Will the SPX this week be all about R2 just as last week was all about R1?
Nb. Our comment from 10/28/19
It looks like we are going to get our wish of this index testing its R ratios above the zone.
However, what we should have mentioned on the 22nd, was that the Delta Ratio here was just 33%
And, today, it has hardly changed, being 33.7%, and anything below 50% we see as bullish.
Hence, our wish to see a test of the R ratio, still at 3045.
In fact, the ratios above the zone have strengthened, most notably R3 which has come in from 3125 to 3105.
More noticeable though, is the utter lack of movement below the zone.
However, the first real test of the bullish commitment will come with R1 at 3045, and then at 3070.
Although, we would like to point out, that there is a step-up in the ratios at 3055, as this is where they switch to being close to the top of the R1 band, rather than being at the bottom.
Of course, please don’t forget the corresponding R1 ratio level does not appear until you get all the way down to 2895.
Looks like the Nov expiry is just getting started.
Range: 3005 to 3045
Type: On balance only just bearish
Nb. Our comment on 11/05/19
When we last commented on the SPX (28th Oct) it was all about R1, then at 3045.
And, blowing our own trumpet unashamedly, the next 4 intraday highs were 3044.08, 3047.87, 3050.10 and 3046.90.
Friday saw the deadlock broken, and very interestingly, it took a gap-up at the open, to 3050.72, to achieve what they had struggled to all week.
Of course, once the dam had broken, it was always going to then be about R2.
Back on the 28th this was at 3070, whereas today it is 3080, and although we now have no way of knowing exactly when it did change, we suspect slipping 10-points over Friday and Monday looks about just right.
So, the point being, is although the ratios are slipping above the zone, this index is now battling R2 ratio from here on up.
Don’t forget the rollover starts next week, so the gravitational effect of the zone will come to bear towards the end of this week.
Furthermore, the ratios below the zone have not built to any great degree, and in fact, with R1 static at 2895, the huge, no enormous, Y ratio bandwidth, with its inherent risk, remains in place.
It is timidly making all the right moves, for the bulls anyhow, and they could just continue knocking on a retreating R2 ratio door for sure, but whatever you do, don’t lose sight of the fact that the zone remains at 2995-3005, and the rollover is now just over a week away, and, that if it really gets a fright, the corresponding R ratios are now 180-points away.