Nb. Our comment on 18/03/24
Before we get on to the April expiry we must comment on the last week of the mighty March one.
Obviously, it didn’t finish in its zone on rollover Wednesday but, we suspect they were already counting up their gains from the previous three weeks, so were not that bothered.
The writing was on the wall on Monday, with the market closing at 7669.23, just above the zone’s upper boundary at 7650.
Then on Tuesday, from 11am onwards the FTSE traded between 7740 and 7760, bouncing between those two lines like a ping pong ball. Which back then was testing R2 at 7750. Today, if that expiry was still live, 7750 would be R1.
Essentially, 7750 dominated the last four days of the March expiry. It still could have capitulated at any time, especially either the Wednesday or expiry day, Friday, but it seemed happy to just sit there banging its head on 7750.
Perhaps, with one eye on the April expiry, they were more than happy to see it between 7650 and 7750.
On a final note, regarding March, had the zone changed, 7450-7550 would have been the favourite, so the bulls got away with one there for sure.
Anyway, April, and the most striking aspect is the zone is at 7650-7750, and has been since before the 11th significantly.
This is all well and good as long as the market is happy to stay in there and, we are certain, the market would be well pleased taking all that time value again.
The issue this time, is that there is an awful lot of Y ratio either side of the zone.
This gives you a potential trading range over the next five weeks (that includes the April Bank Holiday) of 7550 all the way up to 7900.
As we said last week, the FTSE may be arriving at the party just before the police.
However, don’t lose sight of the lack of support either. Either, or both ways, it could be a real fun ride this expiry.
Range: 7650 to 7750
Activity: Strong
Type: On balance only just bearish
www.hedgeratioanalysis.com
Nb. Our comment from 11/03/24 (NB. The March expiry)
Hate to say it but, and this is what is both good and bad about London, the FTSE is currently under total sway of derivatives.
The overall move this week was down 22.76-points, yawn.
However, there wasn’t a day that didn’t involve the upper boundary of the zone. If the market itself can’t generate enough firepower to outdo the dynamic delta, then it will always end up like it has for the last three weeks.
Monday, as anticipated, the FTSE retreated back inside its zone. The intraday high of 7654.81 on Tuesday saw it try, but fail to break back out.
The Wednesday was the big day, despite the official open of 7646.16 the real one was 7651, significantly above the upper boundary. The very first bar on the open established the intraday low of 7639.03 but, those first few minutes, were the only time the market was below said boundary.
Sadly, memories of 7750 curtailed the bull’s enthusiasm and, both Thursday and Friday, were all about said boundary yet again with the intraday lows of 7645.06 and 7646.20 respectively.
This brings it all around rather neatly to the final week of the mighty March expiry.
It really is a great expiry to absorb all that time value due to the fact it is a triple, and therefore at least three times the size of intermediary expiries.
Anyway, rollover Wednesday is now but a heartbeat away so, if can get into its zone for that then job done, then it can party for the final two days.
Being realistic, this expiry has been a result for the FTSE, as if it wasn’t for every other Western market hitting all-time highs, then the FTSE would have spent far more time in its zone. This would have meant visiting 7550 and, with only Y2 beneath that boundary, 7450 would have been a very distinct probability.
So, going nowhere, was actually a result for the bulls.
Early days but, April looks a far better expiry for the bulls, however it may just be wanting to join the party when it’s winding up.
Range: 7650 to 7750
Activity: Very poor
Type: On balance only just not bearish
www.hedgeratioanalysis.com
