Nb. Our comment from the 09/23/20
Well, don’t we feel a bit silly for not calculating the ratios here on Monday or Tuesday.
Obviously, there have been big changes since we last looked at them on Friday, the day the September expiry ended.
Of course, there has been a lot of activity, and where we have “very good”, it is worth mentioning that this is just a smidgen below the threshold of “strong”.
But the main reason we are a bit aggrieved, is we don’t know when the zone changed, or when R2 moved from 5850 to 5800, and now we never will.
Both rather pertinent so far this week, needless to say.
May not see it, but what we have noticed, is R3 at 5750 has been steady, and more than that, while R2 has obviously been slipping, this level has actually strengthened.
In fact, because of this divergence, 5800 is in clear danger of dropping to R1, which would make the jump up to R3 at 5750, all the more impactful.
If 5800 was R2 yesterday, and therefore because the intraday low was 5794.54, then the market’s reaction to this, means that it should be even more pronounced when, or if, it encounters the dynamic hedge futures buying at R3.
Otherwise there is not else to say, as it looks a perfectly normal ratio table now, balanced, with the zone not far away, all aided and abetted by some decent levels of activity.
Range: 5800 to 5900
Activity: Very good
Nb. Our comment on 09/28/20
As we mentioned on the 23rd at the start of last week it was all about the support R2 was providing at 5800.
That very same day the market rallied, but significantly failed to hold above R1, which was at 5900, closing at 5899.26.
Extremely close, but no biscuit, and to make matters worse, it was by design, as in real time the market closed at 5906.48, and it was the auction that took it below.
The next day, Thursday 24th saw the intraday low of 5805.28, which was back to our old friend R2, and made it strike 3.
We did calculate the ratios on Friday, and R2 had moved up to where it is today, at 5850.
So, the big question, is whether the intraday low of 5771.49 is close enough to R3 at 5750 to be called a test, and for us, that is not quite, as we would prefer to see it within 10-points, or, at the end of a 2% move, when all the greeks spike.
Shame though, as with the intraday high of 5843.72, that would constitute a bandwidth test.
Obviously now, 5850 is the crucial level, with R1 at 5900 just above that.
But as this market has been playing near R3, then 5900 should hold no fear for it.
Of course, once, or if, it gets above these levels, then all it has in its way is the minimal Y2 ratio and its zone.
So, it has a tough 50 to 60-points ahead of it, but if it can achieve that, then there is nothing meaningful in its path all the way up to 6150.
Naturally, our first goal, would be to see the market back in its zone, so our target is 5950 to 6050, but being honest, we would love to see this index travel from R to R ratio and then end the expiry in its zone for the perfect expiry.
Range: 5750 to 5850