just.
And that is the trouble with the zone, as being where there is no ratio, then there is absolutely nothing to push back against the market whichever way it goes.
And once the expiry was out the way and, courtesy of the January expiry zone being slightly higher, the market found itself below the zone in this new expiry without having to actually even go anywhere.
Compounding this, is the fact that the new expiry also has 150-points of the very minimal Y1 ratio below the zone.
This makes the first meaningful ratio support level 7250.
However, the good news for the bulls, is that there is also 150-points of Y1 ratio on the other side of the zone.
Meaning we have a potential trading range of 7250 all the way up to 7650 this expiry.
Range: 7250 to 7400
Activity: Average
Type: On balance decently bearish
www.hedgeratioanalysis.com
Nb. Our comment from 12/12/22 (re. the Dec expiry)
Well, here we are in the final week of the mighty December expiry and, we have to say, it really hasn’t been that exciting. Quite the opposite in fact.
Hopefully the rollover and actual expiry will generate a bit of excitement, and then we can get down to the usual Christmas rally.
But first we must mention last week and, on the very day we last published (5/12/22) we saw a bandwidth test with B1 again featuring prominently, and exactly as suspected (please see our comment below).
The intraday high was 7598.21 and, although B1 had slipped, we did get that “nervous reaction”, which then saw the market to go on and test DR at 7550.
DR held but, as we always say with a bandwidth test, you tend to get a breakout the next day. Which is exactly what happened.
This meant the remainder of last week was all about the zone’s upper boundary at 7450.
Perfect timing as we enter the final week, now all they need is one last final effort to get it back in its zone for either the rollover or the expiry.
Trouble is, it is never that simple. As this week sees everything go up several notches, as the December expiry isn’t known as the biggest of the big for no reason.
The trouble is, this greatly enhanced activity can very easily be misdiagnosed and, therefore attributed to other factors, which can make getting, and holding, the market between 7350 and 7450 very difficult.
And then, we quite often see the amber gamblers, those that pile in at the closing stages, which can dramatically shift even the zone. So, a move to 7450-7550 is not out of the question either.
At least 7550 is still DR and B1 is back at 7600, so you at least definitely know where all that futures selling is going to come out at.
Range: 7450 to 7550
Activity: Very poor
Type: Bearish
www.hedgeratioanalysis.com
