Category: Uncategorized

March 8th, 2021 by Richard

Amazing watching the FTSE bulls vs. the Ratios.

 

Nb. Our comment from the 03/01/21

Respect to the bulls, as they could not have tried any harder.

By which we mean getting over DR at 6650 on Wednesday 24th Feb.

Sadly, it was almost too painful to watch, as is so often the case in these scenarios, that the market thinks it has done the hard part, but then every 50-points it is DR (or higher) repeated constantly.

Therefore, it was no real surprise to see it come a cropper at 6700, although it was also very resilient of those bulls to keep the close a smidgen above DR, at 6651.96.

Then you get to the amazing Friday, and the market misinformation that the open and high were the same as the previous days close, 6651.96, just obfuscates the picture, so shame on you, yet again.

In reality, the open was about 6573, so significantly below DR at 6650, and the subsequent rally and resultant intraday high of the day was about 6647, so another test of DR, not that the official O,H,L,C, want you to know that of course.

Although they couldn’t hide the solid test at the other end of the R2 bandwidth, as it battered on the door of its zone at 6550 for a good half hour.

The bulls did try to hold the line, and for quite a while, but to no avail.

For the astute among you, this test of 6550 would have been immediately recognised as strike 3, the first two tests having already taken place on the Monday and Tuesday.

This now makes the bottom of the zone, 6450, a really very important level.

So, and as you can see in the table above, it is worth noting that the ratio has gone up to R2.

Hopefully, it will now reside safely in its zone for the next fortnight, but if it doesn’t, then R2 shouldn’t hold that much fear (having been in it all last week), and as it has already tussled with DR, this would then now become a possibility.

 

Range:            6450  to  6550       

Activity:          Moderate

Type:              Bearish

 

Nb. Our comment on 03/08/21

 

Again, we have to applaud the bulls, as they are trying ever so hard.

Actually, it is a bit sad that they are in such an ebullient mood just at the very same time that the ratios are stacked against them.

Twice now (Wed & Fri) they have got past 6650, only to come a cropper at 6700, the next level of DR.

The problem is, this isn’t going to get any easier, as if they manage to force their way past 6700, they then have the daunting task of facing B1 at 6750.

And although 6800 is still in the B1 ratio bandwidth, as these levels are exponential, then this is something similar to B1 plus R3.

If they ever get that far, then the result might be that they will wish that they had in fact stayed in their zone.

Sadly, yet again, the misinformation propagated by the O, H, L, C data continues as on Thursday the high was never 6675.47, but rather a smidgen above 6650.

Anyway, the ratios haven’t actually changed, so this expiry is a perfect example for anyone to study how the ratios can actually affect the market.

We are not going to list how many times and for how long the FTSE engaged with one of our ratio levels and reacted last week (not enough room anyway), but between 6550, 6650 and 6700 there was more than ample opportunities for those that knew what ratio levels were there to see it.

Looking forward, as we now enter the last two weeks of this expiry, then things are only going to get more excitable, or at least, this is what normally happens.

And please don’t forget that this is the first “biggie” of the year, and as such all the naturally occurring derivative inspired increase in equity activity does also tend to get incorrectly labelled, especially by the press, who seem to need something more tangible to blame or accredit. But it does tend to get people nice and excited.

 

Range:            6550  to  6650 (6700)       

Activity:          Moderate

Type:              Bearish

 

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March 2nd, 2021 by Richard

Hope you are enjoying the SPX volatility.

 

Nb. Our comment from the 02/23/21

 

To be fair you have to be going some to have an exciting a start to the mighty March expiry that London has.

So, despite it being slightly sedate here in the SPX, do not lose sight of the fact this is a 4-week triple (the US like to call them quadruple, but whatever) expiry, and as such everything tends to go up several notches.

Our one reservation is that there are oodles of Y ratio still around here, which is again amazing, but especially so for a triple, but which might just keep the sensitivity down towards the levels we have been seeing recently in this index.

