June 14th, 2022 by Richard

It is all gearing up for a typical end to a triple witching expiry, so we hope you were/are ready for it.

 

Nb. Our comment from the 06/06/2022

Very short week last week courtesy of the Jubilee, but none the duller for it.

Monday was all about finding its feet in the R1 ratio bandwidth it was in. Testing the water as it were.

Tuesday, having got used to it, saw it push ahead to the next point of resistance. Namely R2, and exactly where we had put the top of our trading range, for this very reason. So, when we saw the intraday high of 7648.26, we hoped you too had noticed and were aware of its significance.

Interestingly, on the Wednesday (the last trading day of last week), we saw the intraday high of 7639.21. This was not another test of R2, but something more valuable, as it is a good sign of everyone opening the door for someone else to go through first.

By this we mean, when you know there is a large futures seller at 7650, having just been there and seen the tip of the iceberg, if you are not a futures buyer, then it is only natural to let, or want to let, someone else go first. And if everyone is of a like mind, then you get a stalled market just below said ratio level.

Finally, the close was back inside its zone.

Nice, safe and cosy for the very long weekend.

Nevertheless, it was over 100-points drop from Tuesday’s high.

For this week, you now know that the market knows that above 7550 it is R1, and at 7650 there is a large futures seller. Otherwise, it is back inside its zone, where there is no ratio at all for the 100-points that this comprises. And something to watch out for, especially as we are only half way through this expiry, is that at the other end of the zone it is only Y ratio.

 

Range:            7450  to  7550       

Activity:          Very poor

Type:              Not bullish

 

 

Nb. Our comment on 06/13/22

It is good to have a bit of continuity, hence we always include (for better, and sometimes even for worse) what we said the previous week, just so you can reacquaint yourself with the thread of the expiry.

However, this time, we sincerely hope you also read last weeks comment about the SPX, especially the bit about volatility returning just in time for the rollover and expiry this week.

Anyway, about midday last Monday (6/6/22) we saw another test of R2 at 7650 with the intraday high of 7646.66.

Our analogy above, about holding the door open for others to go through fist, is just as good even if it is by just a few points. The other scenario is that one, or more, players are aggressive, and that way you get a deep incursion into the next bandwidth. In either case, it should give you invaluable insight into the market forces at play in that instant.

Obviously, Monday was not a good sign for the bulls.

From then on, it was just a steady progression all the way back into its zone.

Friday was a bit of a surprise, well to the greater London market participants anyway, as hopefully you would have anticipated the SPX going a little wild.

Then, just as it didn’t bother much with R1 when it was heading north of its zone, then neither would we expect it to have much influence below.

Dropping through R2 at 7350 was an interesting battle though, which under more normal circumstances we would have expected it to hold.

The big question therefore, is will R3 at 7250?

Well, as it is rollover and expiry, with that extra gravitational influence, then yes, hopefully it will. Worth noting, R2 in the SPX on Friday stood at 3895.

But all the levels are there for all to see in the table above, as is where the zone is but, at the end of the day, the only certainty is that this is what we expect a typical end to a triple witching expiry would be.

 

Range:            7250  to  7350       

Activity:          Very poor

Type:              Bearish

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June 6th, 2022 by Richard

After testing R2 the FTSE decided it was best to spend the long Jubilee weekend in its zone, smart.

 

Nb. Our comment from the 05/30/2022

Having fun yet?

Well, we certainly hope so but, and apologies for being the bringer of bad tidings, the FTSE is caught up in bit of a ratio nightmare for the next few weeks.

Last week was all about the zone, which it jumped straight back into on the Monday. Tuesday was all about staying in it. Whereas the Wednesday and Thursday were all about breaking out above it.

With the intraday low on Friday being 7542.78, or the zones upper boundary (7550), we saw resistance turn into support.

But and this is where it gets a bit problematic, as travelling up through the 100-points of the zone, where there is no ratio at all, is the easy bit.

Now the FTSE is in a 100-point bandwidth of R1 ratio. Not impossible to negotiate, especially for a triple. But, nevertheless, a level of ratio that will still produce a degree of futures selling onto the market that will have to be absorbed for it to progress.

