Nb. Our comment from the 02/01/21
It seems an age ago we were saying how lop-sided this market was, and it was tangling with R1 all the way up there at 6700.
But it has only been a fortnight.
Probably worth your while going back and checking on our note of the 18th January.
Of course, the ratios are all about the dynamic delta, and as such they are dynamic in their own right, and so much so recently, all that “very scary” Y ratio we have been mentioning, has all but vanished.
All that now remains is just 100-points above the zone.
Hands up, we didn’t see that coming, or at least not so quickly.
But it does go a long way to explaining why this market was loitering around in the vicinity of its zone for so long.
And, moan, moan, moan, but this stupidity of the open being the previous days close, totally distorted Thursday 28th, as the open should have been circa 6515 and the intraday high 6549, not both being Wednesday’s 6567.37.
As the intraday low that day was 6439.55, then the high of 6549, made that a zone bandwidth test.
So, no great surprise to see a breakout on the Friday.
OK, so it’s no longer Y ratio below the zone, but the levels are the same, so 6350 is still the critical number.
In fact, it makes it very appropriate, as at the start of this expiry, the market started in R1, the only difference being that this was above the zone.
There are still three entire weeks to go, but with the disappearance of most of the Y ratio, hopefully everything will now calm down considerably.
Range: 6350 to 6450
Type: On balance just fractionally bearish
Nb. Our comment on 02/08/21
And calm down it certainly has.
In fact, it has almost become torporific such has been its lack of ambition, although for those that realised it was zone-bound there have been plenty of trading opportunities.
Last Monday was the deciding day, as the close was 6466.42, or in our world, just inside its zone.
The following Tuesday saw the FTSE essentially flatline along the middle of said zone, circa 6500.
The following two days were all about testing the upper boundary, with intraday highs of 6573.10 (spike at the open) and 6553.37 on the Wednesday and Thursday respectively.
Then on Friday it was the turn of the bottom boundary to be tested, with the intraday low of 6457.60.
So, there is no doubt at all that this index now knows exactly where it is.
More importantly, what it now needs to do to breach 6450 or 6550.
The problem is that it is a week too early, as the rollover and expiry are not until the week beginning 15th.
It’s not beyond the realms of possibility, and it has done it before, for it to stay zone-bound for the next fortnight, but it is rather unlikely.
Obviously, it is a lot easier to break up, as it only has to contend with Y2 ratio, and the next assault on 6550 would also be strike 3.
But whichever direction it chooses you now know that the market knows what’s there, and so will only go there with intent.
Range: 6450 to 6550