Aug
30
2022
August 30th, 2022 by Richard

The SPX has retreated all the way back to its zone at the start of the big Sept expiry.

 

Nb. Our comment from the 08/22/22 (Not published)

 

Nb. Our comment for 08/30/22

 

It is a shame we couldn’t get a note out last week on the SPX, as just like the FTSE this index started the September expiry knocking on a high ratio door.

For the SPX this was R1, historically not particularly high but, under recent conditions, this index has even proved sensitive to just Y2 ratio.

Of course, this all came about because there was an absolute vacuum of ratio in the last expiry that allowed this index to be sucked higher. Very impressively finishing the August expiry +418.40-points, or 10.9%. Even exceeding our forecast at the start “that it could be one for the bulls”.

So, worth noting that the expiry intraday high in Aug was 4325.28 (16/08/2022), which made the closing high that very same day of 4305.20, the day before the rollover.

Again, and just like the FTSE, the zone here had been steadfast at 4000, 300-points below where the market was.

The good news, is that there is no Y ratio below said zone, which is not so good for the bears admittedly, but may prove very handy for the bulls as the market is just 30-points away now.

This therefore also means that we are seeing the smallest Y1 ratio bandwidth that we have for a very long time, coming in at just 110-points.

However, and as we have just experienced, the overall Y ratio bandwidth is still a very impressive 310-points, but which is nothing compared to what we have been seeing of late.

More importantly, it reverses the recent trend of ever-expanding bandwidths, which can only be good.

Plenty of life left in this index, and the bulls have nothing to worry about quite yet, that will only come with a test and fail of R1 at 3995. In the meantime, enjoy the wide-open expanse of the Y ratio.

 

Range:            4005  to  4305           

Activity:          Poor

Type:              On balance bullish

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

Aug
10
2022
August 10th, 2022 by Richard

Well, so far, it certainly has been one for the bulls, but what's next is the real question now?

 

Nb. Our comment from the 07/26/22

 

Well, so far it has definitely been the case that this “expiry might actually turn out as one for the bulls”.

On Monday 18th, the first day of this expiry, the intraday low was 3818.63, another test of Y2 at 3820. Since then, and after we highlighted the stubbornness of the August zone, the market closed on Thursday 21st at 3998.95, right in it. Not bad that, 4.6% in as many days, and why we feel slightly vindicated about our comments.

The question is, what happens next?

It was all done rather hastily, and let’s face it, there is still 4-weeks to go in this expiry.

The intraday high on Friday was 4012.44, and we mention this as there is some doubt as whether or not this was a test of Y2. The reason is, that Y2 after the 19th had moved down to 4015 but, on the Friday, actually slipped back out to 4020, before moving back for today.

If it was a test, then that is the market having performed a complete Y1 bandwidth test.

The fact that it is now almost 100-points below this, suggests that it was in fact a test.

Generally, this means the market languishing for a while in this bandwidth.

However, if one compares where the ratios were on the 19th to where they are today, then it is obvious that they are strengthening on both sides of the zone.

If this continues at the same pace, then the zone will have to move, and downwards.

The prognosis is that everything now rests on how the ratios now evolve. If they continue to strengthen as they are above the zone, this will eventually force it down. Or will the ratios below the zone get enough support to keep it up.

Whichever side wins this new battle, we suspect will then dominate the rest of this expiry. But, don’t lose sight of the fact that the Y1 ratio bandwidth is now only 170-points, whereas the overall Y ratio bandwidth is still a massive 460-points. So, although these are a lot narrower than they have been, they are still plenty wide enough to satisfy most traders.

 

Range:            3845  to  3995           

Activity:          Poor

Type:              On balance only just bearish

 

Nb. Our comment for 08/10/22

 

As we said, this one (expiry) may be one for the bulls, and so it has with a whopping rise of 7.96% so far.

In fact, if you go from the expiry high of 4186.62 it is actually 9.64%…and not many others saw this coming back on 18th July when this expiry started.

But, more importantly, is what might happen next?

