Oct
18
2022
October 18th, 2022 by Richard

As the FTSE enters the Oct expiry rollover derivatives have a chance.

 

Nb. Our comment from the 10/10/2022

Despite the fact that R3 had retreated to 6850 last week, it seems the market hadn’t realised.

As R2 at 6950 evidently produced enough dynamic delta to achieve the same result, with the intraday lows on Thursday and Friday being 6961.10 and 6960.36 respectively.

If the market should go back there again even R2 has retreated, back to 6900 now but, with another drop in the zone, this now makes 6950 not only R1 but also the bottom boundary of this new zone.

Again, a falling zone coupled with falling ratios below and rising above are all bearish signs.

And don’t forget this market has already tested R3 (when it was at 6950 on 26th Sept with the intraday low of 6937.40), so the fact it is now at 6800 means that this market is not out of the woods yet.

However, if it can stabilise in its fallen zone, and the ratios either side can also stop, or change, their direction of travel then it might give a chance to the bulls.

Especially as we now have only two weeks to go in this expiry.

And with the way this expiry has evolved, above the zone you now have 300-points of just the minimal Y ratio. A level of ratio that should hold no fear for an index that has been messing with R3 and R2 levels already.

Of course, so far this expiry it has been one-way traffic, don’t forget the “opening” price on day 1 was 7236.68, and back then the zone was 7250-7350 and all the Y ratio was below it.

Almost the mirror image of what it is now, and back then, on the 20th September, did you think that the market would go down through all that Y ratio until it hit the R ratios?

 

Range:            6950  to  7050      

Activity:          Moderate

Type:              On balance definitely bullish

 

Nb. Our comment on 10/10/22

 

The only day we are sure what the ratios were last week was on the actual day we published, Monday 10th.

On the 10th 6950 held firm, with the post auction close of 6959.31 and the real time close at 6972.15.

After this we have no idea when the ratios changed but, as you can see in the above table, they have roughly slipped 50-points below the zone. Whereas, above it, they are unchanged apart from the appearance of R1.

The other aspect that also hasn’t changed, is the zone, which is good news, for the bulls at least.

And for derivatives, as on Friday the intraday high was 6976.30, tantalisingly back inside it just in front of this, the final week of this expiry.

Sadly, it couldn’t hold onto it, leaving R2 at 6850 to reprise its support role from the previous day again.

From the very first day of this expiry, it was always likely to be messy, one for the bears, the way the ratios were aligned.

The trouble is, now we are entering the rollover and expiry, if derivatives want to keep control and get it to expire in its zone, they have their work cut out for them such is the level of emotion inherent now.

The zone isn’t far away, so eminently achievable, as witnessed by Friday’s price action.

So, the only question that remains, for us at least, is whether or not derivatives can trump the BoE, interest rates and whatever the new Chancellor happens to spring on us next?

 

Range:            6850  to  6950      

Activity:          Moderate

Type:              Bullish

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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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Oct
10
2022
October 10th, 2022 by Richard

Fascinating evolution of the FTSE ratios this expiry, means there's a lot left to come.

 

Nb. Our comment from the 10/03/2022

As we said last week it certainly was a fantastic battle the market had with R3 at 6950, and it was on the Monday as well.

In fact, we thought it might just have been a case of job done when the market bounced right back int the 7000’s, and held there on the Tuesday.

Wednesday was the crunch day, and although the official open (always the previous days close) was 6984.59, in the real world it was nearer 6918.

What this meant was that is gapped down at the open to below R3 at 6950, if it was even still there in fact.

As you can see from the above table 6950 is now R2, having lost a third of its potency. The trouble is that we don’t know when that changed, and it could easily have been on Wednesday.

The fact that R3 is now 6850 and the last three intraday lows have been 6836.28, 6829.29 & 6840.07 does tend to suggest this as well.

Without calculating the ratios daily, we have no way of knowing, sorry.

