Nb. Our comment from the 06/16/21
It wouldn’t be right if we didn’t start off commenting on the end of the last expiry, and although the zone was 6650-6750, this was an unrealistic target in the end, but as the Y ratios stated just below 6900, then anywhere below here would have been acceptable we think.
In the end the EDSP was north of 7000, and as DR started at 6950 in the final calculations, B1 having slipped to 7100, there is no other way to describe this but as an outright win for the all-time-high chasing equites, and a dismal, not to mention very expensive, failure by derivatives.
Looking ahead, into the 5-week May expiry, and the ratio levels are there for all to see, so all that remains now is to see is how aggressive this market might continue to be?
To be fair, we saw something similar when QE was all the rage, as if this isn’t the same, and when you start to print money like every country has been, rationality and fundamentals can fly out the window.
It really does seem like this century politicians are terribly afraid of a weak market, and no, we don’t know why, but they do seem to splurge the cash at the faintest whiff of trouble.
Anyway, as things stand this expiry, it looks like 6950 is going to be the key level.
As above it they will continue to duke-it out against the R ratios, but below, well, then that’s an awful lot of Y ratio.
However, at the moment it is stuck in a very narrow R2 ratio bandwidth (7000 to 7050) and was yesterday a bandwidth test, probably not with the intraday high just 7040.26, but with the market closing right on R2, we should know soon enough whether they still have the stomach to buy all those dynamic delta futures.
Range: 7000 to 7050
Activity: Very good
Type: On balance only just bullish
Nb. Our comment on 04/26/21
Prophetic words (above) or what, as the very day we last published this market blew through 6950 and then went straight on to test the upper boundary of its zone at 6850, with the intraday low of 6857.07.
The intraday low the next day, Wednesday 21st April, is officially 6859.61, which is suspiciously close to the previous day’s close, and therefore Wednesday’s open, 6859.87.
We say suspicious, when what we really mean is wrong, which means that at the very least it is misleading, and at the worst purposefully done so for some nefarious reason.
This is because we had the open around 6875, and the intraday low, on two occasions, around 6865.
Therefore, we are not including that as strike two of our zone’s upper boundary.
However, the very next day, we have another conundrum, as the intraday high on the Thursday was 6941.11, so was it the first strike of R1 at 6950, or not?
On balance, we think not, as the market had already been above this level, so knows what’s there, so more likely than not, pulled up just short as nobody fancied being the one to force out the futures they know are lurking there.
What they don’t know, is that this level has gone up from R1 to R2, although it is only just above the threshold, it will still give it that bit more added dynamic delta.
Nevertheless, it will provide a very useful insight into how aggressive, or committed, the bulls are this trip.
On the flipside, this index is now in a 100-point Y ratio bandwidth, and it knows what’s at each end now, and if it acted rationally, we should see it move into its zone, so it looks like 6950 is still as critical as it was last week.
Range: 6850 to 6950
Type: On balance just bullish