The first aspect we have noted is that activity is going through a normal mid-expiry doldrum. While this is quite common, it does mean a degree of loss of control by the derivatives.

The second aspect to note is that, despite such a huge Y ratio bandwidth, the zone hasn’t moved, and more interestingly, not made any sign that it is likely to.

Thirdly, and this holds true in any expiry, don’t get fooled into believing any 4th Estate hyperbole about what is driving this market. There isn’t anything. It is simply because there is no ratio to speak of to get in the way. Although, almost 10% is a very long way we concede, so we understand why they have to try to label it, but it was nothing that wasn’t seen as possible meaning that the reason was also foreseeable.

Bearing these three aspects in mind, one might want to now consider that the rollover and expiry are next week.

Therefore, activity will pick up, so will volatility in all likelihood, and this will then determine if the zone remains steadfast, or looks likely to adapt.

In the meantime, it is worth remembering that this index is in Y2 ratio. Not difficult to handle, but with low activity, it would certainly make things uncomfortable.

Both Y2 and R1 have been higher, 4105 and 4255 respectively, so where they stand today is actually them strengthening, adding weight to the zone remaining where it is.

Bearing all this in mind, and as things stand, we have to start thinking about this index returning to its zone for next week.

The all-important question, is will the zone shift in the meantime?

 

Range:            4005  to  4230           

Activity:          Very poor

Type:              Neutral

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

Jul
26
2022
July 26th, 2022 by Richard

A ratio battle now looms for control of the SPX for the rest of the Aug expiry.

 

Nb. Our comment from the 07/19/22

 

We have to start the comment on the August expiry with one final one on the July, where the final resting spot for the zone was in fact 3800. Therefore, the settlement price of 3839.81 was about as close as they needed to be. In fact, we did say it was not so much about where the July expiry ended, but rather about keeping a lid on the potential volatility, which certainly seemed to be the case for us. Job done then.

Moving on to August, and as the SPX closed last Friday at 3863.16, it was happily in the new Y1 ratio bandwidth already.

Although, a point to note is that the intraday low on Friday was 3817.18, and yesterday, 3818.63, both right on Y2.

However, the really interesting aspect between the two expiries is that the zone did not make any significant attempt to join with the July level, staying stubbornly at 4000.

So, if Y2 can hold, then the August expiry might actually turn out as one for the bulls.

Also, R1 at 3695, as it stands, is a very solid level, so the downside has some far more significant support not that far away.

On the other side, we have already mentioned the zone being at 4000, then Y2 comes very quickly after that but, it is a very long way above this before you get to the R1 resistance ratio.

Another little pointer, our Delta Ratio, is currently standing at 49.3%, where a reading below 50% is considered bullish.

It is a 5-week expiry, so even longer than normal to go, and the first week of these extended expiries can be somewhat slow to develop, so caution perfectly understandably but, as the ratios are now aligned, there is definitely more upside potential than downside.

 

Range:            3820  to  3995           

Activity:          Average

Type:              On balance bearish

 

 

 

 

Nb. Our comment for 07/26/22

 

Well, so far it has definitely been the case that this “expiry might actually turn out as one for the bulls”.

On Monday 18th, the first day of this expiry, the intraday low was 3818.63, another test of Y2 at 3820. Since then, and after we highlighted the stubbornness of the August zone, the market closed on Thursday 21st at 3998.95, right in it. Not bad that, 4.6% in as many days, and why we feel slightly vindicated about our comments.

The question is, what happens next?

It was all done rather hastily, and let’s face it, there is still 4-weeks to go in this expiry.

The intraday high on Friday was 4012.44, and we mention this as there is some doubt as whether or not this was a test of Y2. The reason is, that Y2 after the 19th had moved down to 4015 but, on the Friday, actually slipped back out to 4020, before moving back for today.

If it was a test, then that is the market having performed a complete Y1 bandwidth test.

The fact that it is now almost 100-points below this, suggests that it was in fact a test.

Generally, this means the market languishing for a while in this bandwidth.

However, if one compares where the ratios were on the 19th to where they are today, then it is obvious that they are strengthening on both sides of the zone.

