Nb. Our comment from the 06/22/20
Certainly, an exciting end to the June expiry, and they almost even got back to their zone, or at least, got a lot closer than we ever imagined they would.
More important, is the next expiry, which is July, and which runs until the 17th being a normal 4-week trip.
And that is about the end of the good news, if you are a bull that is.
Actually, that’s not quite true, as the SPX has the awesome range (when we last calculated it) of 2795 all the way up to 3305, so it may lend a hand on this side of the pond, depending on which way it chooses.
The most important and noticeable aspect of the London benchmark, is its zone, which is way down there at 5950-6050.
It is fairly well supported underneath there with some decent ratio levels, so it is not out of the question that it could move up.
However, a far more pressing concern of ours, is the proximity of R1, as at 6350, it is just 60-points above the current market.
Of course, this index has taken on, and beaten R1 before, so we can’t rule this out.
But, for those of you with a low level of risk tolerance, the corresponding R1 doesn’t appear until 5850, so to say it is lop-sided, is a serious understatement.
We will know soon enough, but just a quick glance at the above table, will tell you that there is an awful lot of Y ratio present, and 90% is all below this index, and that is a major worry for us.
Range: 6050 to 6350
Activity: Good
Type: Neutral
Nb. Our comment on 06/29/20
Exactly as we said, please check above, as our big concern was the proximity of R1, and at the time it was 60-points above the market, but as last Monday finished down 45-points, it made for an even more impressive test on the Tuesday.
On the 23rd, it was a case of the market jumping a hundred points, to the intraday high of 6342.19, to test R1, that made its surprise at finding all that futures selling courtesy of the dynamic delta so effective.
And with so much Y ratio beneath it, it was hardly surprising that the Wednesday was a sea of red.
The fact that the FTSE covered our entire 300-point trading range in just three days is also very impressive, not to mention pleasing.
The intraday low on the 25th was 6029.25, which was a deep incursion below the upper boundary of its zone, and at the time, we thought that it might have been broken.
The only thing that held us back from saying so, was the manner in which it was passed on the day, as it really was just a very long wick on a 5-minute candle, that produced that low, rather than a more prolonged and protracted battle that we would expect.
We have left our trading range unchanged, but we would anticipate the zones upper boundary being tested again, and although this would be strike 2, it must have been badly weakened by that 20-point incursion last Wednesday.
Therefore, we don’t expect much support, some, but not a lot.
Which means, that once in its zone, there is absolutely no ratio at all until the bottom boundary at 5950.
This, is where the real battle will be, we suspect, and if this fails, then below the zone is bear territory, which, we should point out, is where the SPX is already.
Range: 6050 to 6350
Activity: Moderate
Type: On balance just fractionally bullish
