Feb
07
2022
February 7th, 2022 by Richard

It's not unheard of but can the FTSE spend a third week in its zone?

 

Nb. Our comment from the 01/31/22

Well, what can one say about last week? Well, quite a lot actually.

Monday was a remarkable day, as it is not often that London loses 200-points. And although the intraday low was 7283.38 and R1 was then at 7250, when you take into consideration not only the magnitude of the fall but also the velocity of it, then that is close enough for us.

And if Monday wasn’t enough for you, then Tuesday was all about Y2, then at 7350.

And the last three days have all been about the zone, 7450 and 7550. And, although the official close on Thursday was 7554.31, that was down to the auction as the real time close was 7550.15, right on the upper boundary.

Which makes the range on Friday, from this intraday high to the intraday low of 7420.20 coupled with the close of 7466.07 (real time 7472.04) a zone bandwidth test. And we did check the honest open, not the official it is the same as the previous days close, and it was circa 7550. Which normally means a breakout the next trading day.

Of course, when we said above that it might be beneficial to the bulls if this market spent the first week in its zone and, although this was the case for most of it, this did not take into consideration the extreme start to the week and then the ensuing no quarter battle to get it back in there.

Therefore, it is scant surprise that there has been considerable change in the ratios. Naturally necessitated by continued high levels of activity.

The changes can be seen above but what is not so evident is the fact that the zone could easily move down to 7250-7350 and, should this happen, it would materially change the entire dynamic of this index for the rest of this expiry.

Otherwise, the main takeaways are the disappearance of all the Y ratio above the zone, and the fact there is now 200-points of the minimal Y1 ratio below it. So, for us, keeping this market in its zone will be hard enough, but if it in itself falls, then a really tough ask, despite the zone bandwidth test on Friday.

 

Range:            7450  to  7550       

Activity:          Good

Type:              On balance only just bullish

 

 

Nb. Our comment on 02/07/22

 

Despite it being “a tough ask” they did manage to keep this market in its zone.

And by doing so, we have now seen a very decent build up in the ratios below the zone.

Again, it was an exciting start to the week, and if you were watching on Monday then that would have given you a massive clue about what might be in store for the rest of last week. At 10:30 the market went down to 7452 before recovering. Then again at 14:50 it had another go, getting back down to 7451 before one final attempt just before the close when it hit 7451 again. Three tests of the bottom boundary, and not one breach in sight.

Therefore, it was hardly surprising when we saw the intraday high of 7549.29, the upper boundary, the very next day.

Of course, we don’t know when 7550 dropped from R1 to Y2, but three days in row where the intraday high was around 7600 suggests it was about Wednesday or Thursday. Interestingly, only the Thursday closed outside of the zone.

It is not unheard of for this market to spend a third week in its zone but, as activity has continued to be so good, we suspect this is going to be even harder to achieve this week

However, there is now some Y ratio either side of the zone, so plenty of scope for it to escape should it want to.

Below the zone is still where there is the more scope, with R1 now starting at 7350.

Above the zone is still rather limited, with R1 remaining at 7600 and thereafter the exponential ratios climb one rung up every 50-points so, if they want a new all-time-high, then they are going to have to work for it and be prepared to take on all those futures forced out by the dynamic delta.

 

Range:            7450  to  7550       

Activity:          Good

Type:              On balance bearish

 

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Jan
30
2022
January 30th, 2022 by Richard

After Friday's zone bandwidth test in the FTSE its going to be tough to keep it in there.

 

Nb. Our comment from the 01/24/22

We don’t think we can get away with not mentioning the end of the Jan expiry, especially as there was such a huge battle going on between derivatives and equities. And, we were anticipating a move up in the zone to 7350-7450 but, in the end, what we got was 7450-7550. So, the valiant R3 at 7550 that was such a thorn in the equities side in the final fortnight, did eventually capitulate, ending up as the upper boundary of the zone as well as R1. Meaning the EDSP of 7528.28 was actually in the new zone.

Furthermore, the huge levels of activity have continued on into the Feb expiry, so much so it has almost doubled the overall exposure that had been present, and in just one week. Which was rather fitting for an expiry that produced a 3.63% gain over the five-weeks of its length.

