Let the SPX games begin.

Nb. Our comment from the 07/21/20

Well it is certainly a fascinating start to the August expiry, but for not the right reasons.

In the table above, you can clearly see how far Y2 has slipped, and in just one day.

More to the point, this is in just “moderate” activity, and which is “neutral” into the bargain.

And, just like the FTSE, overall, and this is even for a 5-week expiry, activity is abysmal.

In comparison to the last expiry, August is about 20% lower at the same stage, and, in comparison to the last biggie, June, it is about a quarter of its size.

But, even at this incredibly early stage, the ratios are building below the zone and weakening above it, on top of the fact the zone should move to 3195-3205, when, in fact, the zone should have moved, and the ratios should be building on both sides, this early on.

It is all bullish, but please, just be very aware that this index is sitting on top of a 410-point Y ratio bandwidth.

So, it may look good, and the market may look relaxed, and only ever looking to a new all-time high, fuelled by a complacent press, but there is literally nothing, absolutely zilch, supporting this market underneath it, and that is for a massive 12.6%.

Nobody, or nothing, might say “boo”, but that doesn’t mean the risk is not there.

Range:            3105  to  3305         

Activity:          Moderate 

Type:              Neutral

   Nb. Our comment for 07/24/20

At least, after today that is, we will have gotten rid of the “spare” week, and business can get back to normal.

What we mean by this, is that the “spare” week is the fifth week of this expiry, as more usually there are only four, so, more often than not, the extra week, taken at the start of the expiry, not the end, can be bit of a non-entity.

And, looking at the ratios above, especially below the zone, you would be excused for thinking just that.

However, between publications, RI has been up to 2920, and R2, climbed to 2820 and then 2845, before falling back today, to, rather ironically, below where it was.

Also, the activity is slightly misleading, as it has been pretty good, until today, of course.

More importantly, especially as the market is above its zone, the ratios here have continued where they left off, which is still weakening, despite the type of activity.

The market, however, has been happily ensconced in the Y2 ratio bandwidth, until yesterday’s fall.

Annoyingly, we never saw the market test R1, which was at 3305, a level that today, will still be what we call, a step-up.

So, what we said on Tuesday, still holds very true today, insomuch as the zone will move up (probably to 3195-3205), overall activity still pathetic and the Y ratio bandwidth is still a panic-inducing 415-points wide.

Yesterday’s 57-point move is therefore really very benign, as the ratios tell us that 2% to 3% moves are eminently possible, and should be expected.

Range:            3105  to  3310         

Activity:          Poor 

Type:              Bullish