Nb. Our comment for 06/05/24
We think the market must have read what we said, as it did exactly that.
Starting on the very day we last published, Tuesday 30th April, when the market dropped 80.48-points.
Then the Wednesday neatly encapsulated everything we had said, with the market performing an 80-point round trip.
The final two days were more one-way traffic, but were still quite chunky moves.
However, at the end of the day and as you can see in the ratio table, nothing has changed in our respect, as the market remains in its Y1 ratio bandwidth.
In fact, and despite last week being an exciting ride, the net gain is only 11-points. Virtually nothing.
Therefore, what we said last week still holds true for this week. That is apart from the part about the bulls’ fence-sitting, as since the market touched its zone (6-points away on the 2nd) they have obviously been tempted back in.
Although, it must be said, not in any great stampede, otherwise this index would have already tested Y2 by now.
Otherwise, the ratios are all a little firmer below the zone. Above the zone, only the higher ratios have firmed, although the fact that the others have held steady is significant.
On balance the bulls’ just about edge it but, the real game changer might be what we said at the very start of this expiry, that it is easier to recover lost ground than win it in the first place.
We are of course referring to the zone and today we have seen a definite move towards 5100 and/or 5150. With two-weeks still to go, we think that this will be the main driving force, especially in the absence of so many players.
Range: 5005 to 5205
Activity: Poor
Type: Neutral
www.hedgeratioanalysis.com
Nb. Our comment from the 30/04/24
In comparison to the FTSE the SPX has been far more reticent and, although we didn’t specifically say so last week, it hasn’t disappointed in producing the very much expected usual volatility and whipsaw associated with being in the absolutely minimal Y1 ratio.
In fact, it has been the whipsaw that has most impressed us, flipping 20/30 or even 40-points in minutes, especially pre-market.
However, even though it is up just over 100-points on the week, in ratio terms it really hasn’t gone anywhere.
However, don’t get lulled into a false sense of security, as it could easily motor, albeit in either direction.
As one can see from the ratio table, the Y1 ratio bandwidth, which is entirely above the zone, is an impressive 210-points wide.
As this index is circa 5115, that means it could jump 100-points in either direction with very little impetus at all.
And then, that just takes it to Y2 and, this bandwidth, stretches for a further 165-points on top of Y1. Albeit mainly above the zone as well.
Don’t forget this index challenged R1 in the last expiry, when it established its new all-time high and just before that 5% pullback to its zone.
Therefore, and again referencing the FTSE, one does have to wonder why the bulls aren’t taking advantage.
It’s not as if they don’t know by now how little ratio currently surrounds them.
The ratios tell us this index could move 100-points very easily in either direction, or more with just a little incentive.
However, our head says with the bulls obviously fence-sitting, weakness is the more likely outcome unless a spark is ignited.
Range: 5005 to 5205
Activity: Poor
Type: Bullish
www.hedgeratioanalysis.com