So, apart from the ratios below the zone all looking weak, the other big news is the zone itself.

And it is not a small drop either, but a 200-point fall.

The upside, is perhaps that come the rollover and expiry, that this might be far more attainable but, the not so good news, is that there is still three weeks left in this expiry.

Obviously, falling ratios coupled with a falling zone are both bearish, as is the rising ratios above the zone. However, R3 does still seem to holding its own.

Plenty of upside now, the only question is will 6850 remain at R3 to give some downside protection?

 

Range:            6850  to  7050      

Activity:          Good

Type:              On balance just bullish

 

Nb. Our comment on 10/10/22

 

Despite the fact that R3 had retreated to 6850 last week, it seems the market hadn’t realised.

As R2 at 6950 evidently produced enough dynamic delta to achieve the same result, with the intraday lows on Thursday and Friday being 6961.10 and 6960.36 respectively.

If the market should go back there again even R2 has retreated, back to 6900 now but, with another drop in the zone, this now makes 6950 not only R1 but also the bottom boundary of this new zone.

Again, a falling zone coupled with falling ratios below and rising above are all bearish signs.

And don’t forget this market has already tested R3 (when it was at 6950 on 26th Sept with the intraday low of 6937.40), so the fact it is now at 6800 means that this market is not out of the woods yet.

However, if it can stabilise in its fallen zone, and the ratios either side can also stop, or change, their direction of travel then it might give a chance to the bulls.

Especially as we now have only two weeks to go in this expiry.

And with the way this expiry has evolved, above the zone you now have 300-points of just the minimal Y ratio. A level of ratio that should hold no fear for an index that has been messing with R3 and R2 levels already.

Of course, so far this expiry it has been one-way traffic, don’t forget the “opening” price on day 1 was 7236.68, and back then the zone was 7250-7350 and all the Y ratio was below it.

Almost the mirror image of what it is now, and back then, on the 20th September, did you think that the market would go down through all that Y ratio until it hit the R ratios?

 

Range:            6950  to  7050      

Activity:          Moderate

Type:              On balance definitely 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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Oct
03
2022
October 3rd, 2022 by Richard

Will R3 remain able to contain the FTSE rout?

 

Nb. Our comment from the 09/26/2022

October could well turn out to be another classic expiry, albeit one that still carries the memories of 1987, courtesy of it being regurgitated by the press every year.

First however we must look back at last week, before going over the coming one.

Wednesday the 21st was significant not just because it started weak and finished strong, but because the intraday high was 7258.87.

This was a test of its zone’s bottom boundary, and the fact it failed to hold onto it was the significant part.

Thursday was also significant, as the intraday low was 7149.59, right on Y2.

It did close back above it, giving the bulls a small crumb of comfort, but not by very much, in the end closing at 7159.52.

Who knows whether R1 at 7050 might have been more effective on Friday if it wasn’t for the shocks coming out of the mini-budget.

It is just R1, and don’t forget these ratios are exponential, but with gilts and sterling also getting hammered it really didn’t have much of a chance. Sometimes this is also healthy, as it does show that sometimes derivatives don’t have it all their own way.

The big, nay huge test, will hopefully come today. By this we mean the market testing R3 at 6950.

This is a significant jump in the ratio level it has been experiencing, and this is a level that will produce a considerable number of futures buying generated by the dynamic delta.

If it holds, it may well tempt the bulls back on board. If the market is really in the doldrums, it will just provide a buyer for those dumping futures. No crystal ball we are afraid, but it should be a fantastic battle. A battle we suspect that will decide what happens for the rest of this expiry.

 

Range:            6950  to  7250      

Activity:          Moderate

Type:              Neutral

 

Nb. Our comment on 10/03/22

 

As we said last week it certainly was a fantastic battle the market had with R3 at 6950, and it was on the Monday as well.

In fact, we thought it might just have been a case of job done when the market bounced right back int the 7000’s, and held there on the Tuesday.