The best way to explain this is simply look at the FTSE, which spent ages yesterday morning touching the top boundary of its zone, or the bottom of its R2 bandwidth, before recovering, and then today try ever so manfully to break up into DR at 6650, before getting such a bloody nose it immediately dropped 120-points.

The point being, is that this index is already messing with R2 and trying it on with DR, and so in 3-weeks times its sensitivity will have adjusted, simple as.

Whereas here, in the SPX, it has a Y1 ratio bandwidth that is 160-points wide, and a Y2 ratio bandwidth (obviously inclusive of Y1) that is 360-points wide.

Back in the day, well in the last decade really, it was a surprise to see any Y ratio at all in a triple.

And the fact we are now a year on from the fallout, means that adjustment excuse is wearing paper-thin right now.

The ratio table above shows that there is more ratio below than above, but importantly do take note of the respective distances away from the market each ratio level actually is, and of course, as yet we have no idea of the level of sensitivity.

But, with so much Y ratio just expect volatility, whipsaw and solid percent moves.

 

Range:            3805  to  3955           

Activity:          Moderate

Type:              On balance only just bullish

 

 

 

Nb. Our comment for 02/23/21

 

We have some good news and some bad news for you, well, actually, it’s the same news, just that it depends on your interpretation of it.

As we said last week, please see above, this is exactly what we were expecting.

Although, it has been particularly impressive the way the market has mixed up one-way down or up days, with whipsaw days.

The net result of this, is activity has fallen off a cliff.

But, believe it or not, this is actually all rather lame, especially so for a triple.

By which we mean that this index has found support twice at its zone, the first on Tues 23rd Feb with the intraday low coincided with the top boundary at 3805.59, and secondly last Friday, when it dipped briefly below its zone.

It has yet to test R1 at the other end of the Y ratio bandwidth above the zone.

And this is the reason why it is so “lame”, because it has only bounced around in the Y ratio bandwidth above the zone.

It is not the markets fault that this is so wide, and as dramatic as the 2% to 3% daily moves we have been getting are, this is nothing had the market utilised the full Y ratio bandwidth.

As food for thought, that would mean seeing it down to circa 3635, which would be fun, or not, again depending on your interpretation.

Talking of interpretation, this is where we get to the good/bad news bit, as precious little has changed, ratio wise, after the first week.

The overall the Y ratio bandwidth has shrunk by 40-points admittedly, but nevertheless still remains a jaw-dropping 320-points wide.

On the flip side, it would be very interesting to see this market get aggressive, as it really won’t realise that the only ratio ahead is just R1 and R2.

Bizarre not to see any B ratios, but then again, it’s bizarre to see Y ratio in a triple.

In a nutshell, more of the same, but probably getting worse as the expiry continues.

 

Range:            3805  to  3955           

Activity:          Very poor

Type:              Bullish

 

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March 1st, 2021 by Richard

Will the FTSE find peace in its zone?

 

Nb. Our comment from the 02/22/21

 

A very big hearty welcome to the first triple of the year.

And for those that still harbour any doubts as to the significance of these “biggies” then just cast your mind back to this time last year.

As everything goes up by some considerable way, it is therefore totally natural that so should a markets sensitivity.

Although, even having just said that, being sensible about it means that it does normally take a bit of time for the market to get used to everything getting so much bigger.

By way of a more practical explanation, with DR lurking ready to pounce on an unsuspecting market at 6650, we would fully expect this to be far too much dynamic delta for the market to absorb.

Or at least, in the first few days, as once this expiry gets going, then these triples have historically traded between the DR and even B1 corresponding levels of ratio.

And, even if it just trades between the DR levels, then this still gives you a potential trading range of 6650 all the way down to 6100, as things stand.

Of course, things may change, and significantly so, but at first blush this is not looking like a happy expiry for the bulls.

Therefore, it is probably welcome news that at least this one is a normal 4-week trip.

This is not to say we can’t be wrong, but the slap in the face R2 gave to this market at 6800 (Feb and also aided and abetted by the expiry), suggests that the futures that will come out onto the market by an exponential ratio level two notches above this will be very hard to digest. Not unheard of, just unlikely in our opinion.

