Nb. Our comment from the 10/25/22
Before we get onto the November expiry, we should mention that the settlement price for the October one was 3656.28.
Which was close enough for us, as the zone did move down, and to 3695-3705, so it got quite close but, regardless of this, this meant that it finished in the Y ratios, so no great harm done really.
Coming back to November, and the zone here was following Octobers down. In fact, the Oct expiry actually pre-empted November, dropping down to 3795-3805 on the 20th, which is why we have made that the comparison in table above.
We think that, had the market not started moving sharply higher immediately after the October expiry, then the zones would have dovetailed circa 3700.
As it happens, with the market reaching the zone by the close yesterday, this is no longer an undue influence.
This also gives November a chance to start on a normal footing.
And the ratio alignment is as textbook as you can get, literally going up in sequence.
If anything, it is slightly skewed towards the upside, as there is a bit more Y ratio northwards than southwards.
However, the real issue, is that we are now back to the situation where the Y1 ratio bandwidth is a massive 360-points, and the overall Y ratio bandwidth is a colossal 510-points.
The problem now, is that back when we were getting these enormous bandwidths of minimal ratio the market was extremely sensitive, reacting to just Y2 sometimes.
Well, just over a week ago it took R3 at 3495 to turn this market around, so we fear that sensitivity ship has sailed long ago.
Of course, only time will tell with this new expiry but, we for one, are expecting a very very exciting ride for the next four weeks.
Range: 3645 to 4005
Type: On balance bullish
Nb. Our comment for 11/01/22
The excitement factor has certainly been high so far, especially considering that from the settlement price in October to the end of the first week in November the SPX gained an incredible 245-points, or 6.70%. That is in just a week, to spell it out.
Interestingly, where the ratio is concerned, this is actually quite mundane…as it hasn’t even got close to testing Y2 yet.
The only thing the market has done is move up through the Y1 ratio bandwidth.
So, it may seem exciting, but the reality is that this is exactly what one should have been expecting.
And the only significant change in the ratios has been the move up in the zone.
This has taken it to 3845-3855 and actually happened last Friday 28th Oct.
Therefore, Thursday’s price action was all about the old zone and Fridays about the new one, but water under the bridge now.
The main point is that the market is now back above their zone, and so by definition, back into bullish territory.
Which is not something we have seen for a while.
Now, what would be interesting is if the zone moved back up to 4000. And, if it did do so, in front of or in reaction to the market.
We still feel that there is plenty of life left in this market and, although the ratios are rising below the zone, there is still ample room down there.
In fact, the overall Y ratio is still 460-points, which is down from the 510 it was, but this remains scarily wide.
The big takeaway from all this, is don’t get fooled into thinking that this recent rise means anything but the fact that there was no ratio there to provide even the smallest bit of traction to give the bulls any concern at all.
This, of course, works both ways, and worth noting activity for the last 5 days has been abysmal.
Range: 3855 to 4005
Activity: Very poor