Mar

2021

March 22nd, 2021 by Richard

FTSE opening price aberration still clouds the real picture.

Nb. Our comment from the 03/18/21 (Not published)

Nb. Our comment on 03/22/21

Well, what can you say about the March expiry just ended, apart from applaud the incredibly persistent bulls yet again?

Made all the more impressive as they came under tremendous pressure at the very start, with this index testing the bottom boundary of its zone (6450), with the intraday low of 6465.57 back on the 26^th Feb.

However, for all their endeavour, from last expiry to this, the net gain was just 96.36-points, which is hardly earthshattering really.

Although, we can really appreciate why, as everybody knows about the recent all-time highs Stateside, and in the DAX, but the CAC was only 20 odd points away from theirs recently, so the FTSE still being 400-points shy, a mere 5.6%, looks a real anomaly.

Which is also what the market data from Friday is, courtesy of this aberration of the opening price.

In reality, the FTSE opened down a chunk at around 6714, and the intraday high was 6756.50.

And for those of you who like a candlestick, if the open was circa 6714, and the close 6708 (in real time it was actually 6720.39 btw), then that’s a Doji in our book.

Anyway, after the madness of the “biggie” everything should calm down considerably for a plain ole intermediary expiry.

Although we don’t see it as any less exciting, and the ratio levels are in the table above (please note Friday’s real intraday high here as well), so the only aspect we can add, is that it appears very likely the zone will move up to 6650-6750.

Range: 6650 to 6750

Activity: Very good

Type: On balance just bearish

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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Mar

16

2021

March 16th, 2021 by Richard

At last a bit of SPX aggression, but just a modicum.

Nb. Our comment from the 03/10/21

We did update the above ratio table on the 5^th March, but just on Twitter.

The reason we say that is because it reflected the fact that Y2 had moved up to 3905, which it actually did on the 4^th, but this is the first public record.

Which means yesterday’s intraday high of 3903.76 was the third test of this level, although only the first when it was officially Y2 in our table.

This doesn’t really help much, as it just highlights exactly how “lame” this market really is.

Really, if it can’t even get past a lowly Y ratio, and that’s in a biggie, this just makes matters worse.

Also, we have seen this market duck below its zone, getting as low as 3723.34, but alas, no test of the corresponding Y2 level below the zone.

Close, but no prize this time, and the fact it only camped out there overnight, meant the bulls, timid as they are, were at least willing to put up bit of a fight down there at least.

At least the volatility has been there, if not any real movement.

After the first day of this expiry, back on the 22^nd February, this index closed at 3876.50, so it has been an exciting ride, a veritable rollercoaster, but at the end of the day going nowhere.

The respective Y ratio bandwidths remain as ridiculously wide as ever, so we can’t envisage this changing any time soon either.

Although, if anything is going to snap this market out of its current lameness, then the rollover and expiry next week will be the events to do it.

Either that, or London will eventually get too sore a head after banging it for so long and for so hard against very high levels of ratio and capitulate, which just goes to show what a market with a bit of emotion can actually do in these triples.

Range: 3805 to (3905) 3955

Activity: Very poor

Type: On balance not bearish

Nb. Our comment for 03/16/21

At last, we are getting somewhere in the SPX, or at least we are now seeing it take on a bit of ratio.

Perhaps it was that trip down to its zone that has sparked this, as quite often, by forcing the bulls’ hand, by being below the zone, a market can benefit from the momentum that this rebound can generate.

Or, it could be just as simple as our previous suggestion, that the rollover and expiry might titillate it somewhat.

As the day after our last comment, the 11^th, this index hit the intraday high of 3960.27, which was a very solid test of R1, then at 3955.

But at least it was a test, and perhaps more significantly, one that didn’t result in too much of a pullback, and in fact, that the market persisted in trading around 3955 for at least three hours that day revealed a decent degree of bullish resilience.

Nevertheless, it certainly stirred it all up, as the very next day we saw R1 slip to 3980.

Which was bit of a herald of what we are seeing today, this retreat having continued on Monday, in fact so much so, we have today seen the zone leap all the way up to 3805-3905.

This also means R1 slips further to 4005, with R2 now at 4055 and the loss of R3 altogether.

This is hardly a surprise, and with so much Y ratio about, more expected really.

In fact, the Y1 ratio bandwidth has actually widened to 235-points, and the Y2 one to 360-points, which is hardly a sign of bullish endeavour.

To us, and as alien as this is to this index, it is more like a derivative capitulation, an acceptance of what will be will be, which is all a bit odd.

But then again, there has been very little of what used to pass as normal since 2020.

All bit of a damp squib, made all the more apparent by the heightened levels of aggression being shown by the FTSE currently, in stark contrast.

Range: 3905 to 4005

Activity: Moderate

Type: On balance bearish

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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Mar

15

2021

March 15th, 2021 by Richard

Still all to play for in the FTSE in its rollover and expiry week.

Nb. Our comment from the 03/08/21

Again, we have to applaud the bulls, as they are trying ever so hard.