 

Range:            6550  to  6650       

Activity:          Moderate

Type:              On balance bearish

 

 

Nb. Our comment on 03/01/21

 

Respect to the bulls, as they could not have tried any harder.

By which we mean getting over DR at 6650 on Wednesday 24th Feb.

Sadly, it was almost too painful to watch, as is so often the case in these scenarios, that the market thinks it has done the hard part, but then every 50-points it is DR (or higher) repeated constantly.

Therefore, it was no real surprise to see it come a cropper at 6700, although it was also very resilient of those bulls to keep the close a smidgen above DR, at 6651.96.

Then you get to the amazing Friday, and the market misinformation that the open and high were the same as the previous days close, 6651.96, just obfuscates the picture, so shame on you, yet again.

In reality, the open was about 6573, so significantly below DR at 6650, and the subsequent rally and resultant intraday high of the day was about 6647, so another test of DR, not that the official O,H,L,C, want you to know that of course.

Although they couldn’t hide the solid test at the other end of the R2 bandwidth, as it battered on the door of its zone at 6550 for a good half hour.

The bulls did try to hold the line, and for quite a while, but to no avail.

For the astute among you, this test of 6550 would have been immediately recognised as strike 3, the first two tests having already taken place on the Monday and Tuesday.

This now makes the bottom of the zone, 6450, a really very important level.

So, and as you can see in the table above, it is worth noting that the ratio has gone up to R2.

Hopefully, it will now reside safely in its zone for the next fortnight, but if it doesn’t, then R2 shouldn’t hold that much fear (having been in it all last week), and as it has already tussled with DR, this would then now become a possibility.

 

Range:            6450  to  6550       

Activity:          Moderate

Type:              Bearish

 

Available to buy now

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February 23rd, 2021 by Richard

One would be forgiven for not realising this SPX expiry was a triple.

 

Nb. Our comment from the 02/19/21 (Not published)

 

Nb. Our comment for 02/23/21

 

To be fair you have to be going some to have an exciting a start to the mighty March expiry that London has.

So, despite it being slightly sedate here in the SPX, do not lose sight of the fact this is a 4-week triple (the US like to call them quadruple, but whatever) expiry, and as such everything tends to go up several notches.

Our one reservation is that there are oodles of Y ratio still around here, which is again amazing, but especially so for a triple, but which might just keep the sensitivity down towards the levels we have been seeing recently in this index.

The best way to explain this is simply look at the FTSE, which spent ages yesterday morning touching the top boundary of its zone, or the bottom of its R2 bandwidth, before recovering, and then today try ever so manfully to break up into DR at 6650, before getting such a bloody nose it immediately dropped 120-points.

The point being, is that this index is already messing with R2 and trying it on with DR, and so in 3-weeks times its sensitivity will have adjusted, simple as.

Whereas here, in the SPX, it has a Y1 ratio bandwidth that is 160-points wide, and a Y2 ratio bandwidth (obviously inclusive of Y1) that is 360-points wide.

Back in the day, well in the last decade really, it was a surprise to see any Y ratio at all in a triple.

And the fact we are now a year on from the fallout, means that adjustment excuse is wearing paper-thin right now.

The ratio table above shows that there is more ratio below than above, but importantly do take note of the respective distances away from the market each ratio level actually is, and of course, as yet we have no idea of the level of sensitivity.

But, with so much Y ratio just expect volatility, whipsaw and solid percent moves.

 

Range:            3805  to  3955           

Activity:          Moderate

Type:              On balance only just bullish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized

February 22nd, 2021 by Richard

DR Ratio ready to pounce on an unsuspecting FTSE.

 

Nb. Our comment from the 02/15/21 (Not published)

 

Nb. Our comment on 02/22/21

 

A very big hearty welcome to the first triple of the year.

And for those that still harbour any doubts as to the significance of these “biggies” then just cast your mind back to this time last year.

As everything goes up by some considerable way, it is therefore totally natural that so should a markets sensitivity.

