Nb. Our comment from the 01/20/22 (Not published for February)
Nb. Our comment for 01/26/22
They tried so very very hard in the January expiry to get it to settle in its zone, with the (in the end) valiant effort to get the market up to 4602.11. The fact that after so much effort they still couldn’t hold it there was the first clue there were stronger undertones at work. The fact that it settled at 4472.07 was a result therefore, as at least it was still in the Y ratios.
However, and also why we have included the ratio table for Feb on the 20th above, is that on Friday the intraday low was 4395.34, coincidentally R1.
The second warning perhaps? Either way the open on Monday was way below this, and the market even went below R2 (which was unchanged from the 20th) before it staged what was a truly spectacular recovery.
This meant that the close at 4410.13 was back above both R2 and R1, which could have easily been job done on one of the most amazing starts to an expiry recently.
Sadly, the ratios below the zone then collapsed on Tuesday and, although they are mostly unchanged today, this weakness was a new experience.
The market yesterday did go below R1 at 4345 (intraday low 4287.11) but didn’t get as far as R2 now at 4245, before recovering to close back above R1. Giving just a glimmer of hope that all hands were rushing to stabilise the ship.
This makes today critical as the ratios are still weak below the zone, which in itself could easily move down to 4495-4505, as it tries to re-establish normal sensitivity and therefore reaction to the ratios, and thereby dispense with any panic.
We have said for quite a while now that these are not risk-free markets, and Monday’s huge test of R2 should also be a lesson as, although it rebounded spectacularly, it could also have gone the other way it was such a close call. Especially as over a great many of the previous expiries this index has been sensitive to just Y2 ratio, so this could just also be a sea change in tolerance levels as well.
Range: 4345 to 4595