Nb. Our comment on 15/04/24
Again, the last five trading days were dominated by our ratio levels.
On Monday the intraday high was 7953.16, whereas on Tuesday it was 7962.78. The market peaked twice 12-points above 7950, once in the am then again late afternoon but, aside from those twin spikes, the bulk of the days price action was on or around 7950.
On the Wednesday, which was also strike three incidentally, the market pushed through 7950 and went on to test R2 at 8000 with the intraday high of 7999.84.
Having dropped back nigh on 40-points after that test, the bulls were again left scratching their heads as to why everyone wasn’t on their side. This also resulted in a lame Thursday while they appraised the situation.
Evidently, they were desperate to join the other markets in establishing a new all-time high so, on the Friday, they dispensed with protocol and the market opened at about 7970, and then immediately went straight back up to 8000 in the first few minutes. We know the official open was 7923.80, but we all know that’s rubbish. Incidentally, Friday’s test of 8000 was also strike three, the first being back on the 4th April.
Sadly, and as we mentioned previously, the all-time high of 8047.06 was being protected by R3 at 8050. Now, that is a lot of dynamic delta futures selling, and as the vega was spiking with the market being up 121.18-points, it’s no surprise to us that the intraday high was 8044.98.
Significant as well, that the close was just below 8000.
Now there have been quite a few changes in the ratios which you should be aware of.
Most importantly, is the fact that none of these changes are above the zone. So, you should be very familiar by now with these pertinent levels.
Below the zone we now see Y2 appearing, with a few of the R ratios slipping, which is bearish.
However, the overriding influence this week should be the rollover and expiry, so a retreat back to 7800 is what we would expect anyway, despite the geopolitical situation. Ironically, the May expiry is looking good should the want to have another pop at the new high, but still very early days there of course.
Range: 7950 to 8000
Activity: Moderate
Type: On balance only just bullish
www.hedgeratioanalysis.com
Nb. Our comment from 08/04/24
London was closed last Monday, so the first day of trading was Tuesday 2nd and true to form it went up to the 8000 level which we mentioned (please see below).
Significantly, it closed just below the other level we mentioned, 7950.
Wednesday was bit of a holding pattern, where the bulls tried to work out why everyone wasn’t on their side.
This meant Thursday was a rerun of Tuesday, significantly topping out at 7990.41, just below the 8000 level, as everyone now knew there was a big futures seller there and didn’t want to be the one getting filled.
Friday was essentially the culmination of the bulls’ failure to deal with the dynamic delta at 8000.
As you can see in today’s ratio table there have been quite a few changes, but it is generally the same levels which are pertinent.
8000 is now out on its own at R2 although, in the last two-weeks, it has gone from being just below the R3 threshold to now, being only just above the R2 threshold.
Should still pack a punch though, or at least for the first couple of days it will.
7950 remains the demarcation line between the Y and R ratios, so still a critical level.
We still have two-weeks to go in this expiry but, by the end of this week, thoughts should be starting to focus on the zone.
In the meantime, now the FTSE is in the Y ratio bandwidth expect volatility and whipsaw, just as we have been seeing in the SPX recently.
Don’t forget, at the start of this expiry the zone was at 7650-7750, and it’s not beyond the realms of possibility that it could revert back.
Range: 7850 to 7950
Activity: Poor
Type: On balance not bullish
www.hedgeratioanalysis.com