Wednesday was the crunch day, and although the official open (always the previous days close) was 6984.59, in the real world it was nearer 6918.

What this meant was that is gapped down at the open to below R3 at 6950, if it was even still there in fact.

As you can see from the above table 6950 is now R2, having lost a third of its potency. The trouble is that we don’t know when that changed, and it could easily have been on Wednesday.

The fact that R3 is now 6850 and the last three intraday lows have been 6836.28, 6829.29 & 6840.07 does tend to suggest this as well.

Without calculating the ratios daily, we have no way of knowing, sorry.

So, apart from the ratios below the zone all looking weak, the other big news is the zone itself.

And it is not a small drop either, but a 200-point fall.

The upside, is perhaps that come the rollover and expiry, that this might be far more attainable but, the not so good news, is that there is still three weeks left in this expiry.

Obviously, falling ratios coupled with a falling zone are both bearish, as is the rising ratios above the zone. However, R3 does still seem to holding its own.

Plenty of upside now, the only question is will 6850 remain at R3 to give some downside protection?

 

Range:            6850  to  7050      

Activity:          Good

Type:              On balance just bullish

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Sep
26
2022
September 26th, 2022 by Richard

Big Ratio battle looming for the FTSE, which could determine the rest of this expiry.

 

Nb. Our comment from the 09/21/2022

 

Well, the September expiry did end up a textbook one.

On the Wednesday and Thursday, the intraday lows were 7259.24 and 7258.67 respectively, and the EDSP was 7264.45. So, there was no doubt at all they held it in its zone over the rollover and expiry, which when you consider what was happening in the US, then this is even more impressive.

Moving swiftly on to more important matters…October, and the new 5-week expiry.

Obviously, the close last Friday was south of the zone, so the grand intentions of September evidently didn’t carry across into the October expiry.

With the short notice Bank Holiday on Monday no doubt affecting things, Tuesday was going to be crucial in determining what the possible intentions might be for this expiry.

And having been almost 100-points higher at one stage seemed to answer that. However, it really didn’t take much to knock the legs out from under that rally, and very early on into the proceedings as well.

More importantly, the bottom boundary of the zone (7250) hardly put up any resistance at all. In stark contrast to the week before.

The next level of support is not until it hits Y2 at 7150.

After that, you have to wait until 7050 before it hits R1.

Even from the very start the ratios were lopsided (no Y ratio above the zone), so it always had the potential to be a hard slog this expiry for the bulls.

Therefore, the only question that really remains, is what will tempt them back in to the fray, Y2, R1 or might it take R3 at 6950?

 

Range:            7050  to  7250      

Activity:          Average

Type:              Neutral

 

 

Nb. Our comment on 09/26/22

 

October could well turn out to be another classic expiry, albeit one that still carries the memories of 1987, courtesy of it being regurgitated by the press every year.

First however we must look back at last week, before going over the coming one.

Wednesday the 21st was significant not just because it started weak and finished strong, but because the intraday high was 7258.87.

This was a test of its zone’s bottom boundary, and the fact it failed to hold onto it was the significant part.

Thursday was also significant, as the intraday low was 7149.59, right on Y2.

It did close back above it, giving the bulls a small crumb of comfort, but not by very much, in the end closing at 7159.52.

Who knows whether R1 at 7050 might have been more effective on Friday if it wasn’t for the shocks coming out of the mini-budget.

It is just R1, and don’t forget these ratios are exponential, but with gilts and sterling also getting hammered it really didn’t have much of a chance. Sometimes this is also healthy, as it does show that sometimes derivatives don’t have it all their own way.

The big, nay huge test, will hopefully come today. By this we mean the market testing R3 at 6950.

This is a significant jump in the ratio level it has been experiencing, and this is a level that will produce a considerable number of futures buying generated by the dynamic delta.

