The issue we feel for the FTSE will be the upcoming June expiry.
Nb. Our comment from the 05/04/20
What a fantastic week, or at least it should have been, if you knew where the ratio levels were.
It was a textbook set-up, to get above 5850, and after a hesitant start last Tuesday it blasted straight through.
Which is why we published two trading ranges, the second being on the assumption that the market would do just this.
What we didn’t expect, was for the market to use up virtually its entire 200-point trading range in the one day.
On the Wednesday it also went straight through R2, which was rather punchy at the time, especially under current conditions.
This left R3 as the next line of resistance, at 6150, and on Thursday the market hit it, with the intraday high of 6151.58.
This they couldn’t ignore, and the turnaround was as if it had hit the proverbial brick wall.
The ensuing 253.61-point capitulation was very impressive, to say the least.
Friday, saw the intraday low of 5746.06, which is the first test of the top boundary of the zone.
It would make sense for this market to try and stay inside its zone, where it is in neutral territory.
The problem, may well be if it tests the lower boundary, as hopefully it will hold, but if it doesn’t, this market will be back into bear territory, and that is an entirely different matter completely.
Range: 5650 to 5750 or 5750 to 5850
Nb. Our comment on 05/11/20
The only change to the ratios is R1 at 5850 has fallen to Y2.
We suspect this happened on Thursday, the last day this market was open, primarily because the way the index acted.
In our last comment on Monday 4th May this index had bounced all the way back from its test of R3 at 6050 (intraday high 30th April 6151.58) and was just above its zone.
That Monday saw it close at 5753.78, just above the upper boundary, so it had essentially made its choice.
Then Tuesday and Wednesday it was all about 5850, which is why we believe it was still R1 on those days, closing at 5849.42 and then 5853.76.
Quite the epic battle, and which revealed the market had developed a far greater degree of sensitivity.
As it stands, this market is now clear up to 6050, but don’t forget this week it is the rollover and expiry.
And, significantly, the next expiry is the second big triple of this year, and as such should bring its massive weight to bear sooner rather than later.
And our preliminary analysis of the June expiry is not a pretty picture, essentially because it is still reflecting things as they were, and not the post Caronavirus environment.
It should become a lot clearer once the rollover has taken place, but as it stands, it would certainly not be getting in the way of the May expiry finishing as high as possible.
Range: 5750 to 6050
Activity: Very poor
Type: On balance only just bearish
The story of the Big Bang, The Great Storm and the crash of ’87.