Category: Uncategorized

Feb
17
2021
February 17th, 2021 by Richard

New SPX highs, but could have been so much more.

 

Nb. Our comment from the 02/10/21

 

In our last note, please see above, we did mention that despite the market’s recent reactions we were still only talking about Y2 after all.

So, our surprise is not so much that it got over this level, but rather the difficulty it has been having since in coping with it.

And we are fast approaching this seemingly endless market manipulation, where once again we are heading for the situation of the stimulus versus the expiry.

The rollover is now a just a week away (boy don’t these 5-week expiries feel far longer than just 5 extra days) so ordinarily we would be looking for the market to gravitate towards its zone.

However, we have seen this before, and being so sensitive coupled with being encased in the minimal Y ratio, we could easily see a repeat of the zone ending up where the market is.

The weird aspect is that there has been virtually no movement in the ratios at all, and this holds true not only for our last note but also the previous one from the 2nd. Bizarre really, especially when this is particularly true below the zone, where there is more potential for it to do so than we would normally ever see.

Although, the last time, it all started with a click of a switch, and let’s face it, we are only talking about minimal ratios.

Long gone seemingly are the days when this index would happily take on the high R ratios and we would be happy to settle just for the expiry to be in the Y ratio at all.

Considering the lack of any real ratio opposition it is actually a concern that this market isn’t taking more of an advantage, so we have to remind everyone that the overall Y ratio bandwidth is still a gobsmacking 410-points wide

Perhaps the stimulus is not so much bullish motivation, but rather the aircushion supporting?

If so, the bulls better pray there’s no sharp objects in the vicinity.

 

Range:            3805  to  3955           

Activity:          Very poor

Type:              On balance bearish

 

 

Nb. Our comment for 02/17/21

 

The SPX never did really find any aggression, so as exciting as it was, from our perspective, it was all rather lame.

Y2 did revert back to 3905 last week, but the market was already above it anyway.

And only today has it moved to 3930, so the same still applies.

However, this time the market is very close to it, so here we are on the rollover and we have 3930 as the demarcation line between Y1 and Y2.

It really shouldn’t be making such a meal out of trading in the minimal Y2 ratio, but it obviously is.

And so, we suspect it will be far happier below 3930.

Although Y2 has moved up below the zone, this bandwidth has actually widened, now standing at 260-points.

In the absence of any FTSE-like behaviour where it fancies taking on the R ratios, we can only see it being happy in Y1 and looking for a quiet and peaceful expiry.

This probably means the zone moving up to 3895-3905, but in truth, anywhere in this absolutely minimal level of ratio would do.

With the mighty March expiry just round the corner, we suspect this level of sensitivity is going to come to an abrupt end a lot sooner than later.

Out of interest, an early preview of said March expiry, and the zone is the same as Feb’s, and not looking like there is that much inclination to move either.

Y2 next trip starts at 3855, and R1 at 3955, or at least this is where they are today.

Overall, it is no where near as lopsided, with our delta ratio coming in at 62.7% (Feb’s 42.1%) and below 50% is very bullish, but above 100% very bearish.

However, there is still a lot more ratio below the zone than above it, but this of course should change dramatically as we are now in the rollover and moving rapidly towards the expiry.

 

Range:            3805  to  3930        or        3930  to  4005           

Activity:          Average

Type:              Bearish

 

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Posted in Uncategorized

Feb
15
2021
February 15th, 2021 by Richard

After truly epic battle with its zones upper boundary at 6550, is the FTSE now out of time.

 

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       

Activity:          Moderate

Type:              Bullish

 

 

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       

Activity:          Poor

Type:              Bearish

 

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Posted in Uncategorized

Feb
10
2021
February 10th, 2021 by Richard

Stimulus vs the expiry for the SPX ... again?

 

Nb. Our comment from the 02/05/21

 

As things are now getting a lot more interesting, we thought it would be nice to keep you updated.