If it holds, it may well tempt the bulls back on board. If the market is really in the doldrums, it will just provide a buyer for those dumping futures. No crystal ball we are afraid, but it should be a fantastic battle. A battle we suspect that will decide what happens for the rest of this expiry.

 

Range:            6950  to  7250      

Activity:          Moderate

Type:              Neutral

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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Sep
22
2022
September 22nd, 2022 by Richard

The FTSE was in ratio trouble from day1

 

Nb. Our comment from the 08/19/2022 (Not published)

 

Nb. Our comment on 09/21/22

 

Well, the September expiry did end up a textbook one.

On the Wednesday and Thursday, the intraday lows were 7259.24 and 7258.67 respectively, and the EDSP was 7264.45. So, there was no doubt at all they held it in its zone over the rollover and expiry, which when you consider what was happening in the US, then this is even more impressive.

Moving swiftly on to more important matters…October, and the new 5-week expiry.

Obviously, the close last Friday was south of the zone, so the grand intentions of September evidently didn’t carry across into the October expiry.

With the short notice Bank Holiday on Monday no doubt affecting things, Tuesday was going to be crucial in determining what the possible intentions might be for this expiry.

And having been almost 100-points higher at one stage seemed to answer that. However, it really didn’t take much to knock the legs out from under that rally, and very early on into the proceedings as well.

More importantly, the bottom boundary of the zone (7250) hardly put up any resistance at all. In stark contrast to the week before.

The next level of support is not until it hits Y2 at 7150.

After that, you have to wait until 7050 before it hits R1.

Even from the very start the ratios were lopsided (no Y ratio above the zone), so it always had the potential to be a hard slog this expiry for the bulls.

Therefore, the only question that really remains, is what will tempt them back in to the fray, Y2, R1 or might it take R3 at 6950?

 

Range:            7050  to  7250      

Activity:          Average

Type:              Neutral

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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Sep
05
2022
September 5th, 2022 by Richard

The FTSE condenses an entire expiry into just two weeks, a sign or is it now done?

 

Nb. Our comment from the 08/30/2022

And too much for them it certainly was.

A very interesting thing also happened last Monday 22nd as the intraday high was in fact 7550.41 (the previous close and Monday’s open being 7550.37).

We never saw it, don’t think anyone did actually, but it’s there in black and white for all eternity despite it being an anomaly IOHO.

The warning signs were there, as on both Tuesday and Thursday the market got back up to the low/mid-thirties.

And we have said this often in the past, that when the market knows there is a huge futures seller at 7550 and then starts playing “you first”, “no, after you” and “please, I insist” but no one is being brave enough to knock on that door again, it’s always a bad sign. Great if you’re a bear though naturally.

Getting back to the present, and the significance of this market closing below 7450 should not be underestimated.

This is because the next level of support is in fact the zone, the upper boundary still being at 7350.

Of course, London is going to be playing catch-up as it was closed yesterday so still has to account for a chunk of Friday’s drop as well as Monday’s.

But, if the FTSE does test its zone, we will be happy to speculate that when we published our comment on the 22nd mentioning the zone at 7300, not many, if any, probably saw that as a likely target.

Means that our trading range is quite a significant one this time, as 7450 will be a big test for any bulls, whereas if the upper boundary at 7350 doesn’t hold then the lower boundary will very probably come into play.

 

Range:            7350  to  7450      

Activity:          Poor

Type:              Bearish

 

 

Nb. Our comment on 09/05/22

We do sincerely hope that you did take notice of our ratio levels, as you should then have had an outstanding week.

In fact, everything we talked about actually played out in London on the very day the market reopened, Tuesday 30th August.

From the open it went on to test R3 at 7450 but, by the end of the day it had also tested the upper boundary of its zone, 7350.

Which did hold, the intraday low being 7351.12, but that did create a bandwidth test. Meaning a breakout was imminent.

As the market closed that day at 7361.63 the odds were in favour of that breakout being down into its zone.

