Nb. Our comment for 08/01/23
On the face of it, bit of a drab week in the SPX last week but, dig down a bit, and it most certainly had its moments.
The DJX grabbed the all the headlines with its 13 days in a row of straight rises, almost beating, or equalling, the record set back in 1987. Which to us at least, shows how desperate they were for a headline.
Admittedly, Monday and Tuesday were very dreary but, this was only to be expected. Not only was it the start of a new expiry, which can take a little “bedding-in”, especially if the market wasn’t left in a ratio-awkward environment, but it also had a few announcements coming its way. Mainly interest rate based really.
Come Wednesday, and the FED rate rise, saw the market definitely twitch.
However, it was the Thursday that it really came to life, coincidentally the day of the ECB rate announcement. Which, in our opinion, are so well flagged by the organisations themselves beforehand, the room for shock must be very small.
Anyway, the SPX on the 27th, shot up to its intraday high of 4607.07, and its first test of Y2 ratio.
This did not go well, as the market proceeded to lose 78.51-points. Perhaps even being the cause for the DJX to miss its record as well.
As the market only finished down 29.34-points on the day, one would be excused for not picking up on this test or the magnitude of the reaction.
The end result is that it has galvanised a bit of activity, with a bit of movement below the zone and, for the first time this expiry, a small move above it.
More importantly however, may be the shake-up has today created the first signs that the zone may start to move up, although to 4550 its small steps for sure.
Overall, the picture looks bullish…it’s just that humongous Y ratio bandwidth that still gives us the jitters.
Range: 4505 to 4610
Activity: Poor
Type: On balance only just bearish
www.hedgeratioanalysis.com
Nb. Our comment from the 07/25/23
Firstly, a quick note about the end of the SPX July expiry, which continued to be bit of a yawn if the truth be known. Well, at least to us that is.
The collapse in the ratio above the zone continued and, in the end, Y2 didn’t start until 4575. So, the settlement price could have happily been anywhere from 4395 all the way up to 4575 as the zone didn’t in the end move.
Officially it was 4554.00. Which is why we decided on what the ratios were on the 18th, as coincidentally the market closed the day before at 4554.98, for comparison in today’s ratio table. To complete the ironic coincidence, yesterday’s close on the SPX was 4554.64, which is on the day we always publish on.
Funnily enough, if you look at the ratio table on the 18th, then you will see that back then Y2 started at 4555.
Anyway, enough of coincidences, and on to the more important aspect, which is what might we expect in the August expiry.
The most obvious aspect, is that the zone here has already moved up to 4500, and actually did so on Friday 21st, the day of the July expiry.
The second aspect, is that on the face of it, the ratios above the new zone appear to have continued to fall however, in the last couple of days they have in fact firmed up.
The third aspect, is that the huge Y ratio bandwidth is still present, and currently goes from 4195 all the way up to 4705.
Gazing into our crystal ball, it’s not very clear in truth, as the danger will be ever-present with that ridiculously wide Y ratio bandwidth.
However, in the absence of any shock (which may even be the FTSE) we suspect August may well be a rerun of July.
Range: 4505 to 4605
Activity: Average
Type: On balance only just bearish
www.hedgeratioanalysis.com