Actually, it is a bit sad that they are in such an ebullient mood just at the very same time that the ratios are stacked against them.

Twice now (Wed & Fri) they have got past 6650, only to come a cropper at 6700, the next level of DR.

The problem is, this isn’t going to get any easier, as if they manage to force their way past 6700, they then have the daunting task of facing B1 at 6750.

And although 6800 is still in the B1 ratio bandwidth, as these levels are exponential, then this is something similar to B1 plus R3.

If they ever get that far, then the result might be that they will wish that they had in fact stayed in their zone.

Sadly, yet again, the misinformation propagated by the O, H, L, C data continues as on Thursday the high was never 6675.47, but rather a smidgen above 6650.

Anyway, the ratios haven’t actually changed, so this expiry is a perfect example for anyone to study how the ratios can actually affect the market.

We are not going to list how many times and for how long the FTSE engaged with one of our ratio levels and reacted last week (not enough room anyway), but between 6550, 6650 and 6700 there was more than ample opportunities for those that knew what ratio levels were there to see it.

Looking forward, as we now enter the last two weeks of this expiry, then things are only going to get more excitable, or at least, this is what normally happens.

And please don’t forget that this is the first “biggie” of the year, and as such all the naturally occurring derivative inspired increase in equity activity does also tend to get incorrectly labelled, especially by the press, who seem to need something more tangible to blame or accredit. But it does tend to get people nice and excited.

Range: 6550 to 6650 (6700)

Activity: Moderate

Type: Bearish

Nb. Our comment on 03/15/21

It is nice to see that the bulls haven’t given up at all, and in fact, due to their very evident strength of feeling, the ratios have done extremely well just to stem the tide.

Although, with the strength in the oil sector especially, it has been a bit Canute-like, such is the overbearing weighting this sector has in the FTSE.

Of course, it was not just down to them, for example the equally massively weighted banking sector lent their collective shoulder to the movement.

Nevertheless, B1 at 6750 really showed its mettle, and although we didn’t explicitly say it, we certainly alluded to the fact (please see above) that 6800 was the more probable line of resistance, so the intraday high of 6786.80 on Tuesday 9^th should have set off warning flares.

For the record, the reason for our suspicion, was that DR at 6650 was towards the upper end of that bandwidth, whereas B1 at 6750, had literally only just made it over that threshold, so the differential between the two was not that great.

And, as you can see in the table above, this has now been reflected.

What hasn’t been reflected though, is that 6550-6650 is making a concerted effort to being the next zone, and as we enter the rollover and expiry week, this could be important, although it is difficult to see the bulls giving up easily.

So, it may well transpire, that it will be derivatives that need to adjust, and our Delta Ratio, which at the start of this expiry was a staggering 401.9%, has now fallen to 213.2%, which is still a lot, but is still a huge change from whence it came.

It is normally always an exciting end to a triple expiry, and we certainly don’t expect any difference this time round.

And, if derivatives can wrest control back from the bulls, then 6650 is going to be the all-important level this week, as below there we fully expect to see the ratio here continue its drop, from R3 initially, then R2, now R1 and probably soon to be Y.

Range: 6650 to 6800

Activity: Moderate

Type: Bearish

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

Posted in Uncategorized

Mar

10

2021

March 10th, 2021 by Richard

Rollercoaster SPX, but going nowhere really.

Nb. Our comment from the 03/02/21

We have some good news and some bad news for you, well, actually, it’s the same news, just that it depends on your interpretation of it.

As we said last week, please see above, this is exactly what we were expecting.

Although, it has been particularly impressive the way the market has mixed up one-way down or up days, with whipsaw days.

The net result of this, is activity has fallen off a cliff.

But, believe it or not, this is actually all rather lame, especially so for a triple.

By which we mean that this index has found support twice at its zone, the first on Tues 23^rd Feb with the intraday low coincided with the top boundary at 3805.59, and secondly last Friday, when it dipped briefly below its zone.

It has yet to test R1 at the other end of the Y ratio bandwidth above the zone.

And this is the reason why it is so “lame”, because it has only bounced around in the Y ratio bandwidth above the zone.

It is not the markets’ fault that this is so wide, and as dramatic as the 2% to 3% daily moves we have been getting are, this is nothing had the market utilised the full Y ratio bandwidth.

As food for thought, that would mean seeing it down to circa 3635, which would be fun, or not, again depending on your interpretation.

Talking of interpretation, this is where we get to the good/bad news bit, as precious little has changed, ratio wise, after the first week.

The overall the Y ratio bandwidth has shrunk by 40-points admittedly, but nevertheless still remains a jaw-dropping 320-points wide.

On the flip side, it would be very interesting to see this market get aggressive, as it really won’t realise that the only ratio ahead is just R1 and R2.

Bizarre not to see any B ratios, but then again, it’s bizarre to see Y ratio in a triple.

In a nutshell, more of the same, but probably getting worse as the expiry continues.

Range: 3805 to 3955

Activity: Very poor

Type: Bullish

Nb. Our comment for 03/10/21