Wednesday saw the zones bottom boundary tested, 7250, which also made that day a zone bandwidth test.

The next level of support was R3 at 7150, and if you knew that then you pretty much had Thursday and Friday covered. Thursday’s intraday low was 7131.69 whereas Fridays was 7148.50.

The trouble is that the FTSE has now crammed into two weeks what we would expect to take the entire expiry. Well, three weeks actually, the final week being needed to get it back to its zone.

We have seen this setup before, and in those instances the market stayed in its zone for the entire third week (excitedly going nowhere) before the final week breakout.

Therefore, we would like to see the same, but we doubt this will happen as there are too many geopolitical things going on.

So, all we can say, is take note of the ratio levels and then watch very carefully what the market does when its around them, as either up or down, it has now been there already.

 

Range:            7250  to  7350      

Activity:          Very poor

Type:              On balance bearish

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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Aug
30
2022
August 30th, 2022 by Richard

After coming unstuck at DR Ratio at 7550 the FTSE is now in a critical bandwidth.

 

Nb. Our comment from the 08/22/2022

The August expiry was even more bullish than we thought/predicted it would be, ending up with a gain of 416.49-points (5.84%) on the EDSP of 7550.62.

And not only was 7550 the settlement price, it is also the closing level for the FTSE.

This is very significant, as the actual real time closing price of the FTSE was in fact 7539.79, down 2.06-points.

So, not only has the auction turned a loss into a gain (so much for transparent and representative market data then) but it has also taken it to a very significant ratio level as well.

For those not sure of the significance of this it is because in real time both the futures and equity market are open, whereas the auction is the preserve of equities only. Therefore, the auction takes place without allowing for any dynamic delta or hedging to take place from the derivative stock index options and futures.

The end result is that today, this index is going to start right on DR ratio, which is a lot, even for a triple.

By the end of a triple, we always say that they can, and frequently do, trade up to the B ratio levels, such is the huge increase in activity in both derivatives and index equities created via stock index options and futures hedging.

But, at the very start of the expiry, DR is a lot of dynamic delta futures selling for a market to absorb.

On top of which, the zone is down at 7300.

Hat’s off to the bulls if they are that committed, but we suspect this will be too much for them to contend with, at least for this week.

 

Range:            7450  to  7550        or        7550  to  7700      

Activity:          Poor

Type:              On balance bearish

 

 

Nb. Our comment on 08/30/22

 

And too much for them it certainly was.

A very interesting thing also happened last Monday 22nd as the intraday high was in fact 7550.41 (the previous close and Monday’s open being 7550.37).

We never saw it, don’t think anyone did actually, but it’s there in black and white for all eternity despite it being an anomaly IOHO.

The warning signs were there, as on both Tuesday and Thursday the market got back up to the low/mid-thirties.

And we have said this often in the past, that when the market knows there is a huge futures seller at 7550 and then starts playing “you first”, “no, after you” and “please, I insist” but no one is being brave enough to knock on that door again, it’s always a bad sign. Great if you’re a bear though naturally.

Getting back to the present, and the significance of this market closing below 7450 should not be underestimated.

This is because the next level of support is in fact the zone, the upper boundary still being at 7350.

Of course, London is going to be playing catch-up as it was closed yesterday so still has to account for a chunk of Friday’s drop as well as Monday’s.

But, if the FTSE does test its zone, we will be happy to speculate that when we published our comment on the 22nd mentioning the zone at 7300, not many, if any, probably saw that as a likely target.

Means that our trading range is quite a significant one this time, as 7450 will be a big test for any bulls, whereas if the upper boundary at 7350 doesn’t hold then the lower boundary will very probably come into play.

 

Range:            7350  to  7450      

Activity:          Poor

Type:              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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Aug
22
2022
August 22nd, 2022 by Richard

As the September expiry starts the FTSE is now facing a huge Ratio level.