The problematic part, is that from 7650 upwards there are some considerably weightier levels of ratio, where even a triple may have difficulty in coping with those quantities of dynamic delta.

In contrast, we saw the SPX’s zone dive down to 4000 but, the side effect of this, was to leave only the minimal Y ratio above it…all the way up to 4605.

And that is the issue in a nutshell. The S&P 500 has 15% of blue skies above it, whereas the FTSE hits the dynamic delta storm after about just 1%.

Of course, the ratios change daily, and significantly so, especially in regard to the lower levels but, even so, where we are concerned, if you are a bull, Stateside is where you need to be and not in London.

 

Range:            7550  to  7650       

Activity:          Average

Type:              On balance only just bearish

 

 

Nb. Our comment on 06/06/22

 

Very short week last week courtesy of the Jubilee, but none the duller for it.

Monday was all about finding its feet in the R1 ratio bandwidth it was in. Testing the water as it were.

Tuesday, having got used to it, saw it push ahead to the next point of resistance. Namely R2, and exactly where we had put the top of our trading range, for this very reason. So, when we saw the intraday high of 7648.26, we hoped you too had noticed and were aware of its significance.

Interestingly, on the Wednesday (the last trading day of last week), we saw the intraday high of 7639.21. This was not another test of R2, but something more valuable, as it is a good sign of everyone opening the door for someone else to go through first.

By this we mean, when you know there is a large futures seller at 7650, having just been there and seen the tip of the iceberg, if you are not a futures buyer, then it is only natural to let, or want to let, someone else go first. And if everyone is of a like mind, then you get a stalled market just below said ratio level.

Finally, the close was back inside its zone.

Nice, safe and cosy for the very long weekend.

Nevertheless, it was over 100-points drop from Tuesday’s high.

For this week, you now know that the market knows that above 7550 it is R1, and at 7650 there is a large futures seller. Otherwise, it is back inside its zone, where there is no ratio at all for the 100-points that this comprises. And something to watch out for, especially as we are only half way through this expiry, is that at the other end of the zone it is only Y ratio.

 

Range:            7450  to  7550       

Activity:          Very poor

Type:              Not bullish

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May 30th, 2022 by Richard

If last week was all about the zone for the FTSE, this week will be all about the higher R Ratios.

 

Nb. Our comment from the 05/23/2022

As we would normally have the ratios for June from a few days ago in the right-hand column for comparison purposes, it will have to suffice when we say that there really hasn’t been a great deal of change in them over the last week, so you aren’t missing anything.

The first thing we must point out is that we are now in the June expiry, the second triple witching one of the year.

These are always considerably larger than the intermediary ones, so everything gets ratcheted up several notches.

Furthermore, these “big” expiries, tend to increase in size as the calendar year progresses. Therefore, June is generally the third biggest, with December being the biggest of them all.

This is important, as equity volumes as well as volatility all naturally increase exponentially over the course of these big expiries. So, don’t get side-tracked by people trying to curve-fit stories to the market moves.

Normally, it takes a while for markets to build up a head of steam to reflect the far larger numbers involved. But, in this instance, we are not sure that is going to be the case, as the moves recently have been quite spectacular in their own right.

Obviously, we would like to see the market get back into its zone. But, if it doesn’t, then we will have to see how sensitive it will be to the dynamic delta. R2 worked in May, and it could do again in June, but a lot will depend on when it interacts with it.

The sooner, the more likely it will have an impact. As the expiry goes on, not only is it less likely, but we would always anticipate it taking the far higher ratios to have the same effect as those that we have seen to be effective in the intermediaries.

And, as ever, a lot will depend on how much, or how little ratio there is present in the SPX, and we have all just witnessed what can happen when there is precious little.

 

Range:            7350  to  7450       

Activity:          Poor

Type:              On balance only just bullish

 

Nb. Our comment on 05/30/22

 

Having fun yet?

Well, we certainly hope so but, and apologies for being the bringer of bad tidings, the FTSE is caught up in bit of a ratio nightmare for the next few weeks.

Last week was all about the zone, which it jumped straight back into on the Monday. Tuesday was all about staying in it. Whereas the Wednesday and Thursday were all about breaking out above it.

With the intraday low on Friday being 7542.78, or the zones upper boundary (7550), we saw resistance turn into support.

