We suspect the only reason the fall yesterday in the FTSE didn’t happen on Wednesday was because of the rollover, although it seems to be the only index this time round paying any attention to it.
Because of this as we said “it could go out to play” and having spent three and a half weeks inside its zone the day the shackles come off is the day it breaks down below its bottom boundary.
The main issue to be aware of is that being the odd one out, or not in sync, then if the others indices react to their expiries then it could just be adding fuel to the fire here.
Range: 7250 to 7350
Activity: Very poor
Type: Not bearish
For an index that has just spent the best part of 4 weeks in zero ratio Monday morning could come as a very rude awakening, because as it stands it is in a R2 ratio bandwidth, which is a huge leap.
Of course we have today to go but where it ends up will be all important for the start on Monday.
Unless emotion suddenly explodes (see above about the other indices) then any close below 7350 will find it struggling to go anywhere within whichever 50 point range it is in.
Rather ironically this expiry looks more like a triple than the triple we are just leaving behind.
Range: 7250 to 7350
Activity: Very strong
Basically exactly what we said yesterday “for the second (now third of course) day running the DAX was entrenched at 12550 ………persistent and aggressive, two words we seldom use with this index, and at any other time very bullish as it is willing to go toe to toe with the futures selling, but not quite gung ho enough to push through”.
No change in the NZ although one more day would probably see it at 12450-12550, but no excuses this is a miss.
However we did nail the low and the high in our forecast 4 weeks ago and we must mention that we look at everything from derivatives and them alone so sometimes fundamental issues can crop up that trump this, and although we can’t be certain the small instance of the looming elections here we suspect may be playing a part.
Range: 12250 to 12650
The Oct DAX is the polar opposite of London’s, so one of them must be wrong, and there is still so little ratio present it has hardly evolved all week.
In fact the Y1 ratio above the zone has been so persistently low we have never seen it last this long without affecting a change in the NZ.
So where London is in for a shock come Monday as it stands here they are in for a sudden release and acres of freedom in either direction.
To put this into perspective the NZ could easily be anywhere between 12150 and 12550, effectively 400 points of zero ratio, what fun.
Range: 12250 to 12900
Activity: Very good