FTSE and DAX Ratio Table 20th Nov 2017
Those that predict don’t know and those that know don’t predict.
Is an old saying made for a very good reason and this expiry we would like to take its advice here in the FTSE.
Any expiry is extremely difficult to call and the mighty Dec even more so and when you get a ratio configuration like this is it just headache inducing.
We would like to say it will stay inside its zone, as it has been doing more or less for the last few expiries.
But therein lies the issue as we believe at some stage, probably towards this expiries rollover, 7450-7550 will have another go at being the NZ, which would change everything entirely.
However, if it grows a pair then the overall trading range would be 7150 up to 7600/7650, but we suspect it will just be 7300 up to 7600/7650.
Range: 7300 to 7400
Looking at the DAX and we could repeat the first three paragraphs from above.
The change in the NZ matches where November’s ended and also with the market at that point this would not have hurt either.
Basically, the ratio configuration here is horrible and as we saw last expiry this index has been taking on R2, so this starts at 13350 and thereafter the ratio climbs orderly every 200-points, and these levels are exponential don’t forget.
The real issue is all that Y ratio below the zone with the R ratios not even starting until 12250, so that is easily a 1000-point trading range for this expiry.
The problem is if it does take fright, as that R2 below the zone has only just appeared, and that is all there is as a last line of defence, which is asking an awful lot of it.
Hopefully it will continue as before and just go from the NZ upwards, but we think if the DJX has returned to normality and their NZ doesn’t shift this index might not be able to afford the luxury of a bull market.
Therefore, we will link this forecast to our US ones but suffice it to say this is a very dangerous situation to be in if you are a bull.
Range: 12950 to 13050
Type: On balance bullish