Although, even having just said that, being sensible about it means that it does normally take a bit of time for the market to get used to everything getting so much bigger.

By way of a more practical explanation, with DR lurking ready to pounce on an unsuspecting market at 6650, we would fully expect this to be far too much dynamic delta for the market to absorb.

Or at least, in the first few days, as once this expiry gets going, then these triples have historically traded between the DR and even B1 corresponding levels of ratio.

And, even if it just trades between the DR levels, then this still gives you a potential trading range of 6650 all the way down to 6100, as things stand.

Of course, things may change, and significantly so, but at first blush this is not looking like a happy expiry for the bulls.

Therefore, it is probably welcome news that at least this one is a normal 4-week trip.

This is not to say we can’t be wrong, but the slap in the face R2 gave to this market at 6800 (Feb and also aided and abetted by the expiry), suggests that the futures that will come out onto the market by an exponential ratio level two notches above this will be very hard to digest. Not unheard of, just unlikely in our opinion.

 

Range:            6550  to  6650       

Activity:          Moderate

Type:              On balance bearish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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February 18th, 2021 by Richard

R2 at 6800 was a real slap in the face for the FTSE

 

Nb. Our comment from the 02/15/21

 

When we said it would “calm down” even we didn’t expect it to go to sleep.

Although it hasn’t not been exciting, which is somewhat in contrast to the lack of movement.

Essentially all week it has been one long battle with its zones’ upper boundary at 6550.

Some days were far more aggressive than others, in particular the Monday and Wednesday.

On the 8th the market spent almost 4 hours above the boundary, flatlining around 6560, but on the 10th the market actually opened around 6560 (officially 6531.56 but we all know that is rubbish), went about 17-points higher before collapsing all the way back by almost 100-points.

No surprise then that the very next day the intraday high 6554.15.

How it held out for so long is a mystery, as that last test was strike number 5, but it still needed a good Street on the Friday to help it over the line.

The problem is that we are now into the rollover on Wednesday and the expiry on Friday, so it couldn’t have picked a worse time to do it.

And don’t forget the next trip is the first triple of the year, so everything just goes up a notch or two.

Also, we will endeavour to see if the amber gambler decides to come back, as that will influence proceedings of course.

So perhaps it isn’t such a bad time to come back to life after all.

Should be an interesting one nevertheless, as it is a straightforward fistfight between the amazingly stubborn but not that committed bulls, and the gravitational pull of the zone at this particular time.

 

Range:            6550  to  6650       

Activity:          Poor

Type:              Bearish

 

 

Nb. Our comment on 02/18/21

 

Talk about picking the exact wrong time to come to life, then that’s the FTSE in a nutshell this week.

Certainly, forced the derivatives players out of their slumber, and just once they had started to count their “keeping it in its zone” monies, they had to scramble just to get back on side.

On Monday, when it blasted up through R1 (then at 6650), this then left R2 at 6800 as the next target.

Impressive slap in the face it was as well, first attack got it up to 6799.23 before it dropped 30-points, then it regrouped, had another go, this time reaching 6799.92, before it fully capitulated, and where we now are is the result.

Interestingly, yesterday R1 had slipped from 6650 to 6700, and the intraday low was 6701.59.

However, the ratios are in full retreat above, and funnily enough below as well, so R1 has now leapfrogged the market.

Basically, the vast swathes of Y ratio that were present in the first few weeks of this expiry, and which caused such rejoicing from the bears, has returned.

We can’t really see the zone moving, precious little time left either, so we suspect the best this market can hope for is to keep it in the Y ratios for the expiry.

At least they are in a similar situation to the Street, so there shouldn’t be any divergence that might need counteracting.

Our first peek at March also has that zone at 6450-6550, and rather worryingly for the bulls, a lot more ratio above it then there is below.

Could be in for an exciting end to this trip, as well as the start of the next. Yay.

 

Range:            6550  to  6750       

Activity:          Moderate

Type:              Bearish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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February 17th, 2021 by Richard

New SPX highs, but could have been so much more.

