Nb. Our comment from the 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
Nb. Our comment on 02/15/21
When we said it would “calm down” even we didn’t expect it to go to sleep.
Although it hasn’t not been exciting, which is somewhat in contrast to the lack of movement.
Essentially all week it has been one long battle with its zones’ upper boundary at 6550.
Some days were far more aggressive than others, in particular the Monday and Wednesday.
On the 8th the market spent almost 4 hours above the boundary, flatlining around 6560, but on the 10th the market actually opened around 6560 (officially 6531.56 but we all know that is rubbish), went about 17-points higher before collapsing all the way back by almost 100-points.
No surprise then that the very next day the intraday high 6554.15.
How it held out for so long is a mystery, as that last test was strike number 5, but it still needed a good Street on the Friday to help it over the line.
The problem is that we are now into the rollover on Wednesday and the expiry on Friday, so it couldn’t have picked a worse time to do it.
And don’t forget the next trip is the first triple of the year, so everything just goes up a notch or two.
Also, we will endeavour to see if the amber gambler decides to come back, as that will influence proceedings of course.
So perhaps it isn’t such a bad time to come back to life after all.
Should be an interesting one nevertheless, as it is a straightforward fistfight between the amazingly stubborn but not that committed bulls, and the gravitational pull of the zone at this particular time.
Range: 6550 to 6650