FTSE & DAX Ratio levels 2nd Jan 2018
We left the FTSE in a 50-point range between the upper boundary of its NZ at 7550 and R2 at 7600 while it had closed at 7592.66, imbedded in R1 ratio.
As one can see from the above table a lot has changed in the three days up to the end of 2017, and the year-end “bonus” rally was the clear winner, yet again.
However, this now leaves the market in R2, which it is no stranger to this expiry of course, but this is because the ratios above the zone have fallen back a long way as last Wednesday 7650 was R3.
For this week it now leaves the market in a 100-point R2 ratio bandwidth, which is tough going in its own right, but it will mainly depend on how it reacts now the main incentive has been removed.
7700 is what we call a step-up, as it is just below the R3 ratio threshold, so may well provide an early insight into the level of conviction remaining.
Range: 7650 to 7750
For the DAX we left them at 13072 and being in so much Y1 ratio wondering why they were not moving 100 plus points a day.
Interestingly the ratios have hardly moved here at all, but what the market has been doing has been much more significant and in stark contrast to London.
The last 3 days before Christmas the DAX was bouncing off the upper boundary of its NZ with lows of 13026, 13013 and 13059 respectively, but never actually closing inside it.
This continued on the Wednesday after the holiday with the low of 13020, but that was strike 4.
The really conclusive day came on the Thursday with the high of 13069 and the low of 12965 which made this a classic NZ Bandwidth test, so a breakout looked imminent.
So, on the Friday, while London was enjoying their bonus rally here they opened close to their bottom boundary and closed below it for the first time this expiry, but more importantly this meant they finished the year in bear territory.
This makes the index unique as every other one we track is at or just been at record highs, and considering all that Y ratio above the zone there was no ratio hinderance, so they could easily have been forging ahead like all the others had they so wished.
The reaction to being in bear territory will now be crucial as it is still quite a way to the first R ratio.
Range: 12750 to 12950 or 12950 to 13050