 

Nb. Our comment from the 02/10/21

 

In our last note, please see above, we did mention that despite the market’s recent reactions we were still only talking about Y2 after all.

So, our surprise is not so much that it got over this level, but rather the difficulty it has been having since in coping with it.

And we are fast approaching this seemingly endless market manipulation, where once again we are heading for the situation of the stimulus versus the expiry.

The rollover is now a just a week away (boy don’t these 5-week expiries feel far longer than just 5 extra days) so ordinarily we would be looking for the market to gravitate towards its zone.

However, we have seen this before, and being so sensitive coupled with being encased in the minimal Y ratio, we could easily see a repeat of the zone ending up where the market is.

The weird aspect is that there has been virtually no movement in the ratios at all, and this holds true not only for our last note but also the previous one from the 2nd. Bizarre really, especially when this is particularly true below the zone, where there is more potential for it to do so than we would normally ever see.

Although, the last time, it all started with a click of a switch, and let’s face it, we are only talking about minimal ratios.

Long gone seemingly are the days when this index would happily take on the high R ratios and we would be happy to settle just for the expiry to be in the Y ratio at all.

Considering the lack of any real ratio opposition it is actually a concern that this market isn’t taking more of an advantage, so we have to remind everyone that the overall Y ratio bandwidth is still a gobsmacking 410-points wide

Perhaps the stimulus is not so much bullish motivation, but rather the aircushion supporting?

If so, the bulls better pray there’s no sharp objects in the vicinity.

 

Range:            3805  to  3955           

Activity:          Very poor

Type:              On balance bearish

 

 

Nb. Our comment for 02/17/21

 

The SPX never did really find any aggression, so as exciting as it was, from our perspective, it was all rather lame.

Y2 did revert back to 3905 last week, but the market was already above it anyway.

And only today has it moved to 3930, so the same still applies.

However, this time the market is very close to it, so here we are on the rollover and we have 3930 as the demarcation line between Y1 and Y2.

It really shouldn’t be making such a meal out of trading in the minimal Y2 ratio, but it obviously is.

And so, we suspect it will be far happier below 3930.

Although Y2 has moved up below the zone, this bandwidth has actually widened, now standing at 260-points.

In the absence of any FTSE-like behaviour where it fancies taking on the R ratios, we can only see it being happy in Y1 and looking for a quiet and peaceful expiry.

This probably means the zone moving up to 3895-3905, but in truth, anywhere in this absolutely minimal level of ratio would do.

With the mighty March expiry just round the corner, we suspect this level of sensitivity is going to come to an abrupt end a lot sooner than later.

Out of interest, an early preview of said March expiry, and the zone is the same as Feb’s, and not looking like there is that much inclination to move either.

Y2 next trip starts at 3855, and R1 at 3955, or at least this is where they are today.

Overall, it is no where near as lopsided, with our delta ratio coming in at 62.7% (Feb’s 42.1%) and below 50% is very bullish, but above 100% very bearish.

However, there is still a lot more ratio below the zone than above it, but this of course should change dramatically as we are now in the rollover and moving rapidly towards the expiry.

 

Range:            3805  to  3930        or        3930  to  4005           

Activity:          Average

Type:              Bearish

 

Available to buy now

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February 15th, 2021 by Richard

After truly epic battle with its zones upper boundary at 6550, is the FTSE now out of time.

 

Nb. Our comment from the 02/08/21

 

And calm down it certainly has.

In fact, it has almost become torporific such has been its lack of ambition, although for those that realised it was zone-bound there have been plenty of trading opportunities.

Last Monday was the deciding day, as the close was 6466.42, or in our world, just inside its zone.

The following Tuesday saw the FTSE essentially flatline along the middle of said zone, circa 6500.

The following two days were all about testing the upper boundary, with intraday highs of 6573.10 (spike at the open) and 6553.37 on the Wednesday and Thursday respectively.

Then on Friday it was the turn of the bottom boundary to be tested, with the intraday low of 6457.60.

So, there is no doubt at all that this index now knows exactly where it is.

