Will testing R2 rejuvenate the SPX bulls?

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.

Range:             2745  to  2795           

Activity:            Poor         

Type:                On balance only just bearish            

May 30th, 2019 by