If this continues at the same pace, then the zone will have to move, and downwards.

The prognosis is that everything now rests on how the ratios now evolve. If they continue to strengthen as they are above the zone, this will eventually force it down. Or will the ratios below the zone get enough support to keep it up.

Whichever side wins this new battle, we suspect will then dominate the rest of this expiry. But, don’t lose sight of the fact that the Y1 ratio bandwidth is now only 170-points, whereas the overall Y ratio bandwidth is still a massive 460-points. So, although these are a lot narrower than they have been, they are still plenty wide enough to satisfy most traders.

 

Range:            3845  to  3995           

Activity:          Poor

Type:              On balance only just bearish

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

Jul
19
2022
July 19th, 2022 by Richard

Could the SPX Aug expiry turn out to be one for the bulls?

 

Nb. Our comment from the 07/15/22 (Not published)

 

Nb. Our comment for 07/19/22

 

We have to start the comment on the August expiry with one final one on the July, where the final resting spot for the zone was in fact 3800. Therefore, the settlement price of 3839.81 was about as close as they needed to be. In fact, we did say it was not so much about where the July expiry ended, but rather about keeping a lid on the potential volatility, which certainly seemed to be the case for us. Job done then.

Moving on to August, and as the SPX closed last Friday at 3863.16, it was happily in the new Y1 ratio bandwidth already.

Although, a point to note is that the intraday low on Friday was 3817.18, and yesterday, 3818.63, both right on Y2.

However, the really interesting aspect between the two expiries is that the zone did not make any significant attempt to join with the July level, staying stubbornly at 4000.

So, if Y2 can hold, then the August expiry might actually turn out as one for the bulls.

Also, R1 at 3695, as it stands, is a very solid level, so the downside has some far more significant support not that far away.

On the other side, we have already mentioned the zone being at 4000, then Y2 comes very quickly after that but, it is a very long way above this before you get to the R1 resistance ratio.

Another little pointer, our Delta Ratio, is currently standing at 49.3%, where a reading below 50% is considered bullish.

It is a 5-week expiry, so even longer than normal to go, and the first week of these extended expiries can be somewhat slow to develop, so caution perfectly understandably but, as the ratios are now aligned, there is definitely more upside potential than downside.

 

Range:            3820  to  3995           

Activity:          Average

Type:              On balance bearish

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

Jul
12
2022
July 12th, 2022 by Richard

Volatility to worsen as the R1 safety net drops in the SPX

 

Nb. Our comment from the 07/05/22

 

Well, it took a while with the market interacting with R1 at 3745 before “the money normally rises to the top” came about.

The fact that the first two days of this expiry, despite intraday lows deep inside the R1 bandwidth, always closed above 3745 gave a glimmer of hope.

The Thursday 23rd therefore could have gone either way, it being strike three at 3745, but a strong opening followed by the intraday low of 3743.52 just set the scene for the Friday.

We would like to have seen this market get back up to its zone, like the FTSE100, before capitulating, but we can’t have everything we suppose.

And last week, the last two days returned us back to literally where we were on the first two days of this expiry. The intraday lows being 3738.67 and 3752.10, yet again testing R1 at 3745.

It might not be Thursday 23rd again, but it might as well be, as it is looking increasingly likely that today we will see a further test of R1. This is some resolute defence going on here, as once again this is strike three.

Naturally R1 has weakened after such a prolonged assault, and the picture is further complicated by the second US holiday falling within this expiry, and so we would not expect 3745 to remain R1 by tomorrow, and probably not even by the end of today.

For a more robust R1, and at a commensurate level to the first week, you have to be looking at 3720, or at a pinch 3730.

In essence, should the market go there yet again, it goes in full knowledge of what to expect, and is therefore not frightened by that, or it pulls up short, pretty much for the same reason.

Don’t forget, last week having hit R1 this market rallied 47 and the 73-points respectively, so the bulls are far from dead, but at the same time, hardly galvanised either. Apologies it’s not more definite, but today or tomorrow should go a long way to sorting out who wants to be in charge for the remainder of this expiry we suspect.

