SPX is in its new zone, but can it now stay there?

SPX Zone has also moved, now the hard part.


Nb. Our comment from the 07/10/20


It certainly has been an odd expiry thus far in the SPX.

The zone has been static so far, and at the start of this expiry this index dropped 100-points to go down and visit it.

At the start, Y2 was at 3205, but by the end of June, it had dropped to 3155.

On the 2nd July the intraday high was 3165.81, before it closed at 3130.01, which also served to reverse Y2’s move, as it moved back out to 3180.

This is what caught this index on the 6th July, when the intraday high was 3182.59, and the close was 3179.72.

On the 7th Y2 had moved to 3195, and as you can see in the above table, today it is back to where it started the expiry, 3205.

Sometimes it is worth knowing what has happened, as it always helps to get a feel for where any index is.

The fact that the moves are so small, when all it has to contend with is the very minimal Y1 ratio, shows a total lack of interest and desire, on top of, or resulting in, its increased sensitivity.

Which brings us around to next week, as it is the rollover and expiry, which should get a bit of activity back into this market.

We are expecting the zone to move to 2995-3005, or 3145-3155, so it is where it needs to be for next week already.

However, once a bit of activity kicks-in, then it is still in a 330-point Y ratio bandwidth, so things should start to get exciting.

If history is anything to go by, 3% daily moves would be perfectly normal, as would whipsaw, so brace yourselves and keep those stops tight.


Range:            2940  to  3270         

Activity:          Very poor 

Type:              Bearish


Nb. Our comment for 07/14/20


No surprise, but we have seen the zone move, and it has landed at the expected 3145-3155.

However, where we said “3% daily moves would be perfectly normal”, we haven’t quite seen that, with 1.6% on Friday and 2.73% yesterday.

Although both did have a good whipsaw involved, so, at least that is normal.

Worth noting, is yesterday’s intraday high was 3235.32, as that is where Y2 currently resides.

So, although the market is currently in its zone, or at least on its upper boundary, there is still an awful lot of Y1 ratio around, so don’t expect it to quieten down any time soon. Therefore, essentially, expect more of the same.

In fact, and very probably because of, the zone moving, the ratios have continued to tumble above it.

Of course, this has resulted in R1 slipping 35-points to 3305, which just goes to highlight how much they have receded.

The upshot could actually be, that the zone, hasn’t yet finished its upward migration.

It is, sadly, a by-product, of the dearth of ratios over all, but we could easily see the zone move up again, to 3195—3205.

So, rising ratios below the zone, coupled with falling ones above, all cemented by a rising zone itself, are all bullish signs.

However, there are two caveats to this, and the first is that moving minimal ratios is hardly onerous, so a very weak signal at best, and, secondly, the Y ratio bandwidth is now 360-points, and that is a stupefying amount.

So, a veneer of OK, but huge risks still remain.


Range:            3145  to  3155        or        3045  to  3230         

Activity:          Average 

Type:              On balance bearish


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July 14th, 2020 by