As we said in the SPX on Friday it was all looking bullish here but they may not be the ones who get to decide, which was exactly how it played out so again today a lot will rest on the DJX.
However, don’t write this index off just yet as apart from the very start of the expiry, when it is expected, this is only the second time in just over three weeks that we have seen this level of activity, so it’s up for a fight for sure.
The main change in the ratios today is that with Y2 slipping it has now gone past the market thereby making Y2 at 2555 now a possible speedbump.
R1 continues its slide and we see the return of R3 above the zone, but Wednesday now starts to loom large and the zone is still a long way away.
Range: 2505 to 2565
Activity: Very good
Type: On balance only just bearish
For the first look at the SPX November expiry there are two main aspects that jump straight out at us.
The first is how little overall ratio there is, and appreciated it is an intermediary to an intermediary but this is a lot less than we would expect, on both sides especially.
The second is the fact that the zones are in sync but because the lack of ratio it is clearer here that the NZ is more than likely to move up, and at the moment 2520-2530 is the firm favourite.
Range: 2505 to 2585
Activity: Average
Type: On balance bearish
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Friday in the NDX was a good example of what we mean when we talk about an index being in a ratio bandwidth it is uncomfortable with.
Having opened up 24.73-points at 6094.72, and don’t forget on Friday Y2 was at 6075, this then fell into this category.
So, as we talk about multiples of 25 (for this index mind) that would make our trading range 6075 to 6100.
The high was 6100.06 and the low was 6087.02, which to be fair is still a bit away but why it is classed as good not perfect.
As it’s the start of the rollover and being where it is either the market or the ratio will have to give way, so let the fight commence.
Range: 6025 to 6100 or 6100 to 6225
Activity: Strong
Type: Neutral
The NDX November expiry looks as sparse as the SPX one, however here it is not that unusual.
Although we must say October was an especially quiet expiry, at least so far, with the big players staying away and even relatively few strike additions, and this does not bode well for November.
Still early days but we are sharpening our ice skate blades in anticipation of the return to the ice rink analogy.
Range: 6025 to 6275
Activity: Average
Type: Neutral
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There is no arguing about that (high 22905) being a test of R3 in the DJX on Friday.
Furthermore, it was one of those that took all the wind out of this index’s sails as it never even ventured close for the remainder of the day.
The start of the rollover should clarify motivations and for us the only question is whether or not that was strike 2 or 3.
No change in the ratios and interestingly the NZ has stayed down at 22300-22500, so game on as they say and activity here is the polar opposite of the SPX’s.
Range: 22500 to 22900
Activity: Poor
Type: Bearish
The first look at the DJX’s November expiry and at a glance one can see as it stands it could be very good for the bulls.
This of course makes the rollover and expiry very important in Oct and how they cope with R3.
However, it is worth pointing out the difference in the NZ levels which has come about as here it hasn’t fallen back.
Range: 22700 to 22900
Activity: Did not register
Type: N/A
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