Jul
20
2022
July 20th, 2022 by Richard

The FTSE starts the Aug expiry well, but there is little ratio...either way.

 

Nb. Our comment from the 07/18/2022 (Not published)

 

Nb. Our comment on 07/20/22

 

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

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Jul
11
2022
July 11th, 2022 by Richard

Still a lot to play for as the FTSE enters its final week of the July expiry.

 

Nb. Our comment from the 07/04/2022

“Big call” indeed, as the FTSE had to dig itself out of the R3 ratio hole it had dug itself into first.

By which we mean the open on the very day we last published, the 22nd June, when the market opened below 7150 and really looked in a very sorry state.

Sadly, we just don’t know when 7150 changed from R3 to R2, but whenever it was, this was always the crucial level.

Still is, as having gone all the way back up to its zone’s bottom boundary, at 7350, here we are back at R2 again.

That failure, on the 28th and 29th, when the intraday highs were 7362.37 and 7345.45 respectively, was very damaging for the bulls. Therefore, the fact that the market closes on Thursday and Friday last week were all about 7150 again, should have come as no surprise.

The fact that the Y1 ratio bandwidth below the zone is 200-points wide, also accounts for the big moves, essentially from 7350 to 7150.

So, although it may have appeared exciting at the time, in essence this market has gone absolutely nowhere in two weeks.

Definitely more troubling for the bulls, as not breaking back up into its zone at 7350 shows a worrying lack of commitment from them. Whereas the bears, have been happy to make deep intraday inroads into the R2 ratio bandwidth. However, both are now on strike three from last week alone.

As we are now just at the half way stage of this expiry, there is ample time left. So, although the market hasn’t really moved in the last two weeks, it does now know where the pertinent levels are. Therefore, game on, we think.

 

Range:            7050  to  7150        or        7150  to  7350      

Activity:          Moderate

Type:              On balance only just bullish

 

 

Nb. Our comment on 07/11/22

 

On the day of our last comment (4/7/22) we thought R2 had done the trick again, with the market finishing up 64-points that day.

Sadly, the very next day, Tuesday 5th, changed the picture entirely, with the huge fall of 207.18-points, which also took the market into the R3 ratio bandwidth.

Obviously, this was one of those instances when equities ruled over derivatives, and the futures buying generated by the dynamic delta had little or no effect.

It does happen, more commonly in those indices with a hundred or less constituents, especially where there are just one or two sectors that account for a disproportionate weighting within the overall index.

For the FTSE on the 5th this was the case with the oil stocks, which all suffered on the back of Brent giving up 10%.

There is absolutely nothing we can do about this, and it is just one of those peculiarities that affect the FTSE.

However, for the brave, it can represent a good opportunity, as generally those equity moments are fleeting, whereas the dynamic delta is there for the length of the expiry.

Naturally, a move like this will shake things up, so the move down in the zone is not altogether surprising. In fact, with such a large Y1 ratio bandwidth below the zone when it was at 7400, it was always a distinct possibility, especially towards the expiry.

7150 is still a key level, although how resilient it will remain after so many tests and breaches, we just don’t know.

The big test for derivatives will be keeping this market inside its new zone for the rollover and expiry, which after the big miss in the June expiry would probably be most welcome. And not that perhaps one might realize, but this index is still up almost 200-points this expiry, so there is a lot to play for still.

 

Range:            7150  to  7250      

Activity:          Average

Type:              On balance bullish

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Jul
04
2022
July 4th, 2022 by Richard

The FTSE returns to 7150, now R2 but still as critical.

 

Nb. Our comment from the 06/22/2022

Obviously, there were some huge changes in the ratios in the last few days of the June expiry but, sadly we were not around to record them, so who knows.

The one thing for certain though, is that it must have gotten seriously out of control, as even if June’s zone ended up where July’s has started, it was still a huge miss on Friday as the EDSP was 7108.24.

Not only that, when we shut up shop, B1 was at 7150. Of course, it would have fallen, and considerably so, but there is no escaping that at the end the market would have been amid a considerable amount of ratio. So, very very expensive for someone.

Which brings us round to this new expiry, the July trip.

And, straight from the very start, the FTSE was imbedded deep into some high ratios.

In a triple we always say it gets very heated, and naturally seeks out the higher ratios to compensate for the huge increase in overall activity. However, this is an intermediary, so it should revert back to being sensitive to the low to mid-range R ratios.

And yet, here it was, starting life just a smidgen north of DR. Quite the rude awakening.

Also, we are not overly surprised with the battle that took place all day yesterday at 7150, as this is a very significant level.

One look at the above table tells you that.

In fact, the ratios are so lopsided this expiry, it is now dangerous being short. Foolish not to have at least extremely tight stops.

7150 will decide whether or not this market digs itself out of a ratio mess, and can head back up to its zone, or not. Big call.

 

Range:            6850  to  7150        or        7150  to  7350      

Activity:          Outstanding

Type:              On balance only just bearish

 

 

Nb. Our comment on 07/04/22

 

“Big call” indeed, as the FTSE had to dig itself out of the R3 ratio hole it had dug itself into first.

By which we mean the open on the very day we last published, the 22nd June, when the market opened below 7150 and really looked in a very sorry state.

Sadly, we just don’t know when 7150 changed from R3 to R2, but whenever it was, this was always the crucial level.

Still is, as having gone all the way back up to its zone’s bottom boundary, at 7350, here we are back at R2 again.

That failure, on the 28th and 29th, when the intraday highs were 7362.37 and 7345.45 respectively, was very damaging for the bulls. Therefore, the fact that the market closes on Thursday and Friday last week were all about 7150 again, should have come as no surprise.

The fact that the Y1 ratio bandwidth below the zone is 200-points wide, also accounts for the big moves, essentially from 7350 to 7150.

So, although it may have appeared exciting at the time, in essence this market has gone absolutely nowhere in two weeks.

Definitely more troubling for the bulls, as not breaking back up into its zone at 7350 shows a worrying lack of commitment from them. Whereas the bears, have been happy to make deep intraday inroads into the R2 ratio bandwidth. However, both are now on strike three from last week alone.

As we are now just at the half way stage of this expiry, there is ample time left. So, although the market hasn’t really moved in the last two weeks, it does now know where the pertinent levels are. Therefore, game on, we think.

 

Range:            7050  to  7150        or        7150  to  7350      

Activity:          Moderate

Type:              On balance only just bullish

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Jun
14
2022
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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Jun
06
2022
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
30
2022
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

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
23
2022
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
16
2022
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
09
2022
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
03
2022
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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