SPX needs to test R1

Nb. Our comment from 04/25/19 (Not published online)

As this is our first coverage of the May expiry there is no previous comment.

However, in our final comment for April we stated “Our money is on it shifting to 2895-2905, as back at the start of this expiry this was R2, nudging on R3, so that is a precipitous fall in the ratio down to Y1”, in respect of the zone.

So really there should be no surprise where May’s zone is, or the fact the expiry last Thursday was 2905, right on the upper boundary.

As we said back then, the SPX does not seem to have any emotions, bullish or bearish, it seems to be curve-fitting more than anything else.

However, in doing so it has just made the situation even worse, as there is now even more minimal ratio below the zone.

Of course, it needs something to cry “BOO!” and catch the market by surprise, but if that does happen then it is worth being aware that R1 below the zone doesn’t even appear until 2770, well over 100-points away.

It remains to be seen if this index will resume knocking on the door of R2 as it hasn’t even tested R1 at 2955 yet, and we suspect, this will depend on whether either of the other two have an agenda this trip.

Range:            2905  to  2955

Activity:          Good

Type:               On balance bearish

Nb. Our comment on 04/29/19

Well it has certainly been bit of a quiet start to the May expiry, although things could become far more interesting now the market is just below a test of R1.

The only change in the ratio above the zone is Y2 comes in ever so slightly.

Below the zone there are two changes, Y2 comes in to 2815 and R1 to 2775.

However, neither of these are significant enough to change the overall picture as there is still a sea of minimal Y ratio below the zone that stretches for 120-points.

Don’t forget, when you add in the zone itself and the Y ratio above it that is another 60-points.

So, the fact remains, this market remains very susceptible to any shocks, to the tune of almost 6%.

First things first, and a test of R1 at 2955 would go a long way to establishing what this market really thinks, as bumbling around in the Y ratio like it has been, doesn’t mean anything, well apart from a large degree of apathy.

Range:            2905  to  2955           

Activity:          Moderate         

Type:              On balance bearish