 

Range:            3745  to  3995           

Activity:          Poor

Type:              Neutral

 

 

Nb. Our comment for 07/12/22

 

Well, that was some test, or should we say examination, of R1 at 3745 last Tuesday 5th. The market basically spent the entire morning flatlining on R1, before eventually the bulls gained control. In fact, it was so impressive, that even after a multitude of tests, the intraday low was still only 3742.06.

The trouble is that the bulls, although happy to capitalise on the support generated by the R1 dynamic delta, they still can’t quite muster enough enthusiasm to really push ahead, and get this market back up to its zone.

And that is the problem, but with an added twist for the derivative players, as this expiry ends this week, so they are literally running out of time.

Up until today, the pertinent ratios hadn’t changed from when we last published.

So, R1 has remained at 3745, with Y2 at 3895.

Of course, as you can readily see in the above table, this has changed significantly today.

Basically, derivatives have blinked first.

In fact, so much so, that there are four candidates to being the potential new zone, each having lost almost 50% of their ratio value.

Therefore, as it stands, the Y1 ratio bandwidth below the zone now stretches from 3795 all the way up to 3995.

And, the “resolute” R1 has dropped to 3695.

Essentially, no one is going to get badly hurt, even if this index expires in the Y2 ratio bandwidth but, with so little ratio around it could get extremely volatile.

And not only is this terribly difficult to control, but with a falling R1, the safety net has also been lowered.

We think this particular expiry now will not be so much about where it finishes, but rather keeping it calm and rational.

 

Range:            3695  to  3995           

Activity:          Moderate

Type:              On balance bullish

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , ,

Jul
05
2022
July 5th, 2022 by Richard

Are we going to see the SPX test R1 at 3745 for the second strike three of this expiry?

 

Nb. Our comment from the 06/22/22

 

We can’t not start without mentioning the end of the June expiry, which most certainly proved very expensive for someone.

But despite it getting out of control from a derivative perspective, it did adhere to some ratio levels, so at least the dynamic delta was having an effect right until the end.

Our final trading range was either 3645 to 3745 or 3745 to 3895. The fact that the market failed to close above 3745 when we last published on the 14th was a warning. It still could have made the zone by the Friday, but getting back to 4000 by the next day, rollover Wednesday, was obviously not going to happen. The bottom of that trading range was 3645, and the intraday lows on the Thursday and Friday were 3639.77 and 3636.87 respectively.

Evidently, “derivatives didn’t reassert their authority”.

Anyway, and more importantly, this, the July expiry, and what is the ratio picture telling us for this trip.

And if anything, the enormous Y ratio bandwidths have actually got worse.

Now the Y1 one stands at 260-points, but the overall one is the widest ever, coming in at the humongous 815-points wide.

Perhaps a saving grace, for the bulls at least, is at least this time the market is actually at the bottom of this huge bandwidth.

As we have seen, the dynamic delta denoted by the ratio levels has continued to work, it is really now just a question of who is in charge?

The highly strung emotions of the equity mob, or the money on the table of the derivative players?

Sadly, we can’t answer this question, all we can do is say that historically, once the over-excitement of a triple is over, money normally rises to the top.

 

Range:            3745  to  3995           

Activity:          Poor

Type:              Bullish

 

 

Nb. Our comment for 07/05/22

 

Well, it took a while with the market interacting with R1 at 3745 before “the money normally rises to the top” came about.

The fact that the first two days of this expiry, despite intraday lows deep inside the R1 bandwidth, always closed above 3745 gave a glimmer of hope.

The Thursday 23rd therefore could have gone either way, it being strike three at 3745, but a strong opening followed by the intraday low of 3743.52 just set the scene for the Friday.

We would like to have seen this market get back up to its zone, like the FTSE100, before capitulating, but we can’t have everything we suppose.

And last week, the last two days returned us back to literally where we were on the first two days of this expiry. The intraday lows being 3738.67 and 3752.10, yet again testing R1 at 3745.

It might not be Thursday 23rd again, but it might as well be, as it is looking increasingly likely that today we will see a further test of R1. This is some resolute defence going on here, as once again this is strike three.

