SPX same old same old

Knock knock knocking on the R ratio's door...again.

Nb. Our comment from the 06/03/20


To be fair we should have posted something before now, as it was becoming exceedingly obvious that the ratios above the zone were collapsing.

Nevertheless, our “step-up” level of 3055 certainly had a strong role to play in the last few days of May.

Basically, it capped the market.

On Monday, the 1st June, we noticed R1 had slipped to 3030 and R2 to 3105, which is where they are today.

This changed the step-up level to 3085, which is what curtailed the market yesterday we believe.

The ratios above the zone continue to slip, but it is not as pronounced as it was.

But, to see real confirmation, we need to see more upward movement in the ratios below the zone.

Having said that, the zone has moved up as expected, so two out of three bullish indicators isn’t bad.

What we really don’t like, is that people mistake this upward movement as economic bullishness, as, to us at least, it is just the totally normal outcome of a market that hasn’t got a properly established ratio profile.

A rise by default, rather than design, if you like.

Again, a bit of understanding and basic market understanding by the regulators would go a long way to establishing a rational appreciation of exactly why this market is back above 3000, as it certainly has absolutely nothing to do with economic expectations.


Range:            3030  to  3105         

Activity:          Poor 

Type:              On balance bearish



Nb. Our comment for 06/05/20


We did mention on twitter yesterday that the ratios have continued to collapse above the zone, and that R1 was now 3080, but, more importantly, R2 was 3130.

We say “more importantly” as a couple of hours after we had posted this, the market hit 3128.91, and then proceeded to retract all the way to 3090.41.

The bulls fought back to fashion a decent close, which is unsurprising considering how weak the ratios are.

Which is sort of why we have posted this today, just two days since our last, because, as you can see in the above table, the ratios continue to recede.

R1 is now 3085 (minor change), but R2 is now 3155, which is a significant change.

Furthermore, we would be very surprised if the zone didn’t jump again, to 2995-3005.

And still two more weeks to go.

Again, we don’t fault the market, as it is only doing what is expected of it where the ratios are concerned.

However, we take great umbrage with the authorities, as they, and yes, they are the responsible party here, have fashioned the same exact market conditions that led to the 35% correction of just two months ago.

At the end of 2019 and up to March we kept on saying that the market keeps “knocking on the R ratio’s door” without ever glancing backwards and noticing the abyss of little or no ratio below it, providing support.

As it is challenging R2, then please note the corresponding R2 level does not kick-in until 2745, and, just like before, if this market drops 410-points (13%) then we rather doubt R2 will be enough to stop a market with that much momentum behind it.

So, for us, just like last time, the only question is when?


Range:            3085  to  3155         

Activity:          Poor 

Type:              On balance only just bearish

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June 5th, 2020 by