When we say “interesting” what we really mean is that this index is at last taking on some ratio, so we now get to see just how committed they really are.

Of course, the last time this market met Y2, then at 3855, it retreated all the way back to 3695.

And although Y2 yesterday was at 3870 (nb. where it closed) it was fascinating to watch first how it rebounded from 3855 early on, then later, when it had established a beachhead as it were, it couldn’t get further than 3860 for almost the rest of the entire trading day.

For the record, although R1 looks unchanged at 3945, in the meantime it has been initially 3940, then yesterday 3935, before reverting today.

Also, in our last note, we mentioned that at last activity had picked up, well ever since those fateful words it has been negligible.

Another aspect to note, is that for a large part of this expiry, Y2 was entrenched at 3905, so although it has come in recently, now the ratios above the zone are in retreat, we would anticipate it ending up back there before very long. Perhaps early next week.

Last note we mentioned we would keep a weather eye on 3745-3755 potential to become the next zone, and it got as close as you could possibly get, but never actually took the plunge, and now it is very rapidly looking less and less likely.

Finally, please don’t lose sight of the fact that we are only talking about Y2, as although it has proved too much so far this expiry, historically, it should be no more than a speedbump. In fact, even R1 has only been a delaying tactic in the past.

At the end of the day this market has been incredibly sensitive to just small amounts of ratio, and therefore dynamic delta, and we have no evidence to suggest that this will not continue to be the case, but it is unusual that’s all.

 

Range:            3805  to  3880           

Activity:          Only just registered

Type:              N/A

 

Nb. Our comment for 02/10/21

 

In our last note, please see above, we did mention that despite the markets recent reactions we were still only talking about Y2 after all.

So, our surprise is not so much that it got over this level, but rather the difficulty it has been having since in coping with it.

And we are fast approaching this seemingly endless market manipulation, where once again we are heading for the situation of the stimulus versus the expiry.

The rollover is now a just a week away (boy don’t these 5-week expiries feel far longer than just 5 extra days) so ordinarily we would be looking for the market to gravitate towards its zone.

However, we have seen this before, and being so sensitive coupled with being encased in the minimal Y ratio, we could easily see a repeat of the zone ending up where the market is.

The weird aspect is that there has been virtually no movement in the ratios at all, and this holds true not only for our last note but also the previous one from the 2nd. Bizarre really, especially when this is particularly true below the zone, where there is more potential for it to do so than we would normally ever see.

Although, the last time, it all started with a click of a switch, and let’s face it, we are only talking about minimal ratios.

Long gone seemingly are the days when this index would happily take on the high R ratios and we would be happy to settle just for the expiry to be in the Y ratio at all.

Considering the lack of any real ratio opposition it is actually a concern that this market isn’t taking more of an advantage, so we have to remind everyone that the overall Y ratio bandwidth is still a gobsmacking 410-points wide

Perhaps the stimulus is not so much bullish motivation, but rather the aircushion supporting?

If so, the bulls better pray there’s no sharp objects in the vicinity.

 

Range:            3805  to  3955           

Activity:          Very poor

Type:              On balance bearish

 

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Posted in Uncategorized

Feb
08
2021
February 8th, 2021 by Richard

The FTSE stuck in its zone, but for how much longer?

 

Nb. Our comment from the 02/01/21

It seems an age ago we were saying how lop-sided this market was, and it was tangling with R1 all the way up there at 6700.

But it has only been a fortnight.

Probably worth your while going back and checking on our note of the 18th January.

Of course, the ratios are all about the dynamic delta, and as such they are dynamic in their own right, and so much so recently, all that “very scary” Y ratio we have been mentioning, has all but vanished.

All that now remains is just 100-points above the zone.

Hands up, we didn’t see that coming, or at least not so quickly.

But it does go a long way to explaining why this market was loitering around in the vicinity of its zone for so long.

