Nb. Our comment from the 03/08/21
Again, we have to applaud the bulls, as they are trying ever so hard.
Actually, it is a bit sad that they are in such an ebullient mood just at the very same time that the ratios are stacked against them.
Twice now (Wed & Fri) they have got past 6650, only to come a cropper at 6700, the next level of DR.
The problem is, this isn’t going to get any easier, as if they manage to force their way past 6700, they then have the daunting task of facing B1 at 6750.
And although 6800 is still in the B1 ratio bandwidth, as these levels are exponential, then this is something similar to B1 plus R3.
If they ever get that far, then the result might be that they will wish that they had in fact stayed in their zone.
Sadly, yet again, the misinformation propagated by the O, H, L, C data continues as on Thursday the high was never 6675.47, but rather a smidgen above 6650.
Anyway, the ratios haven’t actually changed, so this expiry is a perfect example for anyone to study how the ratios can actually affect the market.
We are not going to list how many times and for how long the FTSE engaged with one of our ratio levels and reacted last week (not enough room anyway), but between 6550, 6650 and 6700 there was more than ample opportunities for those that knew what ratio levels were there to see it.
Looking forward, as we now enter the last two weeks of this expiry, then things are only going to get more excitable, or at least, this is what normally happens.
And please don’t forget that this is the first “biggie” of the year, and as such all the naturally occurring derivative inspired increase in equity activity does also tend to get incorrectly labelled, especially by the press, who seem to need something more tangible to blame or accredit. But it does tend to get people nice and excited.
Range: 6550 to 6650 (6700)
Nb. Our comment on 03/15/21
It is nice to see that the bulls haven’t given up at all, and in fact, due to their very evident strength of feeling, the ratios have done extremely well just to stem the tide.
Although, with the strength in the oil sector especially, it has been a bit Canute-like, such is the overbearing weighting this sector has in the FTSE.
Of course, it was not just down to them, for example the equally massively weighted banking sector lent their collective shoulder to the movement.
Nevertheless, B1 at 6750 really showed its mettle, and although we didn’t explicitly say it, we certainly alluded to the fact (please see above) that 6800 was the more probable line of resistance, so the intraday high of 6786.80 on Tuesday 9th should have set off warning flares.
For the record, the reason for our suspicion, was that DR at 6650 was towards the upper end of that bandwidth, whereas B1 at 6750, had literally only just made it over that threshold, so the differential between the two was not that great.
And, as you can see in the table above, this has now been reflected.
What hasn’t been reflected though, is that 6550-6650 is making a concerted effort to being the next zone, and as we enter the rollover and expiry week, this could be important, although it is difficult to see the bulls giving up easily.
So, it may well transpire, that it will be derivatives that need to adjust, and our Delta Ratio, which at the start of this expiry was a staggering 401.9%, has now fallen to 213.2%, which is still a lot, but is still a huge change from whence it came.
It is normally always an exciting end to a triple expiry, and we certainly don’t expect any difference this time round.
And, if derivatives can wrest control back from the bulls, then 6650 is going to be the all-important level this week, as below there we fully expect to see the ratio here continue its drop, from R3 initially, then R2, now R1 and probably soon to be Y.
Range: 6650 to 6800