Therefore, it comes as no great surprise that the zone in Feb has ended up matching the Jan one, albeit one was at the end of its tenure while the other is just at the start of theirs.

How long will the market stay in its zone, who knows. But we hope it will be for this first week at least, if only just to let the dust settle.

If it doesn’t, then worth noting on the upside 7550 is now just Y2, so in reality, the fact it is the zones upper boundary will probably carry more weight than the level of dynamic delta produced by a Y ratio. The serious levels don’t start until 7650, and if it continues to be as aggressive as last week, then R3 doesn’t kick in until 7700.

On the downside, then what with the recent move up in the zone, it has left a huge amount of Y ratio below it, so the serious levels here don’t start until 7250. So, if you are a bull, then a week in its zone would be very beneficial as it might allow for the ratios down here to build up a bit.

Worth noting also Feb is the more regular four-weeks trip, and Jan also started their trip in their zone, although back then (20/12/2021) this was 7150-7250.

 

Range:            7450  to  7550       

Activity:          Outstanding

Type:              On balance only just bullish

 

 

Nb. Our comment on 01/31/22

Well, what can one say about last week? Well, quite a lot actually.

Monday was a remarkable day, as it is not often that London loses 200-points. And although the intraday low was 7283.38 and R1 was then at 7250, when you take into consideration not only the magnitude of the fall but also the velocity of it, then that is close enough for us.

And if Monday wasn’t enough for you, then Tuesday was all about Y2, then at 7350.

And the last three days have all been about the zone, 7450 and 7550. And, although the official close on Thursday was 7554.31, that was down to the auction as the real time close was 7550.15, right on the upper boundary.

Which makes the range on Friday, from this intraday high to the intraday low of 7420.20 coupled with the close of 7466.07 (real time 7472.04) a zone bandwidth test. And we did check the honest open, not the official it is the same as the previous days close, and it was circa 7550. Which normally means a breakout the next trading day.

Of course, when we said above that it might be beneficial to the bulls if this market spent the first week in its zone and, although this was the case for most of it, this did not take into consideration the extreme start to the week and then the ensuing no quarter battle to get it back in there.

Therefore, it is scant surprise that there has been considerable change in the ratios. Naturally necessitated by continued high levels of activity.

The changes can be seen above but what is not so evident is the fact that the zone could easily move down to 7250-7350 and, should this happen, it would materially change the entire dynamic of this index for the rest of this expiry.

Otherwise, the main takeaways are the disappearance of all the Y ratio above the zone, and the fact there is now 200-points of the minimal Y1 ratio below it. So, for us, keeping this market in its zone will be hard enough, but if it in itself falls, then a really tough ask, despite the zone bandwidth test on Friday.

 

Range:            7450  to  7550       

Activity:          Good

Type:              On balance only just bullish

 

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Jan
24
2022
January 24th, 2022 by Richard

The start of the Feb expiry gives the FTSE far more scope.

Nb. Our comment from the 01/17/22 (Not published)

Nb. Our comment on 01/24/22

 

We don’t think we can get away with not mentioning the end of the Jan expiry, especially as there was such a huge battle going on between derivatives and equities. And, we were anticipating a move up in the zone to 7350-7450 but, in the end, what we got was 7450-7550. So, the valiant R3 at 7550 that was such a thorn in the equities side in the final fortnight, did eventually capitulate, ending up as the upper boundary of the zone as well as R1. Meaning the EDSP of 7528.28 was actually in the new zone.

Furthermore, the huge levels of activity have continued on into the Feb expiry, so much so it has almost doubled the overall exposure that had been present, and in just one week. Which was rather fitting for an expiry that produced a 3.63% gain over the five-weeks of its length.

Therefore, it comes as no great surprise that the zone in Feb has ended up matching the Jan one, albeit one was at the end of its tenure while the other is just at the start of theirs.

How long will the market stay in its zone, who knows. But we hope it will be for this first week at least, if only just to let the dust settle.

