FTSE stuck in its R2 Ratio Bandwidth

Nb. Our comment from the 05/27/20

Well there is no denying it, but London was, and to an extent, still is, in a mess.

Well, ratio wise at least.

When the FTSE closed the May expiry, on the 15^th May, at 5799.77, but far more importantly, having traded down as low as 5741.54, we reckoned it could be an explosive start to the June expiry.

The point being, that the mighty DR ratio, was down there at 5750.

Obviously, we were therefore not disappointed or surprised, by the huge leap up of 248.82-points to 6048.59 on Monday 18^th May.

It then stalled, but was happily now at the top end of the R3 ratio bandwidth.

Yesterday, we saw the intraday high of 6130.12, and being at the end of a 136.84-point early morning jump, this was very probably a test of 6150.

Today, 6150 is now R2, so it really just depends on how much of a bloody nose they got.

The zone should probably be 6450-6550, but things have moved so far and so fast, the market simply has not adjusted.

Sadly, the FTSE is caught in some heavy ratio bandwidths, severely restricting its movement, which is the absolute opposite of the SPX, which has happily utilised all its vast swathe of minimal Y ratio to get back over 3000.

Two very different markets, courtesy of very different ratio profiles.

Range:            5950  to  6150        

Activity:          Very poor

Type:              Neutral

Nb. Our comment on 06/01/20

Well London is still in a mess, but it has been tidied up a bit at least.

Sadly though, it failed to hold on to its move above 6150, which was bit of an epic battle, so not a good result really.

After the first test on Tuesday 26^th, the first day back after the Bank Holiday, the market basically camped out on 6150 all day on the Wednesday, before closing at 6144.25.

Then on Thursday there was no holding it back as it burst out of the R3 ratio bandwidth it was in (5950 to 6150) and into the R2 one above it.

The fact it has fallen back in means it has it all to do again, although this time, there will be no surprise what is waiting for it at 6150.

In the meantime, the zone has fallen to 6450-6550, which is a lot closer than it was, but this still puts it quite some way away.

The problem is not so much with this, but rather the US markets are at the other end of the ratio scale, so will very probably be no help at all, and might actually work against.

Which was very much the case when the US gave up all its gains when London was closed on Thursday, the SPX having hit our old R2 level and which was now what we call a “step-up”, resulting in a very weak market on Friday and the FTSE relinquishing 6150.

The good news is that thee is still three weeks to go, so plenty of time, but for the foreseeable, all we can see for London, is it being stuck in one bandwidth or another.

Range:            5950  to  6150        

Activity:          Moderate

Type:              Bullish