Nb. Our comment from the 08/10/20
We sincerely hope you did read our note last Monday, and if you need to check what we said it is just above here.
But after the auction aberration on Friday 31st July the market was left at 5897.76, the wrong side of 5900, which has since turned into R2 as we did mention it was just underneath the threshold, so it didn’t take much.
The market opened a bit easier, then rallied to 5900, where it now found R2, so it promptly collapsed to hit the other level we mentioned, 5850.
Thereafter it was a spectacular bounce, 181-points spectacular.
To be honest, after that, London was a bit boring.
It never quite got low enough for us to call it a test of R1 at 5950, and nor did it get high enough for us to call it a test of the zones bottom boundary at 6150.
However, there is still two weeks to go, so it’s not in any real hurry.
And, anyway, it is probably a bit shell-shocked having been forced to bounce around in R2 ratio, a bit of futures related dynamic delta PTSD if you like.
But don’t despair, as there is still a lot of potential for the FTSE, and we will be keeping a close eye on 6250-6350, as that could easily become the next zone, which should, or could, give this market a decent fillip.
The one problem could be from across the pond, as the SPX was knocking on its R1 ratio door on Friday, so this may transfer across some bearish energy, so best be a bit wary around 14:30 when they open over there.
Range: 5950 to 6150
Nb. Our comment on 08/17/20
It really was the case of being wary around half past two, when the US opens, as their fight with R1 certainly did spill over here, taking the wind out of the UK’s sails more than once during last week.
However, we think the real issue here was the fact that the zone did not move up to 6250-6350, although less likely now, it is certainly not ruled out entirely.
Having fought so hard, on Tuesday 11th, to get into its zone, it needed another auction manipulation to achieve it in the end.
That Tuesday the real time close was 6146.55, but after the auction, it finished at 6154.34, just inside its zone.
Those that knew the significance of 6150, should not therefore, have been surprised on the Wednesday when it powered up the entire breadth of its zone.
The momentum was so great it actually burst out the other side, which was a mistake.
A mistake, that was not only rectified on the Thursday, but compounded on the Friday, again, not exactly helped by the SPX’s interaction with R1.
Of course, the big issue this week is the rollover and expiry, which hopefully will be more influential than the significant weakness in the ratios below the zone.
Therefore, we think this index would do very well to just achieve its zone, which we will endeavour to keep a close eye on should it start to migrate, for the rollover.
The other aspect to be aware of, is the next expiry is the third triple of the year, and as such is inherently much much larger than this expiry, which was always very poorly populated throughout, so its influence may loom large.
Range: 5950 to 6150