If it doesn’t, then worth noting on the upside 7550 is now just Y2, so in reality, the fact it is the zones upper boundary will probably carry more weight than the level of dynamic delta produced by a Y ratio. The serious levels don’t start until 7650, and if it continues to be as aggressive as last week, then R3 doesn’t kick in until 7700.

On the downside, then what with the recent move up in the zone, it has left a huge amount of Y ratio below it, so the serious levels here don’t start until 7250. So, if you are a bull, then a week in its zone would be very beneficial as it might allow for the ratios down here to build up a bit.

Worth noting also Feb is the more regular four-week trip, and Jan also started their trip in their zone, although back then (20/12/2021) this was 7150-7250.

 

Range:            7450  to  7550       

Activity:          Outstanding

Type:              On balance only just bullish

 

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Jan
17
2022
January 17th, 2022 by Richard

With the rollover and expiry looming the FTSE's zone becomes more significant.

Nb. Our comment from the 01/10/22

As suspected R1 at 7400 didn’t last the night, leaving 7450 to take up that mantle.

And last week R2 was at 7500, and between these two levels they pretty much controlled what was happening in the FTSE.

The Tuesday and Wednesday showed just how desperate this market was to catch up with the rampant US markets, and on both days the market made deep incursions into R2 (above 7500) and even closed just north of it, but it was very plain to see that they really didn’t know how to cope with the persistent futures selling brought about by the R2 amount of dynamic delta.

Thursday was all about 7450, and the actual real world intraday high that day was 7498, not the aberration official 7516 caused by their weird policy. Whilst on this subject the real time close of the FTSE on Tuesday was actually 7497.42, it was the auction that took it to 7505.15, which is a cheat in our book.

Anyway, to more pressing matters, and this week the zone has moved up. Not expected, but also not surprising, and as there are still two weeks to go not that important last week anyway.

The real battle has been with R2, which is now gone, although we are sure 7500 will have legacy impact.

The important level is now 7550, which goes straight to R3 from R1, so will be all the more impactful for that. But, if this market couldn’t really cope with R2, and these levels are exponential, we just can’t see it handling this even greater number.

So, in our view, there is now very limited upside, and if the UK wants to follow the US and run for cover in its zone, then at least that has now moved closer. Nevertheless, the upper boundary is still 150-points south, so not insignificant.

This means 7450 and 7550 are the critical levels this week.

 

Range:            7450  to  7550       

Activity:          Good

Type:              On balance only just bullish

 

Nb. Our comment on 01/17/22

All we can say is that we hope you read last week’s comment (above), as if you did then literally everything that happened last week should have made sense.

The first two days were all about R1 at 7450, the market at that time being in the R1 ratio bandwidth of 7450 to 7550.

Had 7450 failed, then we would have been looking at a rather rapid retracement back to the zone.

But, it held, which meant that the market should then test the other end of this bandwidth, namely 7550.

The trouble here was that it wasn’t just the next level up in the exponential ratio scale, R2, but rather R3.

Which is a very significant increase in the number of futures selling bought about by the dynamic delta.

The fact that the market managed to eke out three new all-time-highs was very impressive under these conditions. The fact that two of them were by just a point or so was therefore all the more understandable.

And we must say it, but over the last three days of last week, on any chart timescale it was increasingly blatant that 7550 was a very serious level of resistance, such was the constant interaction with it and the repeated use of the closing auction to try to influence matters.

So, the bulls are going to be rather dismayed to learn that even after all that constant battering, R3 is still there.

And, to make matters worse, this week it is the rollover and expiry, so the zone is going to be ever more influential.

The good news is that it is looking likely that this will move up to 7350-7450.

But if you thought last week’s battle with R3 was intense, then this final week should just raise the stakes even more. What fun.

 

Range:            7450  to  7550       

Activity:          Very poor

Type:              On balance only just bearish

 

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Jan
10
2022
January 10th, 2022 by Richard

Two critical levels for the FTSE this week, 7450 and 7550.

 

Nb. Our comment from the 01/04/22

Happy New Year to you all and may 2022 bring you all health, wealth and happiness.

