Nb. Our comment from the 05/17/21 (On the May Expiry)
Wowee, that was certainly quite some ride, and best of all, it should not have come as a surprise at all.
Literally on the day we published the FTSE went up to take on R3 once again at 7150.
Fascinating battle it was too, and quite a robust one with the market even achieving an intraday high of 7164.18.
Tuesday saw the capitulation, and the battle at the other end, this time with the top boundary of its zone was actually a touch and go affair really.
The fact the market closed just inside its zone, at 6947.99, was not a good sign for the bulls, but they persisted, and managed to have a fairly decent Wednesday.
However, the damage had been done, and so it really didn’t need much of an excuse to test the boundary at the other end of its zone, 6850.
Here, on the Thursday, it had a deeper incursion into bearish territory, by 27-points, which is far more than we would have liked, but in the end, it held, although it needed a decent helping hand from across the pond, which also just goes to show how close it was to being as bad here as it was over there.
Now we are in the rollover and expiry week, we are back to our old friend 7050, although this time it is R1.
Essentially, a lot of money has been taken off the table, on both sides mind, so there have been meaningful changes to the ratios.
The zones move to 6950-7050 is looking rather unlikely now, although 6900-7000 is a possibility, we think the real battle will be between the equity bulls and the gravitational force of the zone for the rollover/expiry which will dictate this week.
Also, next up, is the mighty June, our second “biggie” of the year, and this will have a role to play this week, if only because of its size weighing, in every sense of the word, on proceedings.
Range: 6950 to 7050
Type: On balance not bullish
Nb. Our comment on 05/24/21 (On the June Expiry)
Well, the FTSE has a very big decision to make, and right at the very start of this the triple witching June expiry.
This can be a good thing, as it should set the tone for the remaining four-weeks, so a baptism by fire can quite often get everyone up to speed quicker than normal.
By this we mean by closing just above 7000 it will now find itself in a very narrow 50-point R2 ratio bandwidth, with R1 below it, and R3 above.
And the R3 above is a very robust R3, being only marginally below the threshold of being DR, and please don’t forget, as these ratios are exponential then this is a significant amount of ratio even for a “biggie”.
It is not unheard of for triples to be very aggressive, and in the past, we have seen them trade between the B ratios, however it would be quite a leap for everyone to suddenly turn on that particular tap for two reasons.
Firstly, it is very early on in the expiry, literally day1, and secondly, although it has been acting aggressively recently, it baulked severely at R3 when it hit it at 7150 the other day.
In fact, such was the reaction it went all the way down to the bottom boundary of its zone, at 6800.
Which is a real shame for those chasing a new all-time-high, as practically every 50-points above R3 is a significantly higher level of ratio, which means an awful lot of futures are going to have to be absorbed before they can track higher.
Not impossible, but unlikely, we think.
But, either way, it should certainly be an exciting start to this, the second biggie of the year.
Range: 7000 to 7050
Type: On balance only just bearish