And, moan, moan, moan, but this stupidity of the open being the previous days close, totally distorted Thursday 28th, as the open should have been circa 6515 and the intraday high 6549, not both being Wednesday’s 6567.37.

As the intraday low that day was 6439.55, then the high of 6549, made that a zone bandwidth test.

So, no great surprise to see a breakout on the Friday.

OK, so it’s no longer Y ratio below the zone, but the levels are the same, so 6350 is still the critical number.

In fact, it makes it very appropriate, as at the start of this expiry, the market started in R1, the only difference being that this was above the zone.

There are still three entire weeks to go, but with the disappearance of most of the Y ratio, hopefully everything will now calm down considerably.

 

Range:            6350  to  6450       

Activity:          Moderate

Type:              On balance just fractionally bearish

 

 

Nb. Our comment on 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       

Activity:          Moderate

Type:              Bullish

 

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Posted in Uncategorized

Feb
05
2021
February 5th, 2021 by Richard

At last the SPX takes on some ratio.

 

Nb. Our comment from the 02/02/21

 

Well, the market most certainly has not quietened down, so all as normal and very much expected in our eyes.

Therefore, please do not read too much, in fact anything at all, into these moves, as they are simply a result of there being virtually no ratio around.

In fact, it is worth pointing out that the intraday low on Thursday 29th was 3694.12, which many may remember was the bottom boundary of the old zone, when it was 3695-3705 just a few days ago.

The point of mentioning this is that this level still represents a step-up in ratio, albeit a step-up within the Y1 ratio bandwidth means it is hardly big, it was still evidently sufficient, which means this index is still extremely sensitive.

Please don’t forget it was Y2, then at 3855, that caught this market with the intraday high of 3859.75, back on Wednesday 20th Jan.

Getting back to the present, and at last we have seen some decent activity, and on both sides, so at least the ratios are moving.

However, the zone is the all-important level, and the failure to reach it after last Thursday’s rally should have been a warning.

Interestingly we are seeing 3745-3755 make a move to being the next one, which would be bit of a game changer as it’s a bearish move, so we will keep a weather eye on developments here.

Although the respective Y ratio bandwidths have shrunk, there is still plenty of room there, with Y1 still being 275-points wide for example.

Furthermore, we still have almost a full three weeks to go in this expiry, so now we are seeing activity, as long as it continues, we should now start seeing things go up a notch or two as we enter the back nine.

Food for thought: Just imagine what might happen if this market became aggressive and now fancied taking on the R ratios?

 

Range:            3595  to  3795           

Activity:          Good

Type:              Neutral

 

 

Nb. Our comment for 02/05/21

 

As things are now getting a lot more interesting, we thought it would be nice to keep you updated.

When we say “interesting” what we really mean is that this index is at last taking on some ratio, so we now get to see just how committed they really are.

Of course, the last time this market met Y2, then at 3855, it retreated all the way back to 3695.

And although Y2 yesterday was at 3870 (nb. where it closed) it was fascinating to watch first how it rebounded from 3855 early on, then later, when it had established a beachhead as it were, it couldn’t get further than 3860 for almost the rest of the entire trading day.

For the record, although R1 looks unchanged at 3945, in the meantime it has been initially 3940, then yesterday 3935, before reverting today.

Also, in our last note, we mentioned that at last activity had picked up, well ever since those fateful words it has been negligible.

Another aspect to note, is that for a large part of this expiry, Y2 was entrenched at 3905, so although it has come in recently, now the ratios above the zone are in retreat, we would anticipate it ending up back there before very long. Perhaps early next week.

Last note we mentioned we would keep a weather eye on 3745-3755 potential to become the next zone, and it got as close as you could possibly get, but never actually took the plunge, and now it is very rapidly looking less and less likely.

Finally, please don’ lose sight of the fact that we are only talking about Y2, as although it has proved too much so far this expiry, historically, it should be no more than a speedbump. In fact, even R1 has only been a delaying tactic in the past.