 

Nb. Our comment from the 08/15/2022 (Not published)

Nb. Our comment on 08/22/22

 

The August expiry was even more bullish than we thought/predicted it would be, ending up with a gain of 416.49-points (5.84%) on the EDSP of 7550.62.

And not only was 7550 the settlement price, it is also the closing level for the FTSE.

This is very significant, as the actual real time closing price of the FTSE was in fact 7539.79, down 2.06-points.

So, not only has the auction turned a loss into a gain (so much for transparent and representative market data then) but it has also taken it to a very significant ratio level as well.

For those not sure of the significance of this it is because in real time both the futures and equity market are open, whereas the auction is the preserve of equities only. Therefore, the auction takes place without allowing for any dynamic delta or hedging to take place from the derivative stock index options and futures.

The end result is that today, this index is going to start right on DR ratio, which is a lot, even for a triple.

By the end of a triple, we always say that they can, and frequently do, trade up to the B ratio levels, such is the huge increase in activity in both derivatives and index equities created via stock index options and futures hedging.

But, at the very start of the expiry, DR is a lot of dynamic delta futures selling for a market to absorb.

On top of which, the zone is down at 7300.

Hat’s off to the bulls if they are that committed, but we suspect this will be too much for them to contend with, at least for this week.

 

Range:            7450  to  7550        or        7550  to  7700      

Activity:          Poor

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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Aug
15
2022
August 15th, 2022 by Richard

The risk: reward ratio changes in the FTSE as Aug expiry comes to an end and Sept looms large.

 

Nb. Our comment from the 08/08/2022

Why waste time? Which is exactly the attitude of the FTSE at the moment.

Since our last comment, please see above, where we mentioned it had gone to a lot of effort to stay in bullish territory above its zone and that it was clear all the way up to 7450…it has just powered on up until it hit aforementioned 7450.

During the course of this journey, it has also moved the zone up.

This we see as a natural move, occasioned by the lack of ratio in that huge Y ratio bandwidth that was there a couple of weeks ago, rather than any great bullish manipulation.

To underline this point, below the zone, OK 7050 has gone from Y2 to R1, but otherwise R2, R3 and DR have all remained static.

Admittedly, above the zone, the ratios have slipped, but they were doing that two weeks ago, and anyway, with the huge move in this market this is by and large a natural by-product of this.

So, what next?

Well, 7450 is the new critical level. Now because it is the top boundary of the zone but, previously, it was because it was R1.

Don’t forget at the start of this expiry 7450 was Y2, then became R1, so this is it just retuning to where it came from.

However, the difference now to two weeks ago, is that Wednesday’s intraday high and close was 7445, Thursday’s close was 7448 and Friday’s 7439. All inside the zone.

There is still two weeks to go, but the market is certainly not as aggressive as it was a fortnight ago. There is still some upside, R1 now starting at 7550, but there is also now a lot of downside. Apart from the actual zone of course, the corresponding R1 is all the way down there at 7050, so the risk: reward ratio has changed considerably now, at least for us that is.

 

Range:            7350  to  7450      

Activity:          Moderate

Type:              Neutral

 

 

Nb. Our comment on 08/15/22

 

And here we are, at the end of the August expiry, and one which certainly has been “one for the bulls”.

We have said this before but, one of the main aims of looking at the hedge ratios, is so that one can determine when the market is out of kilter with reality. When we say reality, what we actually mean, is that the market fails to respond to the futures coming on to the market via the dynamic delta. If this is futures selling, and the market is a willing buyer, then all is good. But and this is a big but, at some stage this appetite, or emotion, will fade, leaving the dynamic delta to take charge.

For us this is where this market is now.

Essentially, it has broken up through its zone, met with the futures selling generated by the minimal Y1 ratio dynamic delta, and simply stalled.

The desire is there (for the bulls) but the appetite just isn’t. At the end of this week the FTSE has added just 60-points (0.81%) whereas the S&P500 has added 135-points (3.26%).

And on top of this you now have the rollover and expiry for the market to contend with.