Naturally R1 has weakened after such a prolonged assault, and the picture is further complicated by the second US holiday falling within this expiry, and so we would not expect 3745 to remain R1 by tomorrow, and probably not even by the end of today.

For a more robust R1, and at a commensurate level to the first week, you have to be looking at 3720, or at a pinch 3730.

In essence, should the market go there yet again, it goes in full knowledge of what to expect, and is therefore not frightened by that, or it pulls up short, pretty much for the same reason.

Don’t forget, last week having hit R1 this market rallied 47 and the 73-points respectively, so the bulls are far from dead, but at they same time, hardly galvanised either. Apologies its not more definite, but today or tomorrow should go a long way to sorting out who wants to be in charge for the remainder of this expiry we suspect.

 

Range:            3745  to  3995           

Activity:          Poor

Type:              Neutral

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

Jun
22
2022
June 22nd, 2022 by Richard

Thank goodness for the dynamic delta, otherwise the SPX would really be in a mess.

 

Nb. Our comment from the 06/14/22 (Not published)

 

Nb. Our comment for 06/22/22

 

We can’t not start without mentioning the end of the June expiry, which most certainly proved very expensive for someone.

But despite it getting out of control from a derivative perspective, it did adhere to some ratio levels, so at least the dynamic delta was having an effect right until the end.

Our final trading range was either 3645 to 3745 or 3745 to 3895. The fact that the market failed to close above 3745 when we last published on the 14th was a warning. It still could have made the zone by the Friday, but getting back to 4000 by the next day, rollover Wednesday, was obviously not going to happen. The bottom of that trading range was 3645, and the intraday lows on the Thursday and Friday were 3639.77 and 3636.87 respectively.

Evidently, “derivatives didn’t reassert their authority”.

Anyway, and more importantly, this, the July expiry, and what is the ratio picture telling us for this trip.

And if anything, the enormous Y ratio bandwidths have actually got worse.

Now the Y1 one stands at 260-points, but the overall one is the widest ever, coming in at the humongous 815-points wide.

Perhaps a saving grace, for the bulls at least, is at least this time the market is actually at the bottom of this huge bandwidth.

As we have seen, the dynamic delta denoted by the ratio levels has continued to work, it is really now just a question of who is in charge?

The highly strung emotions of the equity mob, or the money on the table of the derivative players?

Sadly, we can’t answer this question, all we can do is say that historically, once the over-excitement of a triple is over, money normally rises to the top.

 

Range:            3745  to  3995           

Activity:          Poor

Type:              Bullish

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

Jun
07
2022
June 7th, 2022 by Richard

The SPX has had ample opportunity to cut loose, so why hasn't it?

 

Nb. Our comment from the 06/01/22

 

Well, it certainly was dramatic and it certainly was a seismic move in the zone.

Had one realised what was going on, then last week was like reading a book.

The same day as our last note the market hit the intraday low of 3875.13, a deep incursion into R2.

This was evidently enough of a stimulus to the bulls, happy to piggyback on the futures buying dynamic delta unleashed, to force the zone into the seismic move we had mentioned, as when we crunched the numbers on Wednesday it had indeed moved to 3995-4005.

Therefore, Wednesday was all about the new zone but, the Thursday and Friday, were definitely all about the sudden freedom the market found itself courtesy of that now vast expanse of Y1 above said new zone.

Of course, we have seen the zone in the SPX make big moves before, but we can’t actually recall one of this magnitude before. Nor can we ever think of such a move being so necessary, as it really has “reset” this market for this expiry.

So, from starting off in bear territory below the zone, and testing R2 ratio, we now have the situation where it is happily back in bullish territory in acres of Y ratio.

Therefore, you would be forgiven for thinking that the hard work had now been done but, to us at least, now everything has been reset, the true nature of the market can begin to emerge.

It may well be, that the bulls have now gained sufficient superiority that, in hindsight, the hard work has indeed been done. However, now the market is above its zone the gravitational pull from it is now downwards, not upwards. Plus, there is a chance, that the zone could move back from whence it came.

