Nb.
Our comment from 05/24/19 (Not published online)
Just
as we said “please take it for granted
that the zone here should be 2845-2855” and now we see confirmation of that
in the table above.
Although,
in truth, had you been following the SPX then on Monday, Tuesday and Wednesday
it would have been blatantly obvious the impact that 2845 and 2855 was having
on this index.
Nevertheless,
it is good it has got the move done, as delaying it can retard the development
of the ratios until it does so.
However,
for us, the real question is whether or not the intraday low yesterday was a
test of R1 or not?
This
low was 2805.49, and as one can see in the tables above, R1 has stayed put at
2795.
10-points
even when this index was down 50.78-points is a lot to ask of the corresponding
spike in the Vega, so we are going to call that close, but a miss all the same.
The
other potentially relevant fact is where the market closed, at 2822.24.
As
this is just above Y2, which also hasn’t changed.
This
close is bullish, but don’t forget, we are just talking about Y2.
The
more important level is the bottom boundary in the DJX, which is at 25500, and
importantly that index closed at 25490.
10-points
on a twenty-five-thousand-point index is statistically irrelevant, but below is
below.
This
makes today’s open very crucial, for both indices.
So, there is light at the end of the tunnel, but without that solid test of R1 there is a risk remaining, but now there is as much Y ratio above the new zone as there is below it, so the potential is definitely exciting.
Range: 2795 to 2845
Activity: Moderate
Type: On balance bearish
Nb.
Our comment on 05/30/19
Actually,
the first thing we should point out that back on the 24th R2 was at
2770, as seen in the table above, but it was unchanged when we calculated the
ratios in the SPX on the 28th, and referenced in our comment on the
DJX on the 29th.
This
is very important, as yesterday’s intraday low was 2766.06, but also it was the
manner of this low that was significant, as this was just a spike, whereas the
market did hover around the 2770 level for quite a while.
Whilst,
on this subject, it was a very similar story for the DJX and their level at 25000.
Even
more significant, is the fact that R2 has receded to 2745, and interestingly
this is the only ratio to move.
2770
will naturally turn into what we refer to as a “step-up”, but hopefully, unless
you are a bear of course, the market will not need to test this level again, the
job being done yesterday.
However,
this is far from being a done deal, and below the zone the market is in bear
mode, and falling ratios are bearish, but it is the first decent level of
support this index has encountered, so it might rejuvenate the bulls.
Having
said that, it is worth noting that yesterday this index gapped down at the
open, starting at 2790.25, so already significantly below R1 at 2795.
Of
course, this now makes 2795 a hurdle, so now a critical level.
Basically,
now the front line between the bulls and the bears.
Also, please be aware, above the zone, which is still 2845-2855, there is still acres of Y ratio, so if the bulls do regain control, they have an awful lot of space to express themselves in.