At the end of the day this market has been incredibly sensitive to just small amounts of ratio, and therefore dynamic delta, and we have no evidence to suggest that this will not continue to be the case, but it is unusual that’s all.

 

Range:            3805  to  3880           

Activity:          Only just registered

Type:              N/A

 

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Posted in Uncategorized

Feb
02
2021
February 2nd, 2021 by Richard

The SPX is still extremely sensitive to low ratios.

 

Nb. Our comment from the 01/26/21

 

If it’s any consolation we are feeling a bit guilty for not mentioning the fact that the zone did indeed move yesterday.

However, in our defence, we did say to take note of the new “shoo-in” level, 3795-3805.

Those that did were hopefully well prepared when the market fell yesterday to its intraday low of 3797.16, as this was definitely a test of the new zones’ bottom boundary.

And for those more familiar with our analysis, then they would also appreciate that this is also the demarcation line between bullish and bearish territory.

As such it can prove to be a hotly contested area, as was the case yesterday.

Although, this index being in Y1 ratio yesterday, this was exactly what we would expect, being a 60-point move, 120-points if you count there and back.

So, lots of big moves, whipsaw and volatility.

This index is still in a gargantuan Y1 ratio bandwidth, 310-points, and, if possible, an even bigger overall Y ratio bandwidth, 485-points.

Furthermore, we still have virtually a full four more weeks to go.

And so far, although activity is there, it is not really making that big an inroad, so we don’t envisage these bandwidths decreasing significantly any time soon.

Therefore, we would not expect things quietening down soon, in fact probably the reverse.

All in all, this expiry is building up to be tremendously exciting, and if Y2 fails to influence proceedings, then it could even become a classic.

 

 

Range:            3805  to  3905           

Activity:          Average

Type:              On balance decently bearish

 

 

 

Nb. Our comment for 02/02/21

 

Well, the market most certainly has not quietened down, so all as normal and very much expected in our eyes.

Therefore, please do not read too much, in fact anything at all, into these moves, as they are simply a result of there being virtually no ratio around.

In fact, it is worth pointing out that the intraday low on Thursday 29th was 3694.12, which many may remember was the bottom boundary of the old zone, when it was 3695-3705 just a few days ago.

The point of mentioning this is that this level still represents a step-up in ratio, albeit a step-up within the Y1 ratio bandwidth means it is hardly big, it was still evidently sufficient, which means this index is still extremely sensitive.

Please don’t forget it was Y2, then at 3855, that caught this market with the intraday high of 3859.75, back on Wednesday 20th Jan.

Getting back to the present, and at last we have seen some decent activity, and on both sides, so at least the ratios are moving.

However, the zone is the all-important level, and the failure to reach it after last Thursday’s rally should have been a warning.

Interestingly we are seeing 3745-3755 make a move to being the next one, which would be bit of a game changer as it’s a bearish move, so we will keep a weather eye on developments here.

Although the respective Y ratio bandwidths have shrunk, there is still plenty of room there, with Y1 still being 275-points wide for example.

Furthermore, we still have almost a full three weeks to go in this expiry, so now we are seeing activity, as long as it continues, we should now start seeing things go up a notch or two as we enter the back nine.

Food for thought: Just imagine what might happen if this market became aggressive and now fancied taking on the R ratios?

 

Range:            3595  to  3795           

Activity:          Good

Type:              Neutral

 

Available to buy now

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Posted in Uncategorized

Feb
01
2021
February 1st, 2021 by Richard

FTSE volatility to calm down.

 

Nb. Our comment from the 01/25/21

 

Well last week was most definitely all about R1 at 6700, and it took 3 strikes to break down below it, which was all very by-the-book (or should we say “numbers”).

The intraday lows of 6697.67 and 6697.46 on Tue and Wed respectively were only breached on Friday, when 6700 hardly proffered any resistance at all.

