Nb. Our comment from the 06/29/21
It is a real shame we were not able to publish the ratios since the 8th June, especially as so much has happened.
Firstly, the June expiry, where the zone did eventually end up at 4145-4155, meant the market finishing at 4166.45 was about as close as they were going to get under the circumstances.
However, that expiry had a direct influence on the July one, and as one can see from the ratio table above, the July zone was even then at 4220-4230.
In an ideal world (like the FTSE testing R1 at 6948.63) we would have seen Y2 tested here, but evidently the bulls were far more convinced/knowledgeable about the expiry effect, so were very quick to resume control.
So, as the market was racing back up towards its zone, it has moved, albeit by just 25 points, but nevertheless this is still a bullish sign.
But, just as before, it is hardly earth-shattering, as it is a small move, actually the smallest you can get really, and it was just within the Y1 ratio bandwidth, so also not exactly difficult to achieve.
Therefore, the big question still remains, which is how committed are the bulls? As not having been tested yet, we have nothing on which to gauge their willingness.
So, it is worth pointing out, and please bear in mind we are still only talking the minimal Y1 ratio, that there is a step-up at 4305, which, should the market encounter it, give us a very good clue towards this measure.
At the end of the day, it is very similar to the last few expires, as in still a ridiculously wide Y ratio bandwidth, and a market making new highs by default, as there is scant evidence of that many bulls around at all.
So, again we stress, this is really not a risk-free market.
Range: 4255 to (4305) 4330
Type: On balance only just bullish
Nb. Our comment for 07/07/21
If the first week of this expiry was all about the SPX getting back to its zone, then the second week was all about finding out where Y2 was.
As one can see from the above table, this is now 4355, which is where the intraday highs of the last two trading days were.
Fridays came in at 4355.43, while Tuesdays was 4356.46, which was also the open.
Therefore, it was not surprising, to us at least, when the market recoiled from this encounter with Y2, although the bulls are evidentially resilient judging by the bounce.
While looking at the above table, noticing the increase in the ratios below the zone as well as the decrease above, then this suggests a bullish market.
This is true, of course, but again to us this is rather by default than design, as the bandwidths are actually exactly the same.
The Y1 ratio bandwidth remains at 235-points, while the overall Y ratio bandwidth is steadfast at 410-points.
The zone itself is also likely to move up.
The best analogy we can come up with is that the market is like an automatic car in neutral, designed to creep ahead (or at least steady on an incline).
The overall lack of ratio, also denotes a very undecided market.
There is very little else we can add, as the way the ratios are behaving is translated as bullish, and that is about the extent of it.
However, the lack of players participating is a very troublesome aspect, as is, should anything rock the boat, the corresponding Y2 (support) ratio doesn’t come into play until you get down to 4120, a full 5.41% below here.
Enjoy, but just don’t fall into the trap of believing this is a one-way street.
Range: 4255 to 4355