Just to recap the first two days of this expiry were all about the zone, and 7250 did prove critical (please see above).

But thereafter it definitely got its Santa rally hat on and R1 was the next stop, then at 7350.

When we last published it had only just become R1 by a fingernail from the Y2 it had been on the 16th Dec, two trading days prior, so coming under assault from the rampant market we suspect it beat a very hasty retreat.

This means that by the end of last week we firmly believe R1 was at 7400, where it is today.

This then makes perfect sense of the price action last week, especially all the concentrated activity around 7403 on the Thursday and Friday.

Looking forward, as you can see in the above table, 7400 is still R1, but only just, and we wouldn’t expect it to remain so for much more than a day.

7450 is another matter entirely, and is in fact just a smidgen below the R2 threshold.

Which is actually the same situation for 7500, apart from this threshold being R3.

So, it is great it made a new all-time-high, and there is even scope for it to go back there again, but the dynamic delta futures selling brought about by R1 at 7450 and backed up by R2 at 7500 will certainly take the steam, and perhaps enthusiasm out of this market should it test these levels we believe.

On the other hand, and don’t forget we still have three weeks to go in this expiry, the zone is now 200-points south, with virtually no ratio in-between.

 

Range:            7250  to  7400       

Activity:          Moderate

Type:              Neutral

 

 

Nb. Our comment on 01/10/22

 

As suspected R1 at 7400 didn’t last the night, leaving 7450 to take up that mantle.

And last week R2 was at 7500, and between these two levels they pretty much controlled what was happening in the FTSE.

The Tuesday and Wednesday showed just how desperate this market was to catch up with the rampant US markets, and on both days the market made deep incursions into R2 (above 7500) and even closed just north of it, but it was very plain to see that they really didn’t know how to cope with the persistent futures selling brought about by the R2 amount of dynamic delta.

Thursday was all about 7450, and the actual real world intraday high that day was 7498, not the aberration official 7516 caused by their weird policy. Whilst on this subject the real time close of the FTSE on Tuesday was actually 7497.42, it was the auction that took it to 7505.15, which is a cheat in our book.

Anyway, to more pressing matters, and this week the zone has moved up. Not expected, but also not surprising, and as there are still two weeks to go not that important last week anyway.

The real battle has been with R2, which is now gone, although we are sure 7500 will have legacy impact.

The important level is now 7550, which goes straight to R3 from R1, so will be all the more impactful for that. But, if this market couldn’t really cope with R2, and these levels are exponential, we just can’t see it handling this even greater number.

So, in our view, there is now very limited upside, and if the UK wants to follow the US and run for cover in its zone, then at least that has now moved closer. Nevertheless, the upper boundary is still 150-points south, so not insignificant.

This means 7450 and 7550 are the critical levels this week.

 

Range:            7450  to  7550       

Activity:          Good

Type:              On balance only just bullish

 

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Jan
04
2022
January 4th, 2022 by Richard

Looks like the FTSE is heading straight away into tough ratio levels in 2022.

 

Nb. Our comment from the 12/20/21

In our last comment on the December expiry, we said “then holding this market between 7250 and 7350 should be the order of the week” and as the EDSP was 7264.53 we can only surmise that they did a good job.

However, quite often the settlement of one expiry can lead to problems for the next one, especially if the zones are not aligned.

And although this is the case here, the discrepancy isn’t so great and anyway there is a hundred points of the very minimal Y1 ratio above the January zone.

This should make for a very decent start to this expiry, as this 100-points of Y1 ratio together with a 100-points of the zone means that there is plenty of space for this index to play around in.

The one word of caution is that in just a few days, which you can see by comparing the two tables above, there has been a huge loss of Y ratio already. Although this may not continue, it is perhaps wise to be aware of the trend.

Also, January is a 5-week expiry and this, the first “extra” week can therefore sometimes be very quiet, although with everything that’s going on at the moment, we can’t see it getting away with this in the current climate.

Otherwise, looking at the above table, it is obvious there is far more ratio above the zone than below it, although this bias has been undone by the recent activity to a large extent, it is still significant and may yet come into effect as this expiry progresses.

