Nb. Our comment from the 09/07/20
No bounce off 5950 this time, and it probably didn’t help the fact that London was closed on Monday 31st August.
As this meant it had to play catch-up to a what was a weak Europe and the US on that day, when they came back on the Tuesday.
But, DR at 5850, did put up a decent fight, as it should, as that is a more appropriate level for a triple.
And the first three days of last week were all about 5850 and DR, with the close on Tuesday an impressive recovery to end at 5862.05.
Wednesday saw a rally, but sadly ran into our old friend 5950, which did make that a bandwidth test.
And it did try on the Thursday, getting as high as 5996.24, but the fact it eventually closed at 5850.86, was as blatant a signal that you could get.
The fact it closed right on DR held out a glimmer of hope, otherwise why else would it, but the surrounding environment was not going to give it any assistance, especially with the Street being so weak, which was a problem we highlighted right at the very start of this expiry of course.
What we said back then was the SPX was above its zone, bumping into the R ratios, whereas the FTSE “was the polar opposite”, and no prizes for guessing which one won.
For the FTSE, it is now a very long way down to the next ratio level, but the bears are obviously struggling to cope with DR, and with two weeks to go, it won’t be long before the zone comes into play.
But it now has to get back up and over, not only DR but also R3 at 5950, to stand a chance by next week, so it’s certainly no given.
Range: 5550 to 5850
Activity: Very poor
Type: On balance decently bearish
Nb. Our comment on 09/14/20
Hugely impressed with the FTSE last week, as despite the weak Street, it managed to gain the very impressive 233.01-points.
For the record, the SPX ended last week with a loss of 85.99-points.
But it has been much much more than that, as from the high, back in early Sept, when the SPX was struggling with its fight with R2 ratio, it has now given up 247.14-points.
So, when one considers what the FTSE has done in that context, it throws any correlation out of the window, and puts a lot of credence onto the ratios.
And yes, we don’t believe in coincidences, but as of now, both indices are now just below their respective zones, so both are now back in sync.
Let the correlation begin again.
One point of housekeeping, is that the intraday low on Thursday was 5950.62, so that is most definitely the first test of what is now R2, then possibly still R3, and so the bottom of its trading range.
Next week it should all be about the rollover and expiry, and don’t forget this is a triple.
Therefore, the focus should be all about getting back into its zone.
Of course, there is always the possibility of a spanner being thrown in, but as things stand, both the FTSE and the SPX, need to gain just 2% to reach their zones.
So, considering how extremely unbalanced they both were, they couldn’t have now put themselves in a better position than they have, even if they had planned it themselves.
Range: 5950 to 6150
Type: On balance bullish