But and this is where it gets a bit problematic, as travelling up through the 100-points of the zone, where there is no ratio at all, is the easy bit.

Now the FTSE is in a 100-point bandwidth of R1 ratio. Not impossible to negotiate, especially for a triple. But, nevertheless, a level of ratio that will still produce a degree of futures selling onto the market that will have to be absorbed for it to progress.

The problematic part, is that from 7650 upwards there are some considerably weightier levels of ratio, where even a triple may have difficulty in coping with those quantities of dynamic delta.

In contrast, we saw the SPX’s zone dive down to 4000 but, the side effect of this, was to leave only the minimal Y ratio above it…all the way up to 4605.

And that is the issue in a nutshell. The S&P 500 has 15% of blue skies above it, whereas the FTSE hits the dynamic delta storm after about just 1%.

Of course, the ratios change daily, and significantly so, especially in regard to the lower levels but, even so, where we are concerned, if you are a bull, Stateside is where you need to be and not in London.

 

Range:            7550  to  7650       

Activity:          Average

Type:              On balance only just bearish

Available to buy now

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May 23rd, 2022 by Richard

What a superb effort to get so close in the May expiry, but will June suffer for it?

 

Nb. Our comment on the expired May series

 

Well, you just have to give them 10 out of 10 for sheer effort alone.

And by this, we are certainly not referring to the first three days of last week. Although the effort involved there was also highly commendable.

Basically, on Monday the market got back into its zone with the close at 7464.80.

Then the Tuesday was all about the top boundary of the zone.

Wednesday was also about the top boundary of the zone but, with the Street collapsing, it was also about the bottom.

Interestingly, the real time close had it still clinging on, right on 7450, and it was the auction that took the market back below.

The Thursday was damage limitation pure and simple, although R2 must have helped with the low of the day.

So, come the actual expiry, and even we were surprised with the intraday high achieving zone status at 7453.49.

But this was nothing when the EDSP actually came in at 7442.99.

It may not be in its zone but, we for one, are not going to quibble with just over 7-points considering the journey and extreme headwinds it faced last week.

Finally, and as you can see from the table above, this is not our usual format, as this week we have decided to calculate the May expiry had it been going for one more day. In other words, as it would have been today, and this is the

right-hand column as you look at it.

Of course, as it is no longer tradable, there is no need for the range, activity or type.

 

 

 

 

Nb. Our comment on 05/23/22 (the June expiry)

 

As we would normally have the ratios for June from a few days ago in the right-hand column for comparison purposes, it will have to suffice when we say that there really hasn’t been a great deal of change in them over the last week, so you aren’t missing anything.

The first thing we must point out is that we are now in the June expiry, the second triple witching one of the year.

These are always considerably larger than the intermediary ones, so everything gets ratcheted up several notches.

Furthermore, these “big” expiries, tend to increase in size as the calendar year progresses. Therefore, June is generally the third biggest, with December being the biggest of them all.

This is important, as equity volumes as well as volatility all naturally increase exponentially over the course of these big expiries. So, don’t get side-tracked by people trying to curve-fit stories to the market moves.

Normally, it takes a while for markets to build up a head of steam to reflect the far larger numbers involved. But, in this instance, we are not sure that is going to be the case, as the moves recently have been quite spectacular in their own right.

Obviously, we would like to see the market get back into its zone. But, if it doesn’t, then we will have to see how sensitive it will be to the dynamic delta. R2 worked in May, and it could do again in June, but a lot will depend on when it interacts with it.

The sooner, the more likely it will have an impact. As the expiry goes on, not only is it less likely, but we would always anticipate it taking the far higher ratios to have the same affect as those that we have seen to be effective in the intermediaries.

And, as ever, a lot will depend on how much, or how little ratio there is present in the SPX, and we have all just witnessed what can happen when there is precious little.

 

Range:            7350  to  7450       

Activity:          Poor

Type:              On balance only just bullish

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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May 16th, 2022 by Richard

Remarkable 260-point bounce off DR Ratio, now it's all down to the rollover and expiry.

 

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

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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May 9th, 2022 by Richard

Having tested R2 on Friday the FTSE has a simple choice, there again or back to its zone.

