SPX , NDX & DJX Ratio Table 28th August 2018
And the good news is that there is still another 4-weeks of this to go as the penultimate “biggie” of this year does exactly as it should.
Albeit helped with a little nudge from the politico’s, but for those of a slightly more cynical nature an announcement of a possibility with no hard facts or figures justify a 40-point leap in the SPX? It has, so it does, but for us this was just the spark.
As we said last week “no real change in the ratios above the zone, but R1 has taken a right battering and is on strike 3 anyway, but below they are very much stronger, which is in fact bullish, so we suspect it won’t be long before we start talking about the zone moving up”.
This index has been knocking on the door all last week, and having eventually got past R1 on Thursday it stalled against R2, but at least it was trying.
Now, what happened is all very well but of of far more importance is what might happen next?
The ratios below are a little bit stronger, more of a tweak really, so neutral rather than bullish.
However, above the zone they are in full retreat, so we are indeed looking at a jump in the zone.
And we think it will bypass 2820-2830 and go straight to 2850-2860, which is bullish.
All told, we haven’t yet seen this market willing to buy all those futures shaken out by the dynamic delta at R2, so for the time being it looks like it will have to be content with just following it as it recedes as and when.
Range: 2880 to 2905
Type: On balance only just bearish
The NDX is surely proving to be an odd one this expiry.
When we last commented it had closed right on R1, which was then at 7425, and the close on the 22nd August was 7424.60.
The next day it gave up a bit of ground having made quite a deep incursion into R1 territory.
Of course, the ratios have changed considerably, and it is a little difficult to establish exactly when, but as R1 today is at 7500 then at least we know it was somewhere in between.
However, this does not portray the full picture as not only have the ratios slipped above the zone, but they have pretty much all dropped a level, the net result being R3 has gone completely.
Falling ratios in front of a rampant market is not unusual in this index, nor is the ceaseless addition of strikes that nobody seems interested in.
The really odd aspect is that the ratios have crumbled below the zone as well, not quite so dramatically for sure, but it is somewhat contradictory to the norm.
In fact, although activity come in as average, the really telling aspect is that it is money coming off the table, which is downright bizarre this early and after such a move. Makes 7500 a really critical, or key, level.
Range: 7500 to 7625
Looks like we have the answer to our question in the DJX, which is “game on”.
The only question now is how they will react to encountering Y2?
Having had that titanic battle with 25500 during the last expiry, and that was just the upper boundary of their zone with Y1 behind it, we did question how the market would cope with being in a Y1 ratio bandwidth at the start of this expiry.
The answer, of course, is easily, and they have marched straight up to Y2 in a matter of days.
The intraday high on Monday was 26067, which is very close to being strike 1, especially as it was at the end of a 277-point rally, but we think it is just a fraction too far away.
Casting one’s mind back to the rollover and it seems that the DJX has certainly fulfilled the potential it showed in that analysis, and it has now achieved in one week what it took the entire last expiry to do.
Range: 25100 to 26100