Nb. Our comment from the 12/07/20
As we said, the FTSE was “desperate to go higher”, and it has.
The issue has been, how difficult it has found it, which is exactly the same with the SPX incidentally, as everybody is bullish, so they are finding it hard to fathom why there are so many futures being sold.
Of course, those that are aware of the ratios, know it is because of the dynamic delta, but many don’t.
Another point we make a lot, is that we should calculate this daily, but as we don’t, sadly we just don’t know when the zone changed, or the ratios.
Of course, we said the zone would move, but when it did, and more importantly, when DR moved from 6450 to 6550, would have been nice to know.
Although, we did also name 6550 last week.
Therefore, the fact that this index closed at 6550.23, right on it, is naturally no coincidence, but it is also very significant for today.
There are still two weeks to go in this expiry, and the zone is going to make its presence felt more and more.
Of course, it is not impossible for this market to maintain this level of bullishness despite the dynamic delta, but, historically, London has struggled to do so for the entire 4-weeks.
Also, there is no doubt that the ratios are falling above a rising zone, but whether they can do so at a pace fast enough to alleviate this index trying to wade through DR will be the issue this week.
We can’t see it, but a Brexit breakthrough may knock the derivative influence into touch.
This would be a novelty, as it is very rare that fundamentals have more influence in the biggest of the big expiries, but that’s markets for you.
Range: 6350 to 6550 or 6550 to 6750
Activity: Very poor
Nb. Our comment on 12/14/20
Again, we use that word…not even the most sceptical would believe that this many coincidences of coincidences can be anything but validation of the ratios.
6550 was the level we mentioned a fortnight ago, and stressed again last week, and, yet here we are, after what seemed like an exciting week, pinned to that level again.
That makes the net change all of 3.46-points, LOL.
But just as we said last week, and the one before, “the FTSE was “desperate to go higher””.
Well, now that DR has moved up to 6650 it now has the potential, or at least the license, to do so.
The trouble is, that now we are into the expiry and the rollover.
Has the FTSE overreached? Without question.
Can it hold out? Well, this is the crux of the matter.
The zone is 300-points south, DR is now 100-points north.
Our parameters are plain, simple and vanilla.
Others, perhaps not so much, as Brexit may still continue to influence the markets emotions, and, as yet, we haven’t seen any indication of the “amber gambler”, who may or may not be put off by the sheer magnitude of this expiry and/or the Brexit influence.
Our view is that this will prove far too tempting a pot, so there will be a few twists and turns yet in this expiry, but, as it stands, there is far more downside than up.
For the record, where the US has their Santa, or bonus, rally at Thanksgiving, here, in the UK, we tend to have ours after the Dec expiry, and so literally, in the last seven trading days of this month.
Range: 6350 to 6650