Nb. Our comment from the 07/20/2022
Firstly, our final comment on the July expiry where the zone did move down to 7150-7250, meaning that 7150 remained a critical level, but now for two reasons. The EDSP was 7134.13, so close and a sterling effort, but still a smidgen shy. Interestingly, the market actually closed at 7159.01.
So, the first day of the August expiry for the FTSE was all about its zone.
The fact that the intraday high was 7268.88 just hides the fact that this index had many hours in a running battle with 7250, the top boundary of its zone.
And as one can see in the table above, above the zone it is only Y1, so to hold the market back at all meant it was punching above its weight.
Worth noting is the fact, that as things stand, Y2 does not even start until 7450, so there is ample room for this market to go ahead into, if it so desires.
However, and especially for those who have read our comment on the SPX yesterday, the difference in the FTSE is that the corresponding Y2 and R1 ratio levels below the zone are 400 and 500-points away respectively.
That is a long way, particularly for this index.
This is also a 5-week expiry, so the first week can be deemed a bit superfluous, and if this is the case then we haven’t seen this expiry true colours yet.
All we can say, is that London has plenty of scope as things stand, to make a significant move, but in either direction.
The fact it has elected to go above its zone and into bullish territory certainly gives further moves in the same direction the upper hand, but don’t lose sight of the risks.
Range: 7250 to 7450
Nb. Our comment on 07/25/22
As the FTSE returns to its more usual Monday slot, there are a few interesting things going on.
The main one being this markets insistence on staying above its zone, and therefore in bullish territory. The real test was on Thursday when the intraday low was 7200.14, and the real time close was 7257.98. 7-points is nothing to the closing auction, so it could easily have finished back inside its zone, but it chose to turn a 6-point deficit on the day to a 6-point gain, closing at 7270.51 (after an extended auction as well).
The second interesting aspect is that above the zone there is 200-points of the minimal Y1 ratio, and yet here it is just 26-points above the upper boundary.
This seems a lot of effort and considerable expense to go to and not take advantage of this essentially open space.
Then there is the fact that Y2 above the zone has gone, and been replaced by R1, a considerable strengthening. And yet, R2 has slipped 100-point, from 7550 to 7650, and R3 has gone, a considerable weakening.
Luckily below the zone it is a bit more conventional, but no mistake, above it is somewhat contradictory.
Finally, although the “type” of activity has come in as neutral, this is because as much money has been taken off the table on both sides. The interesting aspect of this is that this is when this 5-week expiry is just but days old, so really rather rare to see.
Now we are into the more normal 4-week timeline, things may start to become clearer but, in the absence of anything concrete, it is exactly as we said last week.
As it is above its zone the bulls have the edge, and it is clear all the way up to 7450 but, the upper boundary of the zone (7250) remains critical, and don’t lose sight of all that Y ratio below the zone as that makes the potential overall trading range for the next four weeks 7000 up to 7450. Enjoy.
Range: 7250 to 7450