Nb. Our comment from the 05/03/22
All of our assumptions last week were blown out of the water before the market even opened. Or to be more specific when the market opened circa 7387 on Monday 25th, as this was actually below R2 at 7400. Best lain plans and all that.
However, had one realised that the FTSE was stuck in the R2 ratio bandwidth, then the next few days made perfect sense as it tried to fight its way back up and out of it, despite the millstone of HSBC on the Tuesday.
The intraday highs of 7463.15 and 7458.24 on Tuesday and Wednesday respectively, just went to show how hard it was trying to break back into its zone.
Then the Friday was all about the upper boundary of the zone 7550, with the intraday high of 7569.80. So, in a way, last week was mostly all about the zone.
Looking ahead, and this time it will depend on the open as London not only has to react to Friday’s Street fall, but everything from Monday as well.
Despite all this we do still think that this index just wants to be in its zone, plain and simple. Well, at least for this week, as come the rollover and expiry everything tends to change anyway.
For the record R2 has now dropped to 7350, exactly when we of course don’t know, but this is immaterial now. However, going in the opposite direction are the other ratios below this.
Above the zone, the ratios have also strengthened, which means we have lost Y2, but at the same time above the zone is still the only place where we get any Y ratio at all. So, perhaps the scope has reduced now we have hit the halfway stage but, overall, the alignment remains the same.
Range: 7450 to 7550
Activity: Strong
Type: On balance bearish
Nb. Our comment on 05/09/22
Well, the FTSE did manage to stay in its zone for most of last week, but it was quite a fight.
And this week it was all about the upper boundary of the zone, as opposed to last week being all about the bottom boundary.
For the first three days it battered away at 7550, and on the third day, the Thursday, we thought our strike three rule had come into effect as the market got as high as 7619.39.
Sadly, it couldn’t hold onto it, mainly because of the weak Street, as it finished dead centre of the zone.
Again, the official data is misleading, as the open on Friday was around 7490, not 7503.27. This still meant that the market did open inside its zone.
Then, between 9am and 2pm the market bounced around the bottom boundary 7450.
After 14:00 it became very interesting, as once the bottom boundary was breached it went very quickly down to R2 at 7350, with the intraday low of 7354.06.
So, with two weeks still to go the FTSE is in bear territory just below its zone but, everything it has done so far, leads us to believe that it really doesn’t want to be here.
Of course, only time will tell, but as one can see, it would only take 60-points for it to recapture its zone.
And the fact that it has already tested R2 at 7350, means that we know that the market knows that there will be futures buying at that point, so it should only go there again if it is willing to take that on. And, to add icing to the cake, the next expiry is the second triple of the year, yay.
Range: 7350 to 7450
Activity: Moderate
Type: On balance just bearish
