Dec

2020

December 21st, 2020 by Richard

A very lopsided FTSE Jan 2021 expiry.

Nb. Our comment from the 12/18/20 (Not Published)

Nb. Our comment on 12/21/20

Now the mighty Dec expiry is over, the stark reality of 2021 looms large.

Of course, there is still a shortened week to go for everyone to secure their year-end performance-based fees/bonus’s and the such-like, so this has to be got out of the way first.

Or at least, this has been the case in almost every year we can remember.

This also means the picture painted by the above table could, and probably will change.

But, as it stands, and just one glance should be enough to tell you, that this is not a pretty one.

Every 50-points from 6600 it goes up an exponential ratio level, so if it wants to go higher them’s some serious headwinds, particularly for a January.

Below the zone there is virtually no significant ratio, especially compared to what there is above, which essentially means, no safety net at all.

A saving grace is that we think the zone will move to 6450-6550.

But for us, the best-case scenario, is that this market settles within it, and hopefully just stays there nice and quietly.

Also, don’t get fooled by the level of activity, as when the puddle is so small even a raindrop looks big.

Basically, the world and his brother are all just looking one-way, which seldom ends well for them.

Range: 6450 to 6600

Activity: Very good

Type: Bullish

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

Dec

15

2020

December 15th, 2020 by Richard

Where will the SPX zone end up for the rollover and expiry?

Nb. Our comment from the 12/11/20

The decisive day came when we last published, Tuesday 8^thDecember, when R2 was standing at 3705, and the SPX hit the intraday high of 3708.45.

This was a continuation of its war with the R2 ratio, as it just kept battering away, evidently still a bit perplexed as to why there were so many futures coming out into the market.

Wednesday saw another attempt to blast through, with the intraday high of 3712.39, which was a bit in isolation, as for most of the time it didn’t get past 3710.

Obviously, yesterday, it didn’t have any further attempts, so, the $100 question, is whether or not they have now had enough.

Ironically, although they won’t know it, they have actually won this battle, as R2 is now 3755, leaving plenty of room for another step-up.

But and this is quite a biggie, yesterday they bounced, or gained support, from R1, which was then at 3655, the intraday low being 3645.18.

Which, over these two days, is a bandwidth test, which incidentally, was also our trading range.

The biggie in question however, is the fact that today R1 has slipped to 3705, meaning that this market is now back in its Y ratios.

And, as we always say, this means volatility and whipsaw.

The Y ratio bandwidth is now a staggering 410-points, btw.

The real issue is will, or can, the zone moves in time, as the closer we get to expiry, and the rollover next Wednesday, the more it will bring its influence to bear.

Interestingly, 3645-3655 AND 3695-3705 are now making moves that could see them claim the crown.

What a bizarre expiry is all we can say, although it was weird from the very start with so much Y ratio present, but our trading range (Y ratio bandwidth) essentially says it all. Good luck.

Range: 3295 to 3705

Activity: Poor

Type: Neutral

Nb. Our comment for 12/15/20

Amazingly still no move in the zone.

We suspect the problem is that the market had gone so far past where it was, and still is, that normal development has been very difficult.

But, having just said that, one of the other major contributing factors has most definitely been the stubbornness of the ratios below the zone to rise.

This, we just can’t explain, and it’s not as if they are particularly high.

By which we mean being B ratios, as because the thresholds are exponential, these ratios are seriously big numbers, so perfectly understandable that it takes a while, and decent activity, to shift them, but here we are talking about RR1 and R2.

The fact that the market, especially at this particular point in time, is where it is, makes 3645-3655 the favourite to be the next zone.

However, we certainly haven’t ruled out 3695-3705, which are the two levels mentioned previously.

But and it won’t take much, by the rollover tomorrow, if not in the next few hours, we would expect the Y1 ratio to stretch up to 3655.

R1 at 3705 is also now on tenuous ground, so we would expect that to change in much the same timeframe, so best think of R1 at 3730 come this afternoon.

Under current circumstance, anywhere in the Y ratios for the rollover and expiry, would be fine really.

But and although we have seen a lot of these biggest of the big expiries, we have never seen one with a ratio profile like this.

So, in our opinion, we are glad it is acting so benignly, as the Y ratio stretches from 3295 up to (say) 3730, which is 435-points, or 12%, which is a truly scary bandwidth of negligible ratio.

Which is ironically back to exactly where we were at the start of this year, so, for once, those performance-based bonus’s might be a good thing, and who would have ever thought of us saying that. Weird times indeed.

Range: 3295 to 3705 (3730)

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.

