Nb. Our comment from the 06/29/20
Exactly as we said, please check above, as our big concern was the proximity of R1, and at the time it was 60-points above the market, but as last Monday finished down 45-points, it made for an even more impressive test on the Tuesday.
On the 23rd, it was a case of the market jumping a hundred points, to the intraday high of 6342.19, to test R1, that made its surprise at finding all that futures selling courtesy of the dynamic delta so effective.
And with so much Y ratio beneath it, it was hardly surprising that the Wednesday was a sea of red.
The fact that the FTSE covered our entire 300-point trading range in just three days is also very impressive, not to mention pleasing.
The intraday low on the 25th was 6029.25, which was a deep incursion below the upper boundary of its zone, and at the time, we thought that it might have been broken.
The only thing that held us back from saying so, was the manner in which it was passed on the day, as it really was just a very long wick on a 5-minute candle, that produced that low, rather than a more prolonged and protracted battle that we would expect.
We have left our trading range unchanged, but we would anticipate the zones upper boundary being tested again, and although this would be strike 2, it must have been badly weakened by that 20-point incursion last Wednesday.
Therefore, we don’t expect much support, some, but not a lot.
Which means, that once in its zone, there is absolutely no ratio at all until the bottom boundary at 5950.
This, is where the real battle will be, we suspect, and if this fails, then below the zone is bear territory, which, we should point out, is where the SPX is already.
Range: 6050 to 6350
Type: On balance just fractionally bullish
Nb. Our comment on 07/06/20
Well we hope you enjoyed last week, exciting as it was, it actually went absolutely nowhere.
Which is not quite true, as you can see in the table above, it has actually fallen two-points.
Nevertheless, had you been aware of the ratio levels you would have had a wonderful trading week.
Monday the 29th saw the first test of Y2, still at 6250, with the intraday high of 6251.96, with the eventual close at 6225.77.
Then you had to wait until Thursday 2nd July for the next test, with the intraday high of 6258.60.
Friday saw strike three, and naturally, the incursion was a bit deeper this time, with the intraday high of 6262.71, and the eventual close way down at 6157.30.
We think Y2 has done its job now, and three times at that, so we rather doubt it will be as robust again, should it be retested.
Apart from the market’s persistence attacking Y2, it is rather revealing that such a low level of ratio has had such an effect, while at the same time, the market has yet to trouble the other end, namely the top boundary of its zone.
Now we are exactly half way through this expiry, the FTSE needs to test 6050, and if that holds, then it should empower the bulls enough to be able to push through Y2.
There have been big daily moves in this market, 100-points plus every day, and yet still no test of 6050, but three of Y2 at 6250, which says a lot, and that is that it is blinkered, but timid.
Range: 6050 to 6350
Type: On balance bullish