Nb. Our comment on 12/12/22
Well, here we are in the final week of the mighty December expiry and, we have to say, it really hasn’t been that exciting. Quite the opposite in fact.
Hopefully the rollover and actual expiry will generate a bit of excitement, and then we can get down to the usual Christmas rally.
But first we must mention last week and, on the very day we last published (5/12/22) we saw a bandwidth test with B1 again featuring prominently, and exactly as suspected (please see our comment below).
The intraday high was 7598.21 and, although B1 had slipped, we did get that “nervous reaction”, which then saw the market to go on and test DR at 7550.
DR held but, as we always say with a bandwidth test, you tend to get a breakout the next day. Which is exactly what happened.
This meant the remainder of last week was all about the zone’s upper boundary at 7450.
Perfect timing as we enter the final week, now all they need is one last final effort to get it back in its zone for either the rollover or the expiry.
Trouble is, it is never that simple. As this week sees everything go up several notches, as the December expiry isn’t known as the biggest of the big for no reason.
The trouble is, this greatly enhanced activity can very easily be misdiagnosed and, therefore attributed to other factors, which can make getting, and holding, the market between 7350 and 7450 very difficult.
And then, we quite often see the amber gamblers, those that pile in at the closing stages, which can dramatically shift even the zone. So, a move to 7450-7550 is not out of the question either.
At least 7550 is still DR and B1 is back at 7600, so you at least definitely know where all that futures selling is going to come out at.
Range: 7450 to 7550
Activity: Very poor
Nb. Our comment from 12/05/22
We had to wait until the following day after we published last week for the test of 7550.
The intraday high was 7543.09 on the back of a 4.44% gain on the very heavily weighted HSBC. Although the market finished down at 7512 the writing was on the wall as one could definitely see the bullish flame had been seriously ignited.
We do bang on about the misleading opening level on the FTSE, because it is so very misrepresentative, and such was again the case on Wednesday 30th Nov. Officially the market opened at 7512 but, in reality, it was 7555.
This meant it had essentially leapfrogged the DR level at 7550, and it really didn’t look back again all day.
Rather that Wednesday and Thursday it was all about B1 at 7600, the “serious backup” we called it last week.
The intraday highs were 7599.27 and 7599.70 respectively.
The trouble on Friday, was the market couldn’t break back down over DR at 7550.
If B1 was still at 7600 and the market went back there it would be strike 3 but, as you can see in the above table, B1 now starts at 7650.
Does give the market a bit more headroom but, the market won’t know B1 has slipped, so should it go there again it may well have a nervous reaction.
As we are just at the halfway point of this expiry there is still plenty of time but, eventually the zone down at 7400 will exert its influence, especially as the move up to 7500 is now looking unlikely.
Finally, a note re the Christmas rally and, very typically, this is what we are used to seeing, so if it remains as normal then we won’t see this year’s rally until after the Dec expiry is over.
Range: 7450 to 7550 or 7550 to (7600)/7650
Activity: Very poor