More importantly, what it now needs to do to breach 6450 or 6550.

The problem is that it is a week too early, as the rollover and expiry are not until the week beginning 15th.

It’s not beyond the realms of possibility, and it has done it before, for it to stay zone-bound for the next fortnight, but it is rather unlikely.

Obviously, it is a lot easier to break up, as it only has to contend with Y2 ratio, and the next assault on 6550 would also be strike 3.

But whichever direction it chooses you now know that the market knows what’s there, and so will only go there with intent.

 

Range:            6450  to  6550       

Activity:          Moderate

Type:              Bullish

 

 

Nb. Our comment on 02/15/21

 

When we said it would “calm down” even we didn’t expect it to go to sleep.

Although it hasn’t not been exciting, which is somewhat in contrast to the lack of movement.

Essentially all week it has been one long battle with its zones’ upper boundary at 6550.

Some days were far more aggressive than others, in particular the Monday and Wednesday.

On the 8th the market spent almost 4 hours above the boundary, flatlining around 6560, but on the 10th the market actually opened around 6560 (officially 6531.56 but we all know that is rubbish), went about 17-points higher before collapsing all the way back by almost 100-points.

No surprise then that the very next day the intraday high 6554.15.

How it held out for so long is a mystery, as that last test was strike number 5, but it still needed a good Street on the Friday to help it over the line.

The problem is that we are now into the rollover on Wednesday and the expiry on Friday, so it couldn’t have picked a worse time to do it.

And don’t forget the next trip is the first triple of the year, so everything just goes up a notch or two.

Also, we will endeavour to see if the amber gambler decides to come back, as that will influence proceedings of course.

So perhaps it isn’t such a bad time to come back to life after all.

Should be an interesting one nevertheless, as it is a straightforward fistfight between the amazingly stubborn but not that committed bulls, and the gravitational pull of the zone at this particular time.

 

Range:            6550  to  6650       

Activity:          Poor

Type:              Bearish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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February 10th, 2021 by Richard

Stimulus vs the expiry for the SPX ... again?

 

Nb. Our comment from the 02/05/21

 

As things are now getting a lot more interesting, we thought it would be nice to keep you updated.

When we say “interesting” what we really mean is that this index is at last taking on some ratio, so we now get to see just how committed they really are.

Of course, the last time this market met Y2, then at 3855, it retreated all the way back to 3695.

And although Y2 yesterday was at 3870 (nb. where it closed) it was fascinating to watch first how it rebounded from 3855 early on, then later, when it had established a beachhead as it were, it couldn’t get further than 3860 for almost the rest of the entire trading day.

For the record, although R1 looks unchanged at 3945, in the meantime it has been initially 3940, then yesterday 3935, before reverting today.

Also, in our last note, we mentioned that at last activity had picked up, well ever since those fateful words it has been negligible.

Another aspect to note, is that for a large part of this expiry, Y2 was entrenched at 3905, so although it has come in recently, now the ratios above the zone are in retreat, we would anticipate it ending up back there before very long. Perhaps early next week.

Last note we mentioned we would keep a weather eye on 3745-3755 potential to become the next zone, and it got as close as you could possibly get, but never actually took the plunge, and now it is very rapidly looking less and less likely.

Finally, please don’t lose sight of the fact that we are only talking about Y2, as although it has proved too much so far this expiry, historically, it should be no more than a speedbump. In fact, even R1 has only been a delaying tactic in the past.

At the end of the day this market has been incredibly sensitive to just small amounts of ratio, and therefore dynamic delta, and we have no evidence to suggest that this will not continue to be the case, but it is unusual that’s all.

 

Range:            3805  to  3880           

Activity:          Only just registered

Type:              N/A

 

Nb. Our comment for 02/10/21

 

In our last note, please see above, we did mention that despite the markets recent reactions we were still only talking about Y2 after all.

So, our surprise is not so much that it got over this level, but rather the difficulty it has been having since in coping with it.

