The SPX got away with one in Feb, prob just as well really.

Nb. Our comment from 02/11/20

It is probably difficult to remember back to last Tuesday the 4^th February, but that was the day of our last comment, which happened to coincide with the rather large fiscal stimulus made by the Chinese government.

The end result was an opening gap up of about 32-points, which more importantly, took the open to 3280.61, which was above R1, then at 3280.

That left R2 as the last remaining resistance, and (yet) another opening gap up, this time a more moderate 29-points, got the market safely above that by starting the day off at 3324.91.

Essentially the situation hasn’t changed, as the Y ratio bandwidth is pretty much the same, it’s just that it too is moving up with the market.

In US Football they call it moving the chain, making it first down again with ten yards to go.

The only issue here is that the chasm of very minimal ratio remains beneath this market.

Albeit, the zone has moved up, but as we explained previously, moving up into a level of minimal ratio is not the hardest task to achieve, and is almost self-fulfilling if the underlying is so far ahead in the distance as well.

One difference that perhaps may be worth considering, is that after recent events the bulls may not be as resilient as they once were?

Great it’s moving up, great the zone is as well, and great the ratios are reacting, but really not so great is the Y ratio bandwidth hasn’t shrunk and that the rollover starts next week.

Don’t get fooled, the risks are still there, and perhaps the bulls resolve might not be what it once was.

Range:            3255  to  3355         

Activity:          Moderate      

Type:              On balance only just bearish

Nb. Our comment on 02/20/20

To be fair it has been bit of a default expiry for the February one.

By which we mean that equities have definitely been in control, and the ratios have adapted around them.

Although, to be fair it hasn’t exactly got the pulses racing, as back at the very start of this trip, the market was 3329.62, so a rise of 56.53-points, or 1.70%, so far over 5-weeks is not that spectacular.

However, dropping back to 3214.68, virtually the top of the then zone, made it a very decent round trip.

The zone has continued upwards, and, no doubt, there is probably one move left in it even at this late stage, but as we said, migrating into Y1 ratio is not the hardest thing and “almost self-fulfilling”.

For us the real yardstick, has been the overall depth of the Y ratio bandwidth, which has remained staggeringly wide throughout.

It started at 245-points, then 210, 210, 220 until now it is 260-points.

So, our analogy still stands, with this bandwidth representing the 10-yards in US football, and all this market has done is move this chain forward.

The risk remains, which is an 8% in-the-blink-of-an-eye type risk.

Great it dodged a bullet, but best not to get complacent.

Tomorrow is expiry, so it looks like this expiry is done, but next up is the first triple of this year, and it shouldn’t be so accommodating.

Range:            3330  to  3430         

Activity:          Good      

Type:              On balance bearish