Although, those followed the FTSE closely, would have noticed the market bump its head at that level and retreat, late on in the afternoon.

However, before we get on to this week, we would like to point out that the intraday high on the FTSE on Friday was 6715.66, which is (we suppose) connected from, or to, the fact that the previous market close and next day open, are one and the same, in this case 6715.42.

The point being is that, in the real world, the market open was nearer 6700, so we are at a total loss to explain this statistic. And for all you algo traders out there today, back in 2001, when we were called “mechanical”, the first maxim was “crap-in = crap-out” when talking about data, which, after all, is what it is all about.

Anyway, there have been huge changes in the ratios, driven by the fact activity has registered as “good”, which is actually rather impressive for this expiry at this particular time.

The main point to note, is that 6700 doesn’t feature anymore, cue drumroll.

This means that this index is now in its Y ratio, which ironically was also the situation when it eventually ducked below 6700.

Worth noting that the intraday low on Friday was 6651.71.

So, in similarity with the SPX, it is in a huge Y ratio bandwidth now, overall standing at 450-points, but above the zone it is 250-points alone…enjoy.

 

Range:            6550  to  6800       

Activity:          Good

Type:              On balance just fractionally bearish

 

 

Nb. Our comment on 02/01/21

 

It seems an age ago we were saying how lop-sided this market was, and it was tangling with R1 all the way up there at 6700.

But it has only been a fortnight.

Probably worth your while going back and checking on our note of the 18th January.

Of course, the ratios are all about the dynamic delta, and as such they are dynamic in their own right, and so much so recently, all that “very scary” Y ratio we have been mentioning, has all but vanished.

All that now remains is just 100-points above the zone.

Hands up, we didn’t see that coming, or at least not so quickly.

But it does go a long way to explaining why this market was loitering around in the vicinity of its zone for so long.

And, moan, moan, moan, but this stupidity of the open being the previous days close, totally distorted Thursday 28th, as the open should have been circa 6515 and the intraday high 6549, not both being Wednesday’s 6567.37.

As the intraday low that day was 6439.55, then the high of 6549, made that a zone bandwidth test.

So, no great surprise to see a breakout on the Friday.

OK, so it’s no longer Y ratio below the zone, but the levels are the same, so 6350 is still the critical number.

In fact, it makes it very appropriate, as at the start of this expiry, the market started in R1, the only difference being that this was above the zone.

There are still three entire weeks to go, but with the disappearance of most of the Y ratio, hopefully everything will now calm down considerably.

 

Range:            6350  to  6450       

Activity:          Moderate

Type:              On balance just fractionally bearish

 

Available to buy now

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

Jan
26
2021
January 26th, 2021 by Richard

The SPX zone does move just as expected, and already a boundary test.

 

Nb. Our comment from the 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           

Activity:          Average

Type:              On balance just fractionally bearish

 

 

Nb. Our comment for 01/26/21

 

If it’s any consolation we are feeling a bit guilty for not mentioning the fact that the zone did indeed move yesterday.

However, in our defence, we did say to take note of the new “shoo-in” level, 3795-3805.

Those that did were hopefully well prepared when the market fell yesterday to its intraday low of 3797.16, as this was definitely a test of the new zones’ bottom boundary.

And for those more familiar with our analysis, then they would also appreciate that this is also the demarcation line between bullish and bearish territory.

As such it can prove to be a hotly contested area, as was the case yesterday.

Although, this index being in Y1 ratio yesterday, this was exactly what we would expect, being a 60-point move, 120-points if you count there and back.

So, lots of big moves, whipsaw and volatility.

This index is still in a gargantuan Y1 ratio bandwidth, 310-points, and, if possible, an even bigger overall Y ratio bandwidth, 485-points.

Furthermore, we still have virtually a full four more weeks to go.

