Nb. Our comment from the 06/10/20
The ratios continue to give way above the zone, but, at least at the moment, the rate of change has slowed considerably.
And, although it doesn’t show it in the above table, below the zone, 2895 had gone up to Y2, but has since fallen back to Y1.
Nevertheless, recently it has all been about this index taking on R2 and above, just like it was before coronavirus, BC if you like.
On Monday 8th June R2 had slipped to 3180, and R2 to 3330, but on that day, this index pushed ahead to an intraday high of 3233.13, deep within the R2 ratio bandwidth.
Under “normal” market conditions this would be perfectly usual behaviour, and this being a triple, we would actually consider it quite restrained, but these are very far from normal, and this is our concern.
Basically, the strength in this market we attribute to the fact the ratios are still reflecting markets BC, and as we said, “are just as susceptible to a crash-up”.
But that was to a zone stranded way above the then current market, and to take advantage of the ridiculously wide Y ratio bandwidths.
For this, or any market for that matter, under present conditions, after disaster if you like, to take on R2, or higher amount of dynamic delta futures selling, with an abyss below it, is QE-fuelled madness, again.
We can see why it is happening, but we really don’t think it is clever or sensible.
At the end of the day, the market hasn’t changed, but the world, economic and environmental, has, and why it is ignorant of these facts, as is the regulator, is a mystery.
Beware, there is now a 300-point Y ratio bandwidth below this market, so for goodness sake, nobody say; “boo”.
Range: 3105 to 3205 OR 3205 to 3355
Type: On balance just fractionally bearish
Nb. Our comment for 06/12/20
As we said, “it is just a question of when?”. Or, did we hear a “Boo”.
Actually, we also said that the zone in all likelihood will move to 2995-3005, so we were hardly surprised to see that is exactly where the market eventually ended up.
Albeit a week early (expiry is next week) and the fact the zone hasn’t actually moved yet, but small matters really.
For us, the real battle came at 3205, on the day of our last comment.
The fact that the market finished below R2 that day was the most significant thing that happened this week.
Then yesterday, when the market broke down below R1, and back into the Y ratio bandwidth, it just did everything exactly by the ratio book.
Now it is back in the Y ratios the only thing that we can say with any certainty, is expect volatility, or more pointedly, the continuation of, and whipsaw.
The potential bad news, if you are a bull that is, is that 2795-2805 hasn’t been filling in with ratio.
So, it is not beyond the realms of possibility, that the zone could drop 100-points as easily as it could jump a hundred.
Which is very probably why it hasn’t already moved to 2995-3005, which is still the favourite, but now only by a nose.
The rollover is next week, with the expiry on Friday, then we are back into the intermediary ones.
So, the real issues will be, firstly, have they now adjusted, and, secondly, their disposition, as in, will we still have a gargantuan Y ratio bandwidth?
Let you know next week.
Range: 2905 to 3155
Activity: Very poor
Type: On balance only just bearish