Posted in Uncategorized

Dec

14

2020

December 14th, 2020 by Richard

Yet more coincidences breed more credence for the FTSE

Nb. Our comment from the 12/07/20

As we said, the FTSE was “desperate to go higher”, and it has.

The issue has been, how difficult it has found it, which is exactly the same with the SPX incidentally, as everybody is bullish, so they are finding it hard to fathom why there are so many futures being sold.

Of course, those that are aware of the ratios, know it is because of the dynamic delta, but many don’t.

Another point we make a lot, is that we should calculate this daily, but as we don’t, sadly we just don’t know when the zone changed, or the ratios.

Of course, we said the zone would move, but when it did, and more importantly, when DR moved from 6450 to 6550, would have been nice to know.

Although, we did also name 6550 last week.

Therefore, the fact that this index closed at 6550.23, right on it, is naturally no coincidence, but it is also very significant for today.

There are still two weeks to go in this expiry, and the zone is going to make its presence felt more and more.

Of course, it is not impossible for this market to maintain this level of bullishness despite the dynamic delta, but, historically, London has struggled to do so for the entire 4-weeks.

Also, there is no doubt that the ratios are falling above a rising zone, but whether they can do so at a pace fast enough to alleviate this index trying to wade through DR will be the issue this week.

We can’t see it, but a Brexit breakthrough may knock the derivative influence into touch.

This would be a novelty, as it is very rare that fundamentals have more influence in the biggest of the big expiries, but that’s markets for you.

Range: 6350 to 6550 or 6550 to 6750

Activity: Very poor

Type: Bearish

Nb. Our comment on 12/14/20

Coincidence?

Again, we use that word…not even the most sceptical would believe that this many coincidences of coincidences can be anything but validation of the ratios.

6550 was the level we mentioned a fortnight ago, and stressed again last week, and, yet here we are, after what seemed like an exciting week, pinned to that level again.

That makes the net change all of 3.46-points, LOL.

But just as we said last week, and the one before, “the FTSE was “desperate to go higher””.

Well, now that DR has moved up to 6650 it now has the potential, or at least the license, to do so.

The trouble is, that now we are into the expiry and the rollover.

Has the FTSE overreached? Without question.

Can it hold out? Well, this is the crux of the matter.

The zone is 300-points south, DR is now 100-points north.

Our parameters are plain, simple and vanilla.

Others, perhaps not so much, as Brexit may still continue to influence the markets emotions, and, as yet, we haven’t seen any indication of the “amber gambler”, who may or may not be put off by the sheer magnitude of this expiry and/or the Brexit influence.

Our view is that this will prove far too tempting a pot, so there will be a few twists and turns yet in this expiry, but, as it stands, there is far more downside than up.

For the record, where the US has their Santa, or bonus, rally at Thanksgiving, here, in the UK, we tend to have ours after the Dec expiry, and so literally, in the last seven trading days of this month.

Range: 6350 to 6650

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

Dec

11

2020

December 11th, 2020 by Richard

The SPX has won the battle with R2, but do they know it?

Nb. Our comment from the 12/08/20

It was fairly obvious from last Tuesday that the SPX was intent on just battering away at the R ratios door.

Which is not altogether surprising, as what with the vaccine, the election and various other snippets, not least the “Thanksgiving Effect”, the real surprise to everyone seems to be why it is finding it so hard to go better.

Of course, and just like the FTSE, those that know what level of ratio, and hence dynamic delta, also know what the index is having to contend with, and no matter how bullish everyone is, someone still has to mop up all those futures.

Nevertheless, it is doing a great job, easily evidenced by how far the R ratios are, and have, retreated.

Although, we should point out, that the step-up level we mentioned last week, has now become the new R2 level, which is kinda the point of mentioning it in the first place.

We have two big fears, and the first is the rather obvious stubbornness of the zone to move, even though it is still being flagged.

Secondly, and far more of a worry, is the distinct lack of movement in the ratios below the zone.

Naturally, these two are connected, but in whatever passes for normal these days, it is the rising Ratios below the zone that should create the pressure thereby allowing the market to rise.

So, rising ratios below, falling above is bullish.

One without the other, is not that normal, and strikes us as something more akin to blinkered self-conformation, especially as it has been one-way traffic throughout this expiry, so far at least.

However, like London and Brexit, here a stimulus package, or similar, just like the start of QE, can catapult fundamentals into the driving seat, demoting derivatives to just riding shotgun, which, in truth, doesn’t happen very often, but is a risk.

Range: 3655 to 3705

Activity: Poor

Type: Neutral

Nb. Our comment for 12/11/20