Monday was a very good example of how critical the open is both here in the SPX and in the NDX below, but for different reasons.
Here the market opened down 3.32-points at 2577.75 but crucially below Y2, which is unchanged today.
So, the high here of 2580.03 was an early test of Y2 and just like on Monday the week before, it capitulated.
Evidently this reaction has left participants slightly confused as what little activity there was generated resulted in money coming off the table.
The ratios are weaker across the board which also doesn’t help, but please remember we are only talking about Y2 which is a minimal level of ratio.
Range: 2555 to 2595
Type: On balance just fractionally not bearish
The open in the NDX was also down just a few points, 3.67 at 6209.80, which as a percent is virtually unchanged.
And therein lies the difference as when this index fell down to 6202.53, or their Y2, it actually acted as support.
The real surprise for us was it blasting past 6225 (high 6250.85) as we should be seeing the kind of uncomfortable market that trades in-between multiples of 25 depending on the open.
So, both opens were critical, both different and then when the markets reacted to each individual Y2 level in different manners it seems to have just confused everyone.
Range: 6200 to 6300
Type: On balance bearish
Do not get fooled just because the DJX has been playing second fiddle for the last couple of days as this is the one index that has been lording it all this year and we doubt very much it is going to stop now.
However, we do still see signs of normality returning, either that or a guilty conscience, and we do not think that is even possible.
There has been a huge change in the ratios, which is just the loss of Y2 above the zone, but this just crystallises the fact that this index is in a 1300-point Y1 ratio bandwidth.
And that is not all as we are seeing 23200-23400 making a move to being the next NZ.
Last expiry when this threatened, and we can’t remember the last time this index deigned to visit its zone, but that just acted as the catalyst for the next leg up.
All in all, we just don’t see this index being quiet for much longer.
Range: 22700 to 24000