Nb. Our comment from the 10/26/21
Exactly as we said at this time last week, how the market would react to Y2, then at 4505, would tell us all we need to know.
Last Tuesday the market opened at 4497.34, and then hardly blinked at Y2 as it went past. Well perhaps it held them up for 15 or 20 minutes, but that was all.
Y2 then quickly retreated to where it was at the very start of this expiry, namely 4530, but the market was already way past this point and had new all-time-highs in its sights. As you can see it has now slipped even further.
This expiry is always a strange one, as the US markets do love to hit new all-time highs just before Thanksgiving, and that is still a month away.
Can the market maintain this level of aggressiveness for that long? Unlikely, and anyway, this trip expires on the 19th November, so there is that battle it has to face as well.
However, we have no doubt the zone will move up, and already there is the distinct possibility it will move to 4495-4505, but if it follows the recent game plans then this will always be a catch-up exercise.
Overall, the Y1 ratio bandwidth is actually slightly wider, and although the overall Y ratio bandwidth has come in to “just” 365-points it is still far wider than previously.
Admittedly, at least the Y ratios are moving up below and receding above, both bullish, but if the distance between them doesn’t change any zone move is more by default than design.
Therefore, we are back to the old mantra, that it is like an automatic car in neutral, designed to creep forward, but that even though it is just contending with the minimal Y2 ratio, and very possibly even attack R1, this is not a risk-free market, as that is an 8% bandwidth it is sitting at the top of. Great trading though.
Range: 4445 to 4610
Activity: Moderate
Type: Neutral
Nb. Our comment for 11/03/21
Exactly as we said at this time last week, how the market would react to Y2, then at 4505, would tell us all we need to know.
Apologies for being a day later than normal, but we think we covered the pertinent points last time and, quite frankly, not a lot has changed since then.
The zone has moved up to 4495-4505 as expected.
The market has stayed above Y2, so remaining in its Y2 ratio bandwidth.
R1 has continued to retreat, allowing the market to creep forward.
The only aspect limiting this index is now its sensitivity to what we call “step-up” levels. These are essentially the old higher level of ratio that have fallen, but for a day or so after can remain just below the threshold of the level they once were, so can still represent a hurdle to the market.
This can be evidenced by last Friday, when the market struggled at 4605, the old R1 level.
Then it was 4630, which was what it was all about yesterday, despite the fact that on the 2nd the official R1 level was 4665 and, although today it hasn’t changed, by the time we next publish we would be surprised if it wasn’t 4680 by then (or before).
Either way, it is still exemplary that this market now feels so comfortable taking on Y2 ratio, as it certainly hasn’t prior to this. This actually bodes well for the mighty Dec expiry just round the corner as well.
But, back in the Nov trip, the rollover and expiry are now just a couple of weeks away, and the Y1 and overall Y ratio bandwidths have actually increased, to 235 and 395-points respectively, so the risk is still very much there.
One last point is that although activity started this expiry off like a steam train, the last five days have been rather dire, but then again it is mid-expiry, so it may be a concern for now but we know it won’t last.
Range: 4505 to 4665
Activity: Very poor
Type: Bullish
