We always say that when a ratio drops, as in the SPX’s R1 level yesterday, then the old level can still carry a residual impact as generally it has only just dipped below the threshold.
Although the high yesterday was 2462.82 we do not think that was affected by the R1 level from Friday, 2465, that knocked the market back then, as it was a very sedate approach and it fell short of Friday’s high, so no strike 2 even if the R1 had moved to 2470 yesterday.
Of course today it is 2475 and still backed by R2 at 2480 so it will be very interesting if it goes there today.
Range: 2430 to 2475
Activity: Moderate
Type: On balance bearish
Hardly any changes to the ratios in August, in fact only one which is R1 below the zone comes in to 2370.
In July this index spent most of its time above the zone but with R1 not starting until 2495 here then it will have a lot more scope, well 65 points to be precise.
The real question is whether or not it will go for the zone for tomorrow or will it be happy in the low Y1 ratio?
Range: 2430 to 2495
Activity: Average
Type: On balance bearish
The moves in the NZ for the NDX are coming thick and fast now, especially with the rollover imminent, and today it has jumped a decent length to 5725-5775.
This still places it a significant distance below the current market but we don’t think the moves may be over yet but this does now place the spotlight on the step-up levels.
On Friday it was 5850 (high 5844.80) and yesterday it was 5875, which is still the case today as it happens, but the market only got up to 5860.64 so perhaps there was still bit of a residual affect from Friday’s level.
We mention this as not only can they affect the markets progress but they also show where the NZ may move up to, so as they started at 5825 the highest the NZ can go, unless the ROC accelerates that is, would be 5775-5825.
Range: 5775 to 5925
Activity: Average
Type: Bearish
Rather interestingly the August NZ has also moved up slightly to mirror July’s.
This really just highlight how very thin the ratios are currently in August so there is no doubt that as things stand even after tomorrow we suspect July will still be the dominant force.
The zone may have changed but nothing else has so it actually needs to up the activity levels as we are back to small pebbles in small puddles make big waves relatively.
Range: 5775 to 6125
Activity: Good
Type: Neutral
The ratios in the DJX are stronger below the NZ and weaker above it, which is bullish, and means below Y2 comes in to 19100 whereas above Y2 slips out to 22100.
In the scheme of things all very small and we are only talking Y2 so it should be active as it is there for that very purpose, to easily identify the trend or direction.
The real issue is that the NZ hasn’t budged and today we have had activity, although judging by what has happened it is best described as not just quite enough to get it back to its old level.
This in itself is worth remembering as that was 21300-21500 so even if it does flip back this market would still be over 100 points above it.
Range: 21100 to 22100
Activity: Average
Type: Not bullish
The only difference in August is that we see the appearance of R3, but overall there is still a huge predominance of Y ratio.
Again activity looks okay but it is also a case of a small pebble in a little puddle makes relatively large waves.
The main aspect is the NZ here is holding out at its original level lending a little bit of support to July should that decide to return to this level.
Range: 21500 to 21700
Activity: Strong
Type: Bullish
