Nb. Our comment from the Oct expiry
We thought it might be a good idea to have one last comment on the October expiry which finished on Friday.
The settlement price was 6875.96, so below the zone and by some considerable margin.
In fact, despite the appearance of Y1 below the zone, the expiry actually finished in R1 ratio, which would have cost someone a bob or two.
Which was a bit careless as the market closed on Thursday at 6943.91, just a fraction below the zone. So, all they had to do was to either get the market up by 6-points to get it into its zone or, failing that, keep it above 6900, and therefore in the minimal Y1 ratio.
Not managing to do either in the very short time frame left would not have been the preferred choice, and which therefore reveals that there was a lot more going on than just the expiry.
The fact that the market actually closed back in its zone somewhat masks the reality that the Oct expiry was expensive for someone despite the best efforts right up until the final few hours.
Range: 6950 to 7050
Type: On balance bullish
Nb. Our comment on 10/24/22
Partly the reason for explaining the closing few hours of the Oct expiry is that it also sheds some light on this, the Nov expiry.
And as one can see in the table above the ratios are so underdeveloped in Nov that this may be a problem for the next few weeks.
Admittedly, this is one of those times that we are going from an intermediary expiry to another intermediary one, so activity is always thinner but, even taking this into consideration, the ratio levels are dangerously low.
At least the R ratios start a bit closer below the zone, at 6850, but this is only R1, and you have to go all the way down to 6250 before you get the next level.
Above the zone, the R ratios don’t kick-in until 7350, but at least the next level is slightly closer, only being a further 300-points away.
Despite these huge ranges, don’t miss the fact that the highest the ratios even go in either direction is just R2, which is very low and will not provide that much support or resistance.
But it is the 500-point wide Y ratio bandwidth that is the most concerning.
From 6850 all the way up to 7350, and with no ratio to speak of then it could get very volatile indeed.
And because of the distance involved, if the market does build up a head of steam, then R1, or even R2, are going to struggle to make a difference.
Hopefully, the circumstances that are evidently keeping the players on the side-lines, will dissipate and normal conditions will return but, in the meantime, best fasten those seatbelts nice and tight.
Range: 6950 to 7050