In the meantime, obviously 7250 is the first critical level to watch out for, thereafter the next ones are in the table above for you.

 

Range:            7250  to  7350       

Activity:          Strong

Type:              On balance bearish

 

 

 

Nb. Our comment on 01/04/22

 

Happy New Year to you all and may 2022 bring you all health, wealth and happiness.

Just to recap the first two days of this expiry were all about the zone, and 7250 did prove critical (please see above).

But thereafter it definitely got its Santa rally hat on and R1 was the next stop, then at 7350.

When we last published it had only just become R1 by a fingernail from the Y2 it had been on the 16th Dec, two trading days prior, so coming under assault from the rampant market we suspect it beat a very hasty retreat.

This means that by the end of last week we firmly believe R1 was at 7400, where it is today.

This then makes perfect sense of the price action last week, especially all the concentrated activity around 7403 on the Thursday and Friday.

Looking forward, as you can see in the above table, 7400 is still R1, but only just, and we wouldn’t expect it to remain so for much more than a day.

7450 is another matter entirely, and is in fact just a smidgen below the R2 threshold.

Which is actually the same situation for 7500, apart from this threshold being R3.

So, it is great it made a new all-time-high, and there is even scope for it to go back there again, but the dynamic delta futures selling brought about by R1 at 7450 and backed up by R2 at 7500 will certainly take the steam, and perhaps enthusiasm out of this market should it test these levels we believe.

On the other hand, and don’t forget we still have three weeks to go in this expiry, the zone is now 200-points south, with virtually no ratio in-between.

 

Range:            7250  to  7400       

Activity:          Moderate

Type:              Neutral

 

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Dec
20
2021
December 20th, 2021 by Richard

As the FTSE Jan expiry starts there is an awful lot of minimal Y ratio around.

 

Nb. Our comment from the 12/16/21 (Not published)

Nb. Our comment on 12/20/21

 

In our last comment on the December expiry, we said “then holding this market between 7250 and 7350 should be the order of the week” and as the EDSP was 7264.53 we can only surmise that they did a good job.

However, quite often the settlement of one expiry can lead to problems for the next one, especially if the zones are not aligned.

And although this is the case here, the discrepancy isn’t so great and anyway there is a hundred points of the very minimal Y1 ratio above the January zone.

This should make for a very decent start to this expiry, as this 100-points of Y1 ratio together with a 100-points of the zone means that there is plenty of space for this index to play around in.

The one word of caution is that in just a few days, which you can see by comparing the two tables above, there has been a huge loss of Y ratio already. Although this may not continue, it is perhaps wise to be aware of the trend.

Also, January is a 5-week expiry and this, the first “extra” week can therefore sometimes be very quiet, although with everything that’s going on at the moment, we can’t see it getting away with this in the current climate.

Otherwise, looking at the above table, it is obvious there is far more ratio above the zone than below it, although this bias has been undone by the recent activity to a large extent, it is still significant and may yet come into effect as this expiry progresses.

In the meantime, obviously 7250 is the first critical level to watch out for, thereafter the next ones are in the table above for you.

 

Range:            7250  to  7350       

Activity:          Strong

Type:              On balance bearish

 

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Dec
13
2021
December 13th, 2021 by Richard

As we enter the rollover and expiry for the mighty Dec might the FTSE just get a quiet one?

 

Nb. Our comment from the 12/08/21

Well thankfully we didn’t have to wait very long before the writing was on the wall, as the very day we published (29th Nov) the FTSE finished at 7109.95, comfortably back above its zone.

And, as we pointed out, that now it had a lot more Y ratio above it. In fact, 200-points worth of it back then.

However, it wasn’t very gung-ho last week, as on the Tuesday it closed just above the top boundary, and on Wednesday the intraday low was 7059.35. Furthermore, the next day it never even came close.

Obviously, not out of the woods, but the signs were there.

Apologies for not publishing on our usual Monday, as we will now never know when R1 disappeared at 7250, although it may have provided a speed bump on Monday 6th Dec as the intraday high was 7246.25.

