Mar
21
2022
March 21st, 2022 by Richard

Interesting zone placement in the FTSE April expiry, and with so much Y1 about this should make for a wild ride.

 

Nb. Our comment from the 03/17/22 (Not published)

Nb. Our comment on 03/21/22

 

For the record the FTSE spent the entire rollover Wednesday in its zone, so that was definitely job done. The Thursday and Friday are then just free to do what they want after that really.

Looking at the April expiry and we have to remind everyone that we just crunch the numbers and then try to interpret the results, so we have no control whatsoever as to what those numbers actually are.

We are pointing this out as it does look a very weird expiry.

First up is the fact the zone is 7550-7650 which, when you consider this market just a fortnight ago was battling it out with the ratio at 6950, is just a little odd.

It is basically as if the March expiry never happened.

Secondly, and probably as a direct result of the very high zone, there is a 400-point wide Y1 ratio bandwidth below it. That’s 5.4%, and this is just to start.

Obviously, the zone could easily move anywhere in this bandwidth, which might change the picture somewhat, but one thing that won’t change that quickly is that this is a huge expanse with absolutely minimal ratio in it.

Then when you add in the zone itself and the Y ratio above it, you are then staring at a possible trading range of 7150 all the way up to 7700, a staggering 550-points, or 7.4%. And this is a normal 4-week expiry, well not entirely normal as it expires on Thursday 14th due to the Bank Holiday.

Definitely going to be a fun trip this expiry, so best buckle-up tight.

 

Range:            7150  to  7550       

Activity:          Strong

Type:              On balance bearish

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Mar
14
2022
March 14th, 2022 by Richard

7250 could be the level to watch for in the FTSE for the rollover and expiry this week.

 

Nb. Our comment from the 03/07/22

Well, we did say we could easily see a test of 7050 as, not only would that be in keeping with a triple, but under the present circumstances probably even more so.

The fact that this meant a tumble of just over 400-points, or 5.36%, meant that there was a huge amount of momentum inherent in the market, and obviously too much for the ratio at 7050 to cope with.

Although, having just said that, after the initial fall on Friday for most of the rest of the trading day the action did revolve around 7050, only capitulating in the final half hour.

And that is how the dynamic delta works, as the ratios just tell you where it is and how much of it to expect. What the ratios can’t tell you is the appetite of the market. So, at 7050 we know there will be a “DR” number of futures buying courtesy of the dynamic delta, what we don’t know is if this will be met by as many willing sellers.

However, generally we do get a feel for the market’s sensitivity, or an indication of how it will react to the levels of ratio, but under the current climate we can safely say that these are not normal times.

That said, the next ratio level coming up in the FTSE is B1 at 6950.

And as our levels are exponential, then this is a very significant number of futures buying generated by the dynamic delta. What we don’t know is whether this will be more than the market is willing to sell.

Under normal conditions we would have no hesitation in saying that this would be more than sufficient to turn the market but, with a war raging, who knows.

Finally, in the midst of all this excitement, it would be easy to miss the fact that the zone has slipped down to 7350-7450. This might not be so important in the next few days but, if any hint of normality returns, then it could become significant when we get closer to the rollover and expiry.

 

Range:            6950  to  7050       

Activity:          Poor

Type:              Bearish

 

 

Nb. Our comment on 03/14/22

What an absolutely epic battle with B1 the FTSE had.

And we must point out that