And so far, although activity is there, it is not really making that big an inroad, so we don’t envisage these bandwidths decreasing significantly any time soon.

Therefore, we would not expect things quietening down soon, in fact probably the reverse.

All in all, this expiry is building up to be tremendously exciting, and if Y2 fails to influence proceedings, then it could even become a classic.

 

 

Range:            3805  to  3905           

Activity:          Average

Type:              On balance decently bearish

 

Available to buy now

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

Jan
25
2021
January 25th, 2021 by Richard

Significant Ratio changes in the FTSE.

 

Nb. Our comment from the 01/18/21

 

We don’t normally include our last comment (from the Jan expiry) but this time we are making an exception, basically because it’s worth noting what we said “Guessing on how things might turn out, based on a lot of expiry end-games, getting this market below 6750 will be an impressive achievement for derivatives” and the fact that the EDSP was 6767.92.

Also, in another break from the norm, in the table above we have included last year’s Feb expiry ratio table.

Not for nostalgia purposes, for those that remember the market north of 7000, but to highlight how unusual today’s table is.

Although they both do have one striking similarity, which is that they are both top-heavy, or as we have been saying recently, lop-sided.

For those that remember how aggressive the last expiry was, with the FTSE taking on DR, and how critical 6850 became, then the big question is whether or not this attitude will persist in the Feb expiry.

It is always very difficult to strip out how much of Friday’s price action was down to the Jan expiry, so it is therefore virtually impossible to tell whether or not the bounce up from the intraday low of 6676.55 to a close that is above R1 in this expiry, is a continuation of this aggression.

This makes 6700 a very critical level in this expiry, as if the market is happy to trade within this R1 ratio bandwidth, then it has a lot of room to manoeuvre in.

But, take good note, that again 6850 is a big level, and this time it also jumps an entire ratio, leapfrogging R2 and going straight to R3, which will come as a very nasty surprise should the market go there again.

However, below 6700, lurks a very scary 500-point Y ratio bandwidth.

One thing for certain, is it is highly unlikely that this new trip will be dull.

 

Range:            6700  to  6850       

Activity:          Average

Type:              Bearish

 

Nb. Our comment on 01/25/21

 

Well last week was most definitely all about R1 at 6700, and it took 3 strikes to break down below it, which was all very by-the-book (or should we say “numbers”).

The intraday lows of 6697.67 and 6697.46 on Tue and Wed respectively were only breached on Friday, when 6700 hardly proffered any resistance at all.

Although, those followed the FTSE closely, would have noticed the market bump its head at that level and retreat, late on in the afternoon.

However, before we get on to this week, we would like to point out that the intraday high on the FTSE on Friday was 6715.66, which is (we suppose) connected from, or to, the fact that the previous market close and next day open, are one and the same, in this case 6715.42.

The point being is that, in the real world, the market open was nearer 6700, so we are at a total loss to explain this statistic. And for all you algo traders out there today, back in 2001, when we were called “mechanical”, the first maxim was “crap-in = crap-out” when talking about data, which, after all, is what it is all about.

Anyway, there have been huge changes in the ratios, driven by the fact activity has registered as “good”, which is actually rather impressive for this expiry at this particular time.

The main point to note, is that 6700 doesn’t feature anymore, cue drumroll.

This means that this index is now in its Y ratio, which ironically was also the situation when it eventually ducked below 6700.

Worth noting that the intraday low on Friday was 6651.71.

So, in similarity with the SPX, it is in a huge Y ratio bandwidth now, overall standing at 450-points, but above the zone it is 250-points alone…enjoy.

 

Range:            6550  to  6800       

Activity:          Good

Type:              On balance just fractionally bearish

 

Available to buy now

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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Jan
22
2021
January 22nd, 2021 by Richard

The bulls have won, but has the Y2 damage already been done?

 

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           

Activity:          Good

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           

Activity:          Average

Type:              On balance just fractionally bearish

 

Available to buy now

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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