So, still plenty of risks out there but, the next few days and how they evolve, should go a long way towards either cementing this sea change, or revealing it to be just what we said, a reset.

Nevertheless, playing the cards we now have in front of us, support is the zone and the R ratios immediately below that. Whereas resistance, in the form of R ratios, doesn’t appear until 4605. And, if it remains as aggressive on the upside, then R2 doesn’t appear until 4705. Which is a ridiculous amount of upside for a bull market, let alone the bear one we are meant to be in on a conventional definition, not ours (unless the zone does move back up of course), but even so, it is a lot.

 

Range:            4005  to  4605           

Activity:          Poor

Type:              Neutral

 

Nb. Our comment for 06/07/22

 

Well, it promised so much but, after that seismic move down in the zone, the SPX has just stalled.

Although, we did suspect that it was pure and simple a reset, and so we also think that the true nature of this market is yet to emerge.

It was more to do with the sudden shock of hitting R2 on the very first day, the resultant subsequent rebound forcing the radical zone move, rather than a more deliberate market motivation that caused the reset we think.

Once the zone had moved, and the market was above it, had there been any further aspirational bulls out there, they really could have had the mother of all parties.

Still could of course, as R1 is still a massive distance away at 4505, but there just doesn’t seem to be the belief.

Oddly however, we are also not seeing the zone want to move away from where it is. Which is a bit bizarre, because this index has stalled around the low 4100’s, which is in the virtually non-existent Y1 ratio gigantic bandwidth, and yet it hasn’t forced the zone to settle around it.

There may well be technical, or even economical reasons for this torpor but, from a derivative perspective, there is no reason at all as the market should be fizzing about with 2 or 3% moves.

On a positive note, the level of activity has been ok throughout, so we feel certain this particular doldrum won’t last much longer.

At the very least, next week is the rollover and expiry, so this alone should start to agitate this market and get some volatility out there.

So, same as last week, the R ratios below the zone should provide some support, but it has been there already this trip so will be no stranger to what’s there.

On the other side of the coin, there is still an absolute vast swathe of Y ratio above it, so all it would need it a gentle shove in that direction, but what in the current climate could provide said shove we have no idea.

 

Range:            4005  to  4505           

Activity:          Moderate

Type:              Neutral

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

Jun
01
2022
June 1st, 2022 by Richard

Can the SPX consolidate this seismic zone move, or is it just a reset?

 

Nb. Our comment from the 05/24/22

 

Well, we just have to start with how the May expiry ended, and if you remember the SPX had just bounced off R3 (3880) and had just got back into the Y ratio bandwidth. We then said 4200 looks like a “shoo-in” to be the next zone, but 4100 was also highly probable. So, to see this index close at 4088.85 on the Tuesday we thought it had done it.

Of course, it then went all wrong, and the peril of having so much Y ratio became apparent yet again.

In the end the zone didn’t move, but the R ratios continued to collapse, so much so, by Friday R1 was at 3870. Therefore, in the end, this index did expire in its Y ratios but, there is no denying it, that this was an expensive trip for derivatives.

Looking at June, on Monday, R1 was at 3995, so the fact that the SPX closed on the preceding Friday at 3901.36 meant this expiry opened in the R1 bandwidth.

And, with R2 at 3895 (down from 3945) meant this index was already knocking on this door from the very start.

Not a good baptism really, but one which meant we were not that unduly surprised by the market reaction yesterday.

The question is really what happens next?

The short answer is that this will depend on how, or if, the zone sorts itself out, as being at 4300 is too far above the horizon to have any purposeful influence.

It may sound bizarre, especially as Y2 is at 4095 and R1 3995, but we can see a seismic zone move to 4000, almost as if it is resetting itself.

A lot will depend on today, what and how much business is generated in particular, but this index needs something dramatic to happen. As, once done, then the ratios can start creating a more conventional distribution. Something desperately needed, as currently the overall Y ratio is a gargantuan 635-points (16%) so skittish doesn’t even begin to describe it.