 

Nb. Our comment from the 05/03/22

All of our assumptions last week were blown out of the water before the market even opened. Or to be more specific when the market opened circa 7387 on Monday 25th, as this was actually below R2 at 7400. Best lain plans and all that.

However, had one realised that the FTSE was stuck in the R2 ratio bandwidth, then the next few days made perfect sense as it tried to fight its way back up and out of it, despite the millstone of HSBC on the Tuesday.

The intraday highs of 7463.15 and 7458.24 on Tuesday and Wednesday respectively, just went to show how hard it was trying to break back into its zone.

Then the Friday was all about the upper boundary of the zone 7550, with the intraday high of 7569.80. So, in a way, last week was mostly all about the zone.

Looking ahead, and this time it will depend on the open as London not only has to react to Friday’s Street fall, but everything from Monday as well.

Despite all this we do still think that this index just wants to be in its zone, plain and simple. Well, at least for this week, as come the rollover and expiry everything tends to change anyway.

For the record R2 has now dropped to 7350, exactly when we of course don’t know, but this is immaterial now. However, going in the opposite direction are the other ratios below this.

Above the zone, the ratios have also strengthened, which means we have lost Y2, but at the same time above the zone is still the only place where we get any Y ratio at all. So, perhaps the scope has reduced now we have hit the halfway stage but, overall, the alignment remains the same.

 

Range:            7450  to  7550       

Activity:          Strong

Type:              On balance bearish

 

 

 

Nb. Our comment on 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

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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May 3rd, 2022 by Richard

That has been one of the hardest fights the FTSE has ever had to hang on to its zone.

 

Nb. Our comment from the 04/25/22

Looks like the lowly Y2 at 7650 provided enough dynamic delta futures selling to scare the FTSE into turning tail.

Although, it did take over half an hour at or around its intraday high of 7656.47 on Thursday 21st to make up its mind.

And, when you couple this with a weak Street overnight and then again on the Friday, you had the FTSE in a full-blown retreat back into the safety of its zone.

What is more, is that this expiry is still only a week old. So, plenty more time for some fun and games.

On the upside, Y2 has now moved out to 7700. Although, and as we said back on the 19th, the real test should come at 7750. Even more so now, as it goes up to R2 from R1.

Of course, this is assuming the bulls wrest back control. But, as we said, there is still three weeks to go, so plenty of time.

But first, we should see a test of the bottom boundary of the zone at 7450, Which is also strengthened by the fact it is also R1. The fact that there is no Y ratio at all below the zone should give any bulls out there an excuse, even if the dynamic delta inspired futures buying doesn’t do it for them.

If the bears are really in control, and R1 isn’t enough, then backing it up is R2 immediately underneath at 7400. The big concern will be if this is not enough, then there is a very long way before we hit the next level of support, R3 at 7150.

The other alternative is that the market could just stay zone bound, which is not unheard of. If it does decide to take this easy option, then it could bounce around excitedly within its zone for the next two weeks, only breaking out in the final week, which we have seen quite a lot of in the past.

 

Range:            7450  to  7550       

Activity:          Very good

Type:              On balance only just bullish

 

 

Nb. Our comment on 05/03/22

 

All of our assumptions last week were blown out of the water before the market even opened. Or to be more specific when the market opened circa 7387 on Monday 25th, as this was actually below R2 at 7400. Best lain plans and all that.

However, had one realised that the FTSE was stuck in the R2 ratio bandwidth, then the next few days made perfect sense as it tried to fight its way back up and out of it, despite the millstone of HSBC on the Tuesday.

The intraday highs of 7463.15 and 7458.24 on Tuesday and Wednesday respectively, just went to show how hard it was trying to break back into its zone.

Then the Friday was all about the upper boundary of the zone 7550, with the intraday high of 7569.80. So, in a way, last week was mostly all about the zone.

Looking ahead, and this time it will depend on the open as London not only has to react to Friday’s Street fall, but everything from Monday as well.

Despite all this we do still think that this index just wants to be in its zone, plain and simple. Well, at least for this week, as come the rollover and expiry everything tends to change anyway.

For the record R2 has now dropped to 7350, exactly when we of course don’t know, but this is immaterial now. However, going in the opposite direction are the other ratios below this.

