New Year, New Zone, New Start for the SPX?

New Year, new zone, SPX ends in the middle of it.


Nb. Our comment from the 12/30/20


We hope you all had a happy and safe holiday.

Looks like the SPX did, and is right on course for a very good year-end performance based bumper bonus.

However, a word of caution, that although we see the recent rally as “performance enhancing” it hasn’t really had any great hurdle to overcome in achieving such, so don’t expect an adverse reaction immediately the clock ticks past midnight.

By which we mean, it hasn’t been tangling with the R ratios.

Which is a good thing, as all last week it was about Y2 at 3705, and those that were aware of this level will know how much of a nuisance it was on a daily basis.

Most days it essentially caused the market to flatline about it.

So, for the bulls, it’s probably a good thing it has eventually shifted.

The very interesting aspect is that yesterday this market closed just below it, so perhaps this fight is not yet over.

However, now it is in retreat, it would be remiss of us not to mention the next step-up levels, being 3745 and 3755.

A couple of other housekeeping points; Firstly, the zone hasn’t shifted, but it is still very likely to move to 3695-3705 sooner rather than later.

Secondly, when it does, as things stand, it will still be below the market, so this means the market would remain in bullish territory.

Thirdly, the R ratios below the zone have at last started to creep north.

This has narrowed the Y ratio bandwidth to “just” 410-points, but worth noting, that this market is now a lot closer to the top end of this range than when we last commented.

Final point, and worth noting, that when we come back in ’21 this expiry will only have two more weeks to run, or a week, then it’s into the rollover and expiry. Fun, fun, fun.


Range:            3655  to  3730 (3805)         

Activity:          Poor

Type:              Neutral



Nb. Our comment for 01/05/21


It is a shame we can’t also include what we said the time before above, as our comment from the 23rd December may well be as pertinent today as they were back then.

Essentially, we have got the move in the zone, as anticipated.

And, yet again, in one of those coincidences that happen far too often, the market finishes as close to the middle of it as is practically possible.

Which actually means, a new year and now, a fresh start.

As in, it moved into its zone just as its zone moved there, so it has zeroed the clock to all intents and purposes.

Which brings us round to our comment before last, which basically pointed out that should the zone move before the market rose, the market could find itself by default in bear territory, or in our definition, below its zone.

This is a serious position, as the entire dynamic changes when the bears rather than the bulls are in charge, and for any market participants this should be worth knowing.

Now being in its zone, this index has a totally free choice now. Bulls equals above 3705, bears in charge, below 3695, simple stuff.

But worth bearing in mind, very few will have known the zone has moved (or perhaps the significance of this) so over the next day or so it will be a journey of discovery, not design.

But before you get all gloom and doom, don’t forget a rising zone is bullish (although this is now just where the Dec expiry ended), as is rising ratios below, which is perhaps not so evident in the tables, but there is definitely a groundswell going on.

Also bullish is falling ratios above, which is true, but very pedantically, so certainly not convincing.

Finally, and although this index has been surprisingly sensitive to just Y2 ratio so far this expiry, even this bandwidth stretches for 260-points, and, so far, the only tests of it have been above the zone.


Range:            3695  to  3705        nb.Y2 to Y2 is 3495  to  3755           

Activity:          Very poor

Type:              Bearish


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January 5th, 2021 by