FTSE Aug to Sept 2018 Ratio Rollover Table
All very exciting for the FTSE and it is still looking good for that perfect expiry.
Our last comment was “however, calling the zone is going to be the tricky part” and as one can see from the table above it has already made its move.
This gives it a lot of tolerance for this week however we don’t think it is a given that the zone will move to 7650-7750, as we suspect what we are seeing is the follow through momentum that was so blatantly last time, but since then the market has reversed.
Don’t forget it has been as high as R2 (now R1) at 7800, getting as high as 7790.17, so in essence as the ratios have been reflecting this the market has turned and passed them going the other way.
And, in fact, now the ratios are actually weaker below the zone.
Also, yesterday the low was 7614.48, very close to if indeed it wasn’t, a test of the bottom boundary of the zone.
So, we could easily see the last two trading days reflected in the zone staying put at 7600-7700 now the steam has been taken out of it.
It is perhaps worth contemplating that the close on the Friday of the last expiry was 7678.79, so on paper this market has gone nowhere, but for us from here it went up to R1 at 7750 (high 7751.10) then down to the corresponding R1 at 7550 (low 7549.34), before recovering back up to test R1 again, before hopefully eventually ending in its zone.
So, if you are aware of the ratios at these levels and what the possible outcome may be, for a market that has gone nowhere, there has been 200-points to have been had between the two R1 ratios, and then another 200-point recovery to make an impressive 5.16% on offer, and in just 4-weeks.
Fingers crossed for us as it would be great to see a perfect expiry here in the FTSE.
Range: 7600 to 7750
Sometimes it is worth reminding ourselves of what we said at about this stage for what was then the upcoming August expiry; “At the end of the June expiry our comment was…. so, the question is whether or not it is safe to get back into the water in July? Sadly, the answer is no…. but looking forward to August and the answer is a resounding yes”.
And August looks very likely to be rewarding us with a perfect expiry.
Looking ahead to Sept and the water is still safe, or as safe as any triple witching expiry can ever be.
Furthermore, it looks like being a fairly straightforward affair, assuming the ratios remain fairly static.
The really big issue is the zone, which is down at 7450-7550, which means August’s best bet is to aim for Wednesday and then just take the foot off for the last two “grey area” days.
However, when it gets going, below the zone the ratios jump from Y2 to DR at 7350, so that is a good, solid support level.
On the other side the jump from Y2 to R2 at 7750 will cause problems, but it is a triple, so a lot will depend on what the other markets are doing at the exact moment this index hits this level.
Behind that there is DR at 7850, which again is a far more solid level.
Overall it is also worth remembering that if it really does get animated, which we haven’t seen really so far this year, then triples can be B1 to B1 affairs.
Regardless, the potential for this expiry in the FTSE is 7350 to 7750/7850, which is a big range for this index.
Range: 7550 to 7750