Nb. Our comment from the 04/24/20
Three days later and we are right back to where we were.
Although this is technically strike three, it is really only strike two in this, the May, expiry.
So, we still think it will be a very stern test for this market, as there could still be a lot of nervous people out there, who could easily get spooked by some dynamic delta futures selling.
The zone has changed, and moved up, to 5650-5750, which normally would be a good thing.
However, we are rather sceptical of this move, as it is just within the minimal Y1 ratio, so hardly an onerous achievement.
In fact, it was a very close call, as to whether we made the zone to go from 5650 all the way up to 5750.
We have seen this before, and it makes for a very volatile market.
But, an outstanding trading one.
The big takeaway, is the fact that no other ratio has changed, so there is no corroborating evidence to back this zone move as directional, as opposed to technical.
Could be a big day today, or just a repeat of the last time we were here, sadly.
Range: 5500 to 5850
Nb. Our comment on 04/28/20
Well it is a textbook market at the moment.
Three very solid attempts to breach R1 at 5850 throughout the day, each one lasting a good fifteen minutes, so not just spikes.
Obviously, didn’t quite have enough, and, as we said, we thought it would be a stern test.
Then, in the last quarter of an hour of real time trading, the market got back up to 5829.49.
And, our old friend, the auction, took it back up to within spitting distance for tomorrow.
However, the most important aspect for us, is that the bulls are very evidently back, and, more to the point, willing to take on R1 without running away scared.
The only ratio to change, is R3 below the zone.
The implication of this, is not that it is static, but rather the zone could still easily be 5550 all the way up to 5750 (apologies for the typo on the 24th when we said 5650 to 5750).
So, make no mistake, there is still a considerable risk out there, but at least it is a far more balanced and rational market, at present at least.
Range: 5750 to 5850 or 5850 to 6050
Type: On balance only just bullish