Furthermore, next up is the September expiry, the third of the “biggies” this year, and so this makes it the second biggest this year by sheer volume. Only the Dec expiry is bigger.

After Wall Street’s performance on Friday most would anticipate the market opening stronger this side of the pond, and as one can see in the table above, the FTSE is right in the middle of its Y1 ratio bandwidth.

So, although the Y1 dynamic delta has up to now, applied the brakes to the bulls’ exuberance, lurking dead ahead is R1 at 7550. This is also already a significant ratio level in the Sept expiry. So, it might get frisky this week but, as we said previously, “the risk: reward ratio has changed considerably now”.

 

Range:            7450  to  7550      

Activity:          Average

Type:              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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Jul
25
2022
July 25th, 2022 by Richard

The FTSE has a very wide potential trading range for the August expiry

 

Nb. Our comment from the 07/20/2022

Firstly, our final comment on the July expiry where the zone did move down to 7150-7250, meaning that 7150 remained a critical level, but now for two reasons. The EDSP was 7134.13, so close and a sterling effort, but still a smidgen shy. Interestingly, the market actually closed at 7159.01.

So, the first day of the August expiry for the FTSE was all about its zone.

The fact that the intraday high was 7268.88 just hides the fact that this index had many hours in a running battle with 7250, the top boundary of its zone.

And as one can see in the table above, above the zone it is only Y1, so to hold the market back at all meant it was punching above its weight.

Worth noting is the fact, that as things stand, Y2 does not even start until 7450, so there is ample room for this market to go ahead into, if it so desires.

However, and especially for those who have read our comment on the SPX yesterday, the difference in the FTSE is that the corresponding Y2 and R1 ratio levels below the zone are 400 and 500-points away respectively.

That is a long way, particularly for this index.

This is also a 5-week expiry, so the first week can be deemed a bit superfluous, and if this is the case then we haven’t seen this expiry true colours yet.

All we can say, is that London has plenty of scope as things stand, to make a significant move, but in either direction.

The fact it has elected to go above its zone and into bullish territory certainly gives further moves in the same direction the upper hand, but don’t lose sight of the risks.

 

Range:            7250  to  7450      

Activity:          Strong

Type:              Neutral

 

 

 

Nb. Our comment on 07/25/22

 

As the FTSE returns to its more usual Monday slot, there are a few interesting things going on.

The main one being this markets insistence on staying above its zone, and therefore in bullish territory. The real test was on Thursday when the intraday low was 7200.14, and the real time close was 7257.98. 7-points is nothing to the closing auction, so it could easily have finished back inside its zone, but it chose to turn a 6-point deficit on the day to a 6-point gain, closing at 7270.51 (after an extended auction as well).

The second interesting aspect is that above the zone there is 200-points of the minimal Y1 ratio, and yet here it is just 26-points above the upper boundary.

This seems a lot of effort and considerable expense to go to and not take advantage of this essentially open space.

Then there is the fact that Y2 above the zone has gone, and been replaced by R1, a considerable strengthening. And yet, R2 has slipped 100-point, from 7550 to 7650, and R3 has gone, a considerable weakening.

Luckily below the zone it is a bit more conventional, but no mistake, above it is somewhat contradictory.

Finally, although the “type” of activity has come in as neutral, this is because as much money has been taken off the table on both sides. The interesting aspect of this is that this is when this 5-week expiry is just but days old, so really rather rare to see.

Now we are into the more normal 4-week timeline, things may start to become clearer but, in the absence of anything concrete, it is exactly as we said last week.

As it is above its zone the bulls have the edge, and it is clear all the way up to 7450 but, the upper boundary of the zone (7250) remains critical, and don’t lose sight of all that Y ratio below the zone as that makes the potential overall trading range for the next four weeks 7000 up to 7450. Enjoy.

 

Range:            7250  to  7450      

Activity:          Average

Type:              Neutral

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