It will be very interesting and revealing how this market will react to R2 at 7350, the first real test it has had for some considerable time. And as such, it may just come as a surprise to the bulls.

However, if they are committed enough to push through it is clear up to R3 at 7450, but we feel we should point out that this is just below the DR threshold, so would be a very tough ask indeed. Then if it does break through this it is just in a world of dynamic delta futures selling that we just can’t see it coping with.

Of course, everything can change rapidly as we approach the rollover and expiry, but as this is next week and will bring its own peculiar pressures to bear, we see a limited upside as things stand.

Still, it has been an absolute corker of an expiry so far, so it’s nice to see the mighty Dec holding true to form.

 

Range:            7050  to  7350       

Activity:          Very poor

Type:              On balance not bearish

 

 

Nb. Our comment on 12/13/21

 

Again, it was rather fortuitous timing on our publication, as from the 8th onwards it was all about R2 at 7350.

As one can see in the above table, 7350 is still R2 and 7450 remains at R3. However, we must point out that after the battering it has taken R2 is now only just above the threshold and, R3 is now no longer just below the DR threshold, but rather nearer midway.

So, now it will be all about the bull’s commitment versus the impending rollover and expiry.

Now, this would be a very serious battle considering where the zone is currently as well as all that Y ratio in-between but, in another development, we can easily see 7250-7350 becoming the new zone, having fallen 43.49% in just the last three days.

When the biggest expiry of the big ones enters its final week, it can get very excitable as there is a naturally created derivative inspired giant leap in activity, both futures and equity based, and this can always lead to a misdiagnosis.

But, in the absence of this, then with R2 still at 7350, and assuming the zone does move, then holding this market between 7250 and 7350 should be the order of the week.

7350 speaks for itself, and there is no longer any ratio surprise at that level anymore, and another visit would be strike 3 anyway but, it is the other end that provides the concern.

As, even if the zone does shift, then the new bottom boundary will only be reinforced by Y2 ratio so, should the market test this level, then that will be the harder one to hold.

Always good to get past the mighty Dec rollover and expiry, then the market can concentrate on the Santa rally, but this final week is always an exciting time.

 

Range:            7050  to  7350       

Activity:          Moderate

Type:              Bearish

 

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Dec
08
2021
December 8th, 2021 by Richard

First real test for the FTSE rally up from its zone dead ahead.

 

Nb. Our comment from the 11/29/21

Again, yet another perfect example of why we start by repeating our previous comment (see above) as not only does it act as an aide memoire but, it also saves us having to reference it when our levels are hit.

We are of course referring to 7050, and last Friday the market dropped like a stone, some would even argue hitting terminal velocity it was so quick, all the way down to 7051.24, which remained the intraday low until the last few minutes.

And it was a spectacular bounce off this level, made all the more obvious by being on the end of a very long wick (if you are into candlesticks of course), ending up in a rally of about 70-points.

However, it is the end of the day that counts and so, with little surprise from a ratio perspective, it ended up safely in its zone.

This will make today a very crucial day, and both the upper and bottom boundaries now become very significant.

Of course, there is no way we could have predicted a new mutant variant strain, but in truth what the ratios tell you is what is possible, not the cause. If it wasn’t this it would very probably have been something economical for example.

Obviously, for sanity alone, we would love to see this market excitedly whizz around in its zone for the next two weeks. But, failing this, don’t forget below the bottom boundary it is bear territory, and so, should this market get there, this move will take on an entirely different complexion.

Back above the upper boundary, and we are just back to where we were. Although, there has been quite a shake up in the ratios, so there is a lot more minimal Y ratio around now.

Hopefully we will see soon enough, relax in its zone or will one or the other of the bulls or bears take control?

 

Range:            6950  to  7050       

Activity:          Poor

Type:              On balance only just bullish

 

 

Nb. Our comment on 12/08/21

 

Well thankfully we didn’t have to wait very long before the writing was on the wall, as the very day we published (29th Nov) the FTSE finished at 7109.95, comfortably back above its zone.

And, as we pointed out, that now it had a lot more Y ratio above it. In fact, 200-points worth of it back then.

