Nb. Our comment from the 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
Type: Bullish
www.hedgeratioanalysis.com
Nb. Our comment for 11/08/22
It was good timing to publish our last comment on the 1st, as that very day this market ended at 3856.10, right on its zone.
This made the next day, Wednesday the 2nd, the critical day.
Basically, the market had to choose to stay above the zone and therefore remain in bullish territory, or to relinquish its newly established beachhead.
We hope it came across that we were a bit sceptical of the rise, and saw it mainly as the market drifting upwards in absence of any ratio “traction” whatsoever.
And in keeping with our belief that this expiry will be an exciting one, the following day, Thursday 3rd, saw this index capitulate all the way down to Y2 at 3695, with the intraday low of 3698.15.
We are not convinced that the intraday low of 3708.84 was another test of Y2, as being a bit far away from 3695, we think it was more like one of those cases where it was you first.
Of course, when nobody wants to be the first to test a level again, the market often reverses short of the actual level.
Decent recovery though, but now the market is stranded in no-man’s land.
Not a bad place to be, especially when there is no ratio to speak of.
However, you now know that the market knows that the zone is at 3850 and Y2 is at 3695.
We have no idea which way it will jump next, and there have been no meaningful ratio developments to indicate a preference either way, so we can’t really help at the moment.
What we can say though, is although activity has been truly abysmal so far this expiry, in the last couple of days we have seen a small tick up. Which, if this continues and grows, means the current fence-sitting shouldn’t last much longer.
Range: 3695 to 3845
Activity: Poor
Type: On balance only just bullish
www.hedgeratioanalysis.com
