Nb. Our comment from the 05/04/21
Well, it seems that 6950 did indeed remain the critical level, as the FTSE never strayed very far from it all week.
Although, this was not for wont of trying, especially on the Thursday and Friday, when it had several very robust attempts at 7000.
Of course, last week, 7000 was R3.
This week, R3 has significantly dropped to 7050, and a couple of other moves may also have slipped under the radar, as both 6950 and 6850 have dropped down a level also.
So, the first week was all about 6850 to 6950, and as the second week was all about 6950, then this, the third week, may, could or even should, be all about 6950 to 7050.
It really now all depends on just how aggressive the bulls can continue to be.
Of course, the potential for shocks is all around, and specifically here, as if it ever gets tired of taking on the highest R ratios, then the corresponding ones below the zone are a scary 300+ points away.
However, at least on this side of the pond we have some ratios, as you will see in our note on the SPX tomorrow, their Y ratio bandwidth alone stretches for virtually 500-points, and that is truly scary.
But the bulls seem to be very much in control still, and as long as the ratios continue to fall away in front of these advancing markets, then we can’t buck the trend, but just point out that these advances are being made on incredibly thin ice.
And with three more weeks still to go this trip, then there are no real time constraints.
However, next up is the second triple of the year, so everything should go up a considerable notch then.
Range: 6950 to 7050
Nb. Our comment on 05/10/21
London has definitely taken a leaf out of the SPX book, and we have seen the ratios tumble above a rising zone here as well.
Although, being fair, R3 at 7050 on the Tuesday and Wednesday certainly had a very significant role to play, pretty much nailing the intraday highs on both days.
Again, where we fall flat is no longer calculating this index’s ratios daily, because this means we are not sure when the capitulation set in, but we reckon it was during the Thursday, as on that particular day 7050 was the level that saw all the action throughout the day, apart from literally the last ten minutes.
Nevertheless, to see the FTSE willingly and deliberately take on that amount of ratio was a very pleasing sight.
However, the fact it has now fallen two entire levels, to R1, shows just how much derivatives have conceded in the face of such an onslaught.
And, having been so willing to fight it out with R3, it is no surprise that R2 at 7100 didn’t hold the market back at all, if indeed the capitulation happened on Thursday.
So, with R3 now at 7150, and Friday’s intraday high of 7143.46, it will be fascinating to see just how much more they have got, in ammunition and willingness, in taking on this level again once more this week.
And with two weeks still to go, they have plenty of time, and on top of this, we are fully expecting to see the zone move up again, this time to 6950-7050.
Unlike the SPX, at least here you know the bulls are buying those futures forced out by the dynamic delta, unlike over there, where there is no ratio at all in its way.
But, at the end of the day, any further forward momentum in the FTSE now relies on the ratios continuing to capitulate, and all the while the clock is now ticking and the gravitational of the zone will increasingly make its presence felt.
Range: 7100 to 7150