However, it wasn’t very gung-ho last week, as on the Tuesday it closed just above the top boundary, and on Wednesday the intraday low was 7059.35. Furthermore, the next day it never even came close.

Obviously, not out of the woods, but the signs were there.

Apologies for not publishing on our usual Monday, as we will now never know when R1 disappeared at 7250, although it may have provided a speed bump on Monday 6th Dec as the intraday high was 7246.25.

It will be very interesting and revealing how this market will react to R2 at 7350, the first real test it has had for some considerable time. And as such, it may just come as a surprise to the bulls.

However, if they are committed enough to push through it is clear up to R3 at 7450, but we feel we should point out that this is just below the DR threshold, so would be a very tough ask indeed. Then if it does break through this it is just in a world of dynamic delta futures selling that we just can’t see it coping with.

Of course, everything can change rapidly as we approach the rollover and expiry, but as this is next week and will bring its own peculiar pressures to bear, we see a limited upside as things stand.

Still, it has been an absolute corker of an expiry so far, so its nice to see the mighty Dec holding true to form.

 

Range:            7050  to  7350       

Activity:          Very poor

Type:              On balance not 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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Nov
29
2021
November 29th, 2021 by Richard

FTSE ends in its zone after new variant scare.

 

Nb. Our comment from the 11/22/21

 

Welcome to the big one, the cumulation of everything done so far this year.

Although easily the biggest of the year, by a huge margin over the intermediaries but, even over the previous three triples, it is ahead by a very decent amount.

Therefore, by this very nature, it is more cumbersome and unwieldly which should be borne in mind. As should the fact that because it is so massive there is normally a significant uptick in the derivative related equity business, which more often than not gets misdiagnosed, but also means they get emboldened to take on higher ratio levels than they normally would.

However, just looking at the table above and the main issue is going to be the zone.

It is currently 6950-7050, which is actually lower than it was in the Nov expiry, but it could very easily move to 7050-7150 and there is even an outside chance of it getting to 7250-7350 further down the line during this expiry.

This means, to us at least, that where the zone is will play a crucial role for this trip so we will keep you posted as best we can.

Otherwise, the other critical levels to watch are R3 at 7350, as although R3 should not be particularly troublesome in the mighty Dec expiry it does have history and proved to be an important level in Nov. Then 7450 is a far more robust resistance level, and DR ratio amount of dynamic delta there is enough for even this expiry to sit up and take notice.

On the support side, well this will really be down to the bottom boundary of the zone. So, currently at 6950, but also keep a wary eye on 7050.

Otherwise, just enjoy the ride and surf along on the volume spike.

 

Range:            7150  to  7350       

Activity:          Poor

Type:              Neutral

 

 

Nb. Our comment on 11/29/21

 

Again, yet another perfect example of why we start by repeating our previous comment (see above) as not only does it act as an aide memoire but, it also saves us having to reference it when our levels are hit.

We are of course referring to 7050, and last Friday the market dropped like a stone, some would even argue hitting terminal velocity it was so quick, all the way down to 7051.24, which remained the intraday low until the last few minutes.

And it was a spectacular bounce off this level, made all the more obvious by being on the end of a very long wick (if you are into candlesticks of course), ending up in a rally of about 70-points.

However, it is the end of the day that counts and so, with little surprise from a ratio perspective, it ended up safely in its zone.

This will make today a very crucial day, and both the upper and bottom boundaries now become very significant.

Of course, there is no way we could have predicted a new mutant variant strain, but in truth what the ratios tell you is what is possible, not the cause. If it wasn’t this it would very probably have been something economical for example.

Obviously, for sanity alone, we would love to see this market excitedly whizz around in its zone for the next two weeks. But, failing this, don’t forget below the bottom boundary it is bear territory, and so, should this market get there, this move will take on an entirely different complexion.

Back above the upper boundary, and we are just back to where we were. Although, there has been quite a shake up in the ratios, so there is a lot more minimal Y ratio around now.

Hopefully we will see soon enough, relax in its zone or will one or the other of the bulls or bears take control?

 

Range:            6950  to  7050       

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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