And we are fast approaching this seemingly endless market manipulation, where once again we are heading for the situation of the stimulus versus the expiry.

The rollover is now a just a week away (boy don’t these 5-week expiries feel far longer than just 5 extra days) so ordinarily we would be looking for the market to gravitate towards its zone.

However, we have seen this before, and being so sensitive coupled with being encased in the minimal Y ratio, we could easily see a repeat of the zone ending up where the market is.

The weird aspect is that there has been virtually no movement in the ratios at all, and this holds true not only for our last note but also the previous one from the 2nd. Bizarre really, especially when this is particularly true below the zone, where there is more potential for it to do so than we would normally ever see.

Although, the last time, it all started with a click of a switch, and let’s face it, we are only talking about minimal ratios.

Long gone seemingly are the days when this index would happily take on the high R ratios and we would be happy to settle just for the expiry to be in the Y ratio at all.

Considering the lack of any real ratio opposition it is actually a concern that this market isn’t taking more of an advantage, so we have to remind everyone that the overall Y ratio bandwidth is still a gobsmacking 410-points wide

Perhaps the stimulus is not so much bullish motivation, but rather the aircushion supporting?

If so, the bulls better pray there’s no sharp objects in the vicinity.

 

Range:            3805  to  3955           

Activity:          Very poor

Type:              On balance bearish

 

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February 8th, 2021 by Richard

The FTSE stuck in its zone, but for how much longer?

 

Nb. Our comment from the 02/01/21

It seems an age ago we were saying how lop-sided this market was, and it was tangling with R1 all the way up there at 6700.

But it has only been a fortnight.

Probably worth your while going back and checking on our note of the 18th January.

Of course, the ratios are all about the dynamic delta, and as such they are dynamic in their own right, and so much so recently, all that “very scary” Y ratio we have been mentioning, has all but vanished.

All that now remains is just 100-points above the zone.

Hands up, we didn’t see that coming, or at least not so quickly.

But it does go a long way to explaining why this market was loitering around in the vicinity of its zone for so long.

And, moan, moan, moan, but this stupidity of the open being the previous days close, totally distorted Thursday 28th, as the open should have been circa 6515 and the intraday high 6549, not both being Wednesday’s 6567.37.

As the intraday low that day was 6439.55, then the high of 6549, made that a zone bandwidth test.

So, no great surprise to see a breakout on the Friday.

OK, so it’s no longer Y ratio below the zone, but the levels are the same, so 6350 is still the critical number.

In fact, it makes it very appropriate, as at the start of this expiry, the market started in R1, the only difference being that this was above the zone.

There are still three entire weeks to go, but with the disappearance of most of the Y ratio, hopefully everything will now calm down considerably.

 

Range:            6350  to  6450       

Activity:          Moderate

Type:              On balance just fractionally bearish

 

 

Nb. Our comment on 02/08/21

 

And calm down it certainly has.

In fact, it has almost become torporific such has been its lack of ambition, although for those that realised it was zone-bound there have been plenty of trading opportunities.

Last Monday was the deciding day, as the close was 6466.42, or in our world, just inside its zone.

The following Tuesday saw the FTSE essentially flatline along the middle of said zone, circa 6500.

The following two days were all about testing the upper boundary, with intraday highs of 6573.10 (spike at the open) and 6553.37 on the Wednesday and Thursday respectively.

Then on Friday it was the turn of the bottom boundary to be tested, with the intraday low of 6457.60.

So, there is no doubt at all that this index now knows exactly where it is.

More importantly, what it now needs to do to breach 6450 or 6550.

The problem is that it is a week too early, as the rollover and expiry are not until the week beginning 15th.

It’s not beyond the realms of possibility, and it has done it before, for it to stay zone-bound for the next fortnight, but it is rather unlikely.

Obviously, it is a lot easier to break up, as it only has to contend with Y2 ratio, and the next assault on 6550 would also be strike 3.

But whichever direction it chooses you now know that the market knows what’s there, and so will only go there with intent.

 

Range:            6450  to  6550       

Activity:          Moderate

Type:              Bullish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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