Nb. Our comment from the 12/08/21
Well thankfully we didn’t have to wait very long before the writing was on the wall, as the very day we published (29th Nov) the FTSE finished at 7109.95, comfortably back above its zone.
And, as we pointed out, that now it had a lot more Y ratio above it. In fact, 200-points worth of it back then.
However, it wasn’t very gung-ho last week, as on the Tuesday it closed just above the top boundary, and on Wednesday the intraday low was 7059.35. Furthermore, the next day it never even came close.
Obviously, not out of the woods, but the signs were there.
Apologies for not publishing on our usual Monday, as we will now never know when R1 disappeared at 7250, although it may have provided a speed bump on Monday 6th Dec as the intraday high was 7246.25.
It will be very interesting and revealing how this market will react to R2 at 7350, the first real test it has had for some considerable time. And as such, it may just come as a surprise to the bulls.
However, if they are committed enough to push through it is clear up to R3 at 7450, but we feel we should point out that this is just below the DR threshold, so would be a very tough ask indeed. Then if it does break through this it is just in a world of dynamic delta futures selling that we just can’t see it coping with.
Of course, everything can change rapidly as we approach the rollover and expiry, but as this is next week and will bring its own peculiar pressures to bear, we see a limited upside as things stand.
Still, it has been an absolute corker of an expiry so far, so it’s nice to see the mighty Dec holding true to form.
Range: 7050 to 7350
Activity: Very poor
Type: On balance not bearish
Nb. Our comment on 12/13/21
Again, it was rather fortuitous timing on our publication, as from the 8th onwards it was all about R2 at 7350.
As one can see in the above table, 7350 is still R2 and 7450 remains at R3. However, we must point out that after the battering it has taken R2 is now only just above the threshold and, R3 is now no longer just below the DR threshold, but rather nearer midway.
So, now it will be all about the bull’s commitment versus the impending rollover and expiry.
Now, this would be a very serious battle considering where the zone is currently as well as all that Y ratio in-between but, in another development, we can easily see 7250-7350 becoming the new zone, having fallen 43.49% in just the last three days.
When the biggest expiry of the big ones enters its final week, it can get very excitable as there is a naturally created derivative inspired giant leap in activity, both futures and equity based, and this can always lead to a misdiagnosis.
But, in the absence of this, then with R2 still at 7350, and assuming the zone does move, then holding this market between 7250 and 7350 should be the order of the week.
7350 speaks for itself, and there is no longer any ratio surprise at that level anymore, and another visit would be strike 3 anyway but, it is the other end that provides the concern.
As, even if the zone does shift, then the new bottom boundary will only be reinforced by Y2 ratio so, should the market test this level, then that will be the harder one to hold.
Always good to get past the mighty Dec rollover and expiry, then the market can concentrate on the Santa rally, but this final week is always an exciting time.
Range: 7050 to 7350