Nb. Our comment from the 01/19/21
After a flash of aggression in the Jan expiry, in the end, it was all a bit of a damp squib, having chosen the target of 3795-3805 from as early as the Monday.
Then you have the rollover from an intermediary to an intermediary expiry, which are always low, so probably a good thing they are the least usual.
Then, to compound it all, this expiry is a five-week one, which are themselves notorious for being slow out of the gate.
The holiday on Monday won’t have helped either.
So, having said all that, the way the pathetic amount of ratio, that is around currently, is aligned, then there is potential for some huge moves.
The Y1 ratio bandwidth it is in above the zone is a massive 150-points wide in itself, for example.
The entire Y1 ratio bandwidth is 285-points, and the overall Y ratio bandwidth is a difficult to imagine 585-points wide.
On top of which, literally and metaphorically, is R1, all alone and not really that imposing to a market with a decent breeze in its sails.
Don’t forget, in the January expiry, Y2 played quite a role.
However, we won’t know how potent it will be this trip until it gets tested.
In the meantime, there is so much scope here, it could easily ping around anywhere and everywhere.
We used to use the ice-rink analogy a lot where the NDX was concerned, but is just as equally appropriate here under these circumstances, as a just the smallest bit of momentum could go a very long way.
Range: 3705 to 3855
Type: On balance only just bearish
Nb. Our comment for 01/22/21
Well, we couldn’t have guessed what might happen more closely, as we got our “huge moves” and Y2 did indeed “play quite a role”.
Interestingly on the same day as well, although the first day of this expiry, Tuesday 19th was a very decent 36-point move in itself.
But we are of course referring to the Wednesday, where it exploded out of the gate and managed a 60-point move, before it hit the roadblock of Y2 at 3855.
For those that knew where Y2 was, then they wouldn’t, or shouldn’t, have been surprised when it hit this level around their midday, and basically flatlined along it for the rest of the day.
The intraday high of 3859.75, was literally a 5-minute spike towards the very end of the day, so slightly misleading.
Yesterday was also interesting, as it gapped up at the open, and therefore started at 3857.46, so above Y2, but the fact it hardly made any further northerly progression is significant as well.
As is where it closed.
However, and as you can see in the above table, Y2 has today slipped to 3895, so the market has clear skies above it now, so the bulls have actually won, but, we fear, the damage may have already been done.
For the record, in the above table it appears as if R1 above the zone has come in (strengthened), but actually it was 3960 on Wednesday, so it had strengthened, but has now weakened today, just not quite back to where it started.
The fact that the ratios have strengthened below the zone is also bullish, but at the end of the day, the risk we identified at the outset still remains.
Which is, the Y1 ratio bandwidth is now even wider, at 300-points, and the overall Y ratio bandwidth is slightly narrower, but still a very scary 535-points.
Finally, quite how the zone hasn’t moved to 3795-3805 we don’t know, but it does look a shoo-in, so do please make a note of this level just in case.
Range: 3705 to 3895
Type: On balance just fractionally bearish