 

Range:            3895  to  3995           

Activity:          Moderate

Type:              On balance only just bullish

 

 

Nb. Our comment for 06/01/22

 

Well, it certainly was dramatic and it certainly was a seismic move in the zone.

Had one realised what was going on, then last week was like reading a book.

The same day as our last note the market hit the intraday low of 3875.13, a deep incursion into R2.

This was evidently enough of a stimulus to the bulls, happy to piggyback on the futures buying dynamic delta unleashed, to force the zone into the seismic move we had mentioned, as when we crunched the numbers on Wednesday it had indeed moved to 3995-4005.

Therefore, Wednesday was all about the new zone but, the Thursday and Friday, were definitely all about the sudden freedom the market found itself courtesy of that now vast expanse of Y1 above said new zone.

Of course, we have seen the zone in the SPX make big moves before, but we can’t actually recall one of this magnitude before. Nor can we ever think of such a move being so necessary, as it really has “reset” this market for this expiry.

So, from starting off in bear territory below the zone, and testing R2 ratio, we now have the situation where it is happily back in bullish territory in acres of Y ratio.

Therefore, you would be forgiven for thinking that the hard work had now been done but, to us at least, now everything has been reset, the true nature of the market can begin to emerge.

It may well be, that the bulls have now gained sufficient superiority that, in hindsight, the hard work has indeed been done. However, now the market is above its zone the gravitational pull from it is now downwards, not upwards. Plus, there is a chance, that the zone could move back from whence it came.

So, still plenty of risks out there but, the next few days and how they evolve, should go a long way towards either cementing this sea change, or revealing it to be just what we said, a reset.

Nevertheless, playing the cards we now have in front of us, support is the zone and the R ratios immediately below that. Whereas resistance, in the form of R ratios, doesn’t appear until 4605. And, if it remains as aggressive on the upside, then R2 doesn’t appear until 4705. Which is a ridiculous amount of upside for a bull market, let alone the bear one we are meant to be in on a conventional definition, not ours (unless the zone does move back up of course), but even so, it is a lot.

 

Range:            4005  to  4605           

Activity:          Poor

Type:              Neutral

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

May
24
2022
May 24th, 2022 by Richard

Thanks to May the SPX June expiry was born knocking on R2 Ratios door.

 

Nb. Our comment from the 05/18/22 (Not published)

 

Nb. Our comment for 05/24/22

 

Well, we just have to start with how the May expiry ended, and if you remember the SPX had just bounced off R3 (3880) and had just got back into the Y ratio bandwidth. We then said 4200 looks like a “shoo-in” to be the next zone, but 4100 was also highly probable. So, to see this index close at 4088.85 on the Tuesday we thought it had done it.

Of course, it then went all wrong, and the peril of having so much Y ratio became apparent yet again.

In the end the zone didn’t move, but the R ratios continued to collapse, so much so, by Friday R1 was at 3870. Therefore, in the end, this index did expire in its Y ratios but, there is no denying it, that this was an expensive trip for derivatives.

Looking at June, on Monday, R1 was at 3995, so the fact that the SPX closed on the preceding Friday at 3901.36 meant this expiry opened in the R1 bandwidth.

And, with R2 at 3895 (down from 3945) meant this index was already knocking on this door from the very start.

Not a good baptism really, but one which meant we were not that unduly surprised by the market reaction yesterday.

The question is really what happens next?

The short answer is that this will depend on how, or if, the zone sorts itself out, as being at 4300 is too far above the horizon to have any purposeful influence.

It may sound bizarre, especially as Y2 is at 4095 and R1 3995, but we can see a seismic zone move to 4000, almost as if it is resetting itself.

A lot will depend on today, what and how much business is generated in particular, but this index needs something dramatic to happen. As, once done, then the ratios can start creating a more conventional distribution. Something desperately needed, as currently the overall Y ratio is a gargantuan 635-points (16%) so skittish doesn’t even begin to describe it.

 

Range:            3895  to  3995           

Activity:          Moderate

Type:              On balance only just bullish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized Tagged with: , , , , , , , , , , ,

← Previous Article
Next Articles »