Nb. Our comment from the 07/26/21
The FTSE certainly got its “freedom” but perhaps not in the way many expected.
Ourselves included, as we reckoned on a drop down to test R1, then at 6950, was most likely, followed by a bounce just like the July expiry.
Sadly, we didn’t anticipate a very bad opening last Monday, which by our reckoning was circa 6944 (the official 7008.09 is rubbish) which meant it was below our level before the dynamic delta even had a chance to kick in.
Bit like going limit-down in commodities.
Furthermore, holding our hand up, the incursion past R2, then at 6850, was far deeper than we would have liked, but in our defence, we are unsure when it changed.
By which we mean, and as you can see in the table above, that today R2 is at 6800, but when we checked at the end of last week, it was actually at 6750.
And the significant changes in the ratio table above can only be caused by a significant amount of activity.
Of course, it doesn’t take much to change the Y ratios, as that is what they are designed for, but shifting R2 around like a chess piece, takes quite a lot.
And, whilst on the subject of R2, please note that above the now changed zone it is at 7150, albeit only just.
Also, worth noting, is that every 50-points after this the exponential ratios climb steeply.
Final point of note, is that last Thursday the intraday low was 6956.24, which was either R1 or R1 and the bottom boundary of the zone, depending on when it changed.
Whichever it was, as it stands now, the market is back inside its zone, and it knows what is beneath it now, so all that remains is to find out how aggressive it might be should it test the upper boundary. And, please do keep an eye out on where the SPX is in relation to its ratios.
Range: 6950 to 7050
Activity: Very good
Type: On balance bearish
Nb. Our comment on 08/02/21
The FTSE did try to break out from its zone on Thursday, so it was evidently still trying for that aspect of “freedom” we have been blethering on about for ages now.
As you can see from the table above R1 now resides at 7100, what we don’t know (and never will) is whether it was there on that Thursday when the intraday high was 7093.93. If it was then the Friday makes a lot more sense.
Which is all we can say about that day, as officially the open, high, low and close was 7078.42, 7078.42, 6996.93 and 7032.30 respectively.
In the real world the open was circa 7021, and the high was 7056 and earlier in the day 7046, both being rallies of about 50-points and both being strikes of the FTSE zones upper boundary.
The close is always derived, courtesy of the auction, meaning the only “true” figure is that of the low. This all makes a mockery of chartists, point & figure, candlesticks or many other technical indicators, sadly.
Anyway, at the end of the day, the FTSE is back inside its zone, all safe and sound, and nice and cosy.
And, in a word, boring. As evidenced by the fact that it took all week to gain all of 5 whole points. Although it certainly seemed far more exciting at the time.
There is no doubt in our mind that the FTSE is definitely getting very frustrated by being zone-bound, but from what we are seeing it also doesn’t display anything close to the aggression needed to combat the ratio levels.
Speaking of which, should the market grow a pair, 7150 is still a massive ratio level.
In the meantime, it will just have to wait for more conducive ratio alignments, as if it did get something like those we are seeing in the SPX, then it really will be summertime.
Range: 6950 to 7050
Type: On balance only just bullish