Above the zone, the ratios have also strengthened, which means we have lost Y2, but at the same time above the zone is still the only place where we get any Y ratio at all. So, perhaps the scope has reduced now we have hit the halfway stage but, overall, the alignment remains the same.

 

Range:            7450  to  7550       

Activity:          Strong

Type:              On balance bearish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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April 25th, 2022 by Richard

After testing Y2 the FTSE retreated back to its zone, the question is, can it stay there?

 

Nb. Our comment from the 04/19/22

Firstly, a quick word about how the April expiry ended last Thursday, and the EDSP was 7582.04. So, it didn’t manage to get back in its zone, the upper boundary being 7550, but it came close, and it finished in Y1, so no great harm done.

Although, it was interesting to see the intraday lows on the last three trading days of this expiry coming in at 7543.03, 7550.94 and 7551.39 respectively.

Looking ahead now to the May expiry, and the first aspect to note is that the zone is at the same level.

Then the second major thing to note is that in May 7650 is only Y2. And, perhaps significantly, it is only just Y2, having crept over the threshold by just a little bit.

For the record, 7700 is a far more solid Y2, and is in fact at the other end of this bandwidth, being just below the threshold of R1.

And, by comparing the tables above you would be correct in thinking that activity has been towards the top end of the scale, reinforced as well by the “very strong” description below, but overall, activity is an awful lot lower than it was in the April expiry.

Although, April was larger than normal, so despite the difference being very noticeable, in fact, May is just a little bit below the historical normal. Nevertheless, we would have expected at least a large chunk of the April activity to rollover into May. It could still do so, but if it doesn’t, money coming off the table is never a good sign.

Otherwise, despite the market being above its zone, it now has a lot more room to manoeuvre to the upside, whereas below the zone it is nicely underpinned by there being no Y ratio at all.

 

Range:            7550  to  7750       

Activity:          Very strong

Type:              Neutral

 

 

Nb. Our comment on 04/25/22

 

Looks like the lowly Y2 at 7650 provided enough dynamic delta futures selling to scare the FTSE into turning tail.

Although, it did take over half an hour at or around its intraday high of 7656.47 on Thursday 21st to make up its mind.

And, when you couple this with a weak Street overnight and then again on the Friday, you had the FTSE in a full-blown retreat back into the safety of its zone.

What is more, is that this expiry is still only a week old. So, plenty more time for some fun and games.

On the upside, Y2 has now moved out to 7700. Although, and as we said back on the 19th, the real test should come at 7750. Even more so now, as it goes up to R2 from R1.

Of course, this is assuming the bulls wrest back control. But, as we said, there is still three weeks to go, so plenty of time.

But first, we should see a test of the bottom boundary of the zone at 7450, Which is also strengthened by the fact it is also R1. The fact that there is no Y ratio at all below the zone should give any bulls out there an excuse, even if the dynamic delta inspired futures buying doesn’t do it for them.

If the bears are really in control, and R1 isn’t enough, then backing it up is R2 immediately underneath at 7400. The big concern will be if this is not enough, then there is a very long way before we hit the next level of support, R3 at 7150.

The other alternative is that the market could just stay zone bound, which is not unheard of. If it does decide to take this easy option, then it could bounce around excitedly within its zone for the next two weeks, only breaking out in the final week, which we have seen quite a lot of in the past.

 

Range:            7450  to  7550       

Activity:          Very good

Type:              On balance only just bullish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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April 19th, 2022 by Richard

For the FTSE 7650 is no longer a problem as in the May expiry it is now only Y2.

 

Nb. Our comment from the 04/11/22 (Not published)

Nb. Our comment on 04/19/22

 

Firstly, a quick word about how the April expiry ended last Thursday, and the EDSP was 7582.04. So, it didn’t manage to get back in its zone, the upper boundary being 7550, but it came close, and it finished in Y1, so no great harm done.

Although, it was interesting to see the intraday lows on the last three trading days of this expiry coming in at 7543.03, 7550.94 and 7551.39 respectively.

Looking ahead now to the May expiry, and the first aspect to note is that the zone is at the same level.

Then the second major thing to note is that in May 7650 is only Y2. And, perhaps significantly, it is only just Y2, having crept over the threshold by just a little bit.

