Nb. Our comment from the 11/09/20
Like a scalded cat no less.
As we said, meandering around in R2 would not be a comfortable experience, and its immediate goal should be to get out of it.
It didn’t quite make it last Monday, but the FTSE did however close just above the other level we mentioned, 5650.
Tuesday saw it explode back above 5700, and right back into the Y ratios.
Once back into the Y ratio we did also say their zone should be “plain sailing”, so we were glad to see it close just above the bottom boundary on Thursday.
The one surprise we had was, especially after all the hard work getting there, was how easily this bottom boundary conceded on Friday.
And then, the absolute meal the market made of getting back above it, only succeeding after many attempts, and then not until the early afternoon.
Obviously, we would now expect it to push on and have a go at its upper boundary.
However, the caveat here, is keep a wary eye on the US, as the SPX is now battling Y2, with the R ratios now not far ahead, so it may not get a helping hand as much as it has from across the pond.
But there is still two weeks to go, so although we would be more than happy to see this index remain zone-bound for the remainder of this expiry, we don’t think this will be rather likely.
So, just watch for the relevant ratio levels, while noting where the SPX is in relation to theirs, and act accordingly.
Also, please remember, that it is the mighty Dec expiry up next, and it is already a beast.
Range: 5900 to 6000
Type: On balance bearish
Nb. Our comment on 11/16/20
Well to be honest we were not expecting Monday’s news, although we did fully anticipate the FTSE’s interaction with the top boundary of their zone, 6000, which was like watching waves on the beach.
The market being the waves, lapping at the 6000 level, aka the beach, the entire morning.
And for those that have read our note on the SPX, from down to Y2 then all the way up to their R ratios, it was all as expected, indeed forecast, the only difference was the catalyst (it’s always something btw) and the speed it happened, otherwise same old.
Which is the same, here in the FTSE, as we never expected the upper boundary to hold, especially not for a fortnight, we were just surprised by the timing.
And don’t forget, this market had already plumbed the depths of R3 at 5600, so, if it was a conventional expiry, it would then go on to test R3 at the other end, in this case above the zone, before returning to expire in the zone.
Last time we looked, R3 here was standing at 6300, so you can tick that box. As the intraday high was 6307.00 and the close 6296.85, so we suspect this was still the case that Tuesday, and the change reflected above happened subsequently.
The suddenness obviously shook things up, and the result is there for all to see in the table above.
So, for us, the only question that now remains, is whether it will expire, or rollover, in its zone, which as you can see has returned to its original expiry position.
Way back when, we mentioned that next up is the mighty Dec expiry, which is bigger and meaner than we have seen for many a year.
So, rather than talk about Nov, as an early Christmas present, here are the Dec levels, as we suspect they will bring more influence to bear as this week progresses.
Zone is 6050-6150, with Y2 up to 6250, below DR kicks in at 5800, whereas above DR is currently at 6350, with B1 at 6850, but from 6450 DR starts getting closer to B1 than R3. Have fun.
Range: 6100 to 6450