Nb. Our comment from the 06/06/21
Well, we got our move in the zone and we strongly suspect it was last week as well, or at least, this is what the ratios suggest, as they are so developed already.
This would also go a very long way to explaining why 6750 was so robust last week, although R1 could have done the job on its own, we feel that it also being the zone upper boundary did in fact give it that added bit of resilience.
Of course, today we are not only going to be playing catch-up to the strength we saw on the Street last Thursday, but also from yesterday.
If this is indeed the case, then R3 at 6850 may well enter into the equation.
The realignment of the ratios that we mentioned last week, namely strengthening below and weakening above, resulting in the zone move, has continued, although the ratio levels above the zone are still the same, not yet reflecting this.
Nevertheless, should it test it, remember the market will be going from R1, skipping a level, to a full-frontal assault on R3, a very high level.
Nothing is impossible, but judging by the lack of commitment at lower levels thus far this expiry, we just think that this might be a few too many futures for it to absorb just now.
And this is the problem facing London, as it lags so far behind almost every other index that are hitting new all-time highs.
Basically, whenever the bulls try to get their stampede on, they come up against some serious ratio levels.
In stark contrast, the SPX, has only now, having added practically 100-points to its previous all-time high, hit R1, its journey being entirely through minimal Y ratio.
Range: 6650 to 6750
Nb. Our comment on 04/12/21
We were right on the first day of trading about 6850 last week, but then the market really got its bulls boots on, and trampled all over R3.
And we appreciate it is a bit of a lame excuse, but as you can see from the above table, the ratios above the zone have continued to fall away, so who knows exactly when this was, and it could have been as early as Wednesday.
Nevertheless, even had they fallen at 6850, it should really have put up more of a fight than it did, which just goes to show London can get down and dirty when it wants to.
After Wednesday the next target was B1 (or whatever it was by then) at 6950, and the market duly obliged with a distinct spike up at the open to 6949.56, which also ended up being the intraday high.
However, having engaged with the dynamic delta there, it got bit of a bloody nose, and collapsed almost 50-points.
So, the first week of this expiry was all about staying in its zone, bouncing repeatedly off the bottom boundary, then 6650, with the second week all about the other end of the zone, which had by then moved up, bouncing repeatedly off 6750, the upper boundary.
Leaving last week to take on the ratios north of the zone, having eventually broken free, and a pretty good job it did of it as well.
This fourth week, as it is the rollover and expiry, therefore the market should now gravitate back towards its zone, making the $100 question being; Where will that be?
As in the table above, it is currently 6650-6750, but with the collapse in the ratios above here, as witnessed by the appearance of some Y ratio, then we can fully see the zone moving again, and this time to 6750-6850.
So, for all of those amber gamblers out there, as the time value erodes away to nothing 6850 is going to be the critical level, should the bulls relent and allow it to be tested.
Range: 6850 to 6950