For the record, 7700 is a far more solid Y2, and is in fact at the other end of this bandwidth, being just below the threshold of R1.

And, by comparing the tables above you would be correct in thinking that activity has been towards the top end of the scale, reinforced as well by the “very strong” description below, but overall, activity is an awful lot lower than it was in the April expiry.

Although, April was larger than normal, so despite the difference being very noticeable, in fact, May is just a little bit below the historical normal. Nevertheless, we would have expected at least a large chunk of the April activity to rollover into May. It could still do so, but if it doesn’t, money coming off the table is never a good sign.

Otherwise, despite the market being above its zone, it now has a lot more room to manoeuvre to the upside, whereas below the zone it is nicely underpinned by there being no Y ratio at all.

 

Range:            7550  to  7750       

Activity:          Very strong

Type:              Neutral

 

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April 11th, 2022 by Richard

Huge ratio level just ahead for the FTSE but will the early expiry get in the way?

 

Nb. Our comment from the 04/04/22

This is a very skittish zone this expiry, as it makes yet another move.

This time it goes back up to 7450-7550, which means the level we highlighted last week as important, 7550, took on a joint significance. Last week it was just where R1 started but, what with the zone move, it also became the upper boundary of the new zone.

Again, we should calculate this daily, but as we don’t, we believe it is a fair assumption that last week’s obsession with 7550 was for two different distinct reasons.

At the start of the week, it was all about the dynamic delta caused by R1 but, by the end, it was all about the fact it was now the upper boundary. Which was quite unusual as a move in the zone should be quite rare in this index, and yet here we are at the midpoint, and this is move three already.

And it’s not as if these are small moves, this latest being a jump of 200-points.

Can we say these moves are over, sadly no. Although, it may prove to be significant that there is no more Y1 ratio around.

However, there is still 500-points of Y2 ratio out there, which is still a ridiculously huge amount, so the potential for big moves is ever present.

So, the good news is that if it can break out of its zone, then R1 now doesn’t start until 7650.

However, the bad news, again if it breaks out of its zone, is that R1 below the zone doesn’t now start until 7150.

And with two weeks still to go in this expiry, then there is plenty of time remaining, and who knows, we may even get another zone move.

 

Range:            7450  to  7550       

Activity:          Moderate

Type:              Bearish

 

Nb. Our comment on 04/11/22

 

At least the zone hasn’t moved again but, as last week panned out, the market never quite got away from it so it had every reason to stay put.

And it really was a week of concentrating on the intraday highs and the lows.

Firstly, the lows, and in order they were 7532.23, 7536.21, 7536.20, 7537.25 and 7551.81. So, every day the market was clinging to its zone, apart from the Friday when the low was just under two-points above the upper boundary.

Of course, surprise surprise, on Friday we saw the first test of R1 at 7650. In the morning it took 15 minutes of interaction before it fell back and waited for Wall Street.

Even then it was hardly convincing, and in real time the close was 7659.82, so it was the auction that took it back up to make its high of the day.

The fact that the significant ratios above the zone haven’t changed makes life a bit easier, as does seeing how hard the market found coping with the dynamic delta created by R1. And, don’t forget, this is test two, as the week before it also suffered at the hands of R1 when it was at 7550 (see comment above).

Therefore, make note that the next level is R3, which skips a level (R2) altogether, and as these are exponential, this will be like running into the proverbial brick wall, apart from the fact that the bricks in this instance will be futures selling.

On top of all this we are now into the rollover and expiry week. One that finishes on the Thursday, not the more usual Friday, it being a Bank Holiday. So, apart from a confusing rollover, which theoretically should now happen on the Tuesday, the gravitational pull of the zone should exert an influence.

But, for those traders out there, hopefully not before we get a sniff of R3 at 7700.

As an aside, we seriously hope we do, as in our opinion it would be a real travesty that the new all time high came about because of the closing auction, in other words, as a result of abnormal market conditions.

 

Range:            7650  to  7700       

Activity:          Poor

Type:              On balance only just bearish

 

Available to buy now

The faction account of the Big Bang, The Great Storm and the market crash of 1987, available in eBook and paperback here, a must read if you don’t believe in history repeating itself.

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