Nb. Our comment from the 04/05/22
The zone here in the SPX has indeed moved up, so no surprise there. As is the fact that it probably hasn’t finished yet.
The move to 4495-4505 was actually yesterday, which coincides neatly with the move up in the FTSE, although if there is a relevance to this concurrence, we have yet to discern it.
Of far more importance is how the moves up have occurred. For the SPX it is more of a case of by default, as there was such a huge minimal Y1 ratio bandwidth it really doesn’t take much activity for this to happen.
This is, of course, as opposed to the situation where the ratios are constantly building below the zone while at the same time being in retreat above, and so in this instance the move up is by design.
Which brings us neatly round to the fact that although the Y1 ratio bandwidth has narrowed to 335 (370) this is hardly significant and, anyway, the overall Y ratio bandwidth is now 610 (565), so actually wider, and that’s the case even if you account for the reduction in the Y1 one.
Of far more importance was when we last published (31/03/22) this index was in a tussle with Y2, then at 4615. In the meantime, it dropped back to 4507.57 before recovering, while Y2 has moved out to 4630.
Will 4605 and 4615 still have an impact as steps-up, quite possibly, but please don’t lose sight of the fact that all Y ratio is described as minimal.
In fact, back in the day, the sole purpose for even recording them was as an early indication of momentum and momentum changes. Never did we ever consider back then that one day these markets would react like this to them.
At the end of the day R1 above the zone is just 50-points away, whereas R1 below the zone is 435-points away, so at the very least adjust your risk profile accordingly.
Range: 4505 to 4630
Type: On balance bullish
Nb. Our comment for 04/12/22
It really is a case of more of the same in the SPX.
Basically, everything we said on the 5th (please see above) about how and why the zone here is being so nomadic still holds true now.
So, the zone moves down to 4445-4455 and, again we see this as by default, mainly because the market moved down, Which, frankly, was always on the cards when it was too scared to take that final 10-point move to challenge Y2 again. Or at least where it had been, the last time this market had felt brave enough.
Admittedly the Y1 ratio bandwidth has now come in from 335 to 310-points, but this is still insanely wide, and exactly why we are seeing this behaviour.
On a good note, at least activity is picking up, although as this is the rollover and expiry, this is perhaps not unexpected.
There is not a lot else we can say about this expiry, apart from it might perhaps be wise to be thankful for small mercies.
As even though we saw a decent assault on Y2 above the zone, when the intraday high was 4603.07 and Y2 was at 4605, and then it fell just short the week after, but at least we haven’t seen it test the corresponding Y2 below the zone.
As, don’t forget, at the start of this expiry it stood at 4195, before moving up to where it has been for the last week 4295.
By small mercies we mean the 185-point decline since we mentioned it might be wise to adjust your risk profile five days ago, as if it had fallen down to Y2 at 4295, and in a less controlled manner, then the market mood might have been a lot more on edge than it is now.
Of course, there is still time but, the last few days have shown us that this market is currently being extremely sensitive to even the smallest amounts of dynamic delta. Which is currently a good thing but, should the mood change, there is no real support for quite some distance still. As ever however, this is always a two-way street.
Range: 4295 to 4445
Type: On balance only just bearish