Nb. Our comment from the 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
Nb. Our comment on 05/16/22
Well, we don’t often see this, and that is no change at all in any of the ratios. In fact, we had to trawl back to March 2020 to find the last time this happened. And, it’s not as if this is because of a lack of activity, as over the last five days it has average “moderate” levels which, although not great, is not bad at this stage in an expiry.
However, we feel we should point out that naturally all the numbers have changed, it’s just that none of these changes have been significant enough for any of the ratios to cross a threshold, either up or down.
And, the fact that the ratio levels have been constant throughout, means that every day last week was about one or another level.
The most important of which was on Thursday when the market tested DR at 7150 with the intraday low of 7158.53.
Blink, and you would have missed it, but had you known that there was that much futures buying about to hit at that level then you just might have taken advantage of the very dramatic 260-point bounce.
Of course, it had to break down below R3 at 7250 first, but that was what the Monday and Tuesday were all about (so Thu was strike 3 as well).
The Wednesday was all about not getting back above R2 at 7350.
And so, we enter the rollover and expiry week neatly poised just below the zone, and who would have thought that would be the case for most of last week.
In a further twist, it is not inconceivable that 7550-7650 becomes the next zone. And that is definitely something even we didn’t think would be the case at any time last week.
Anyway, the second triple of the year is up next, and the last time we looked its zone was the same as May’s, so perhaps best to not get too excited by this.
Range: 7350 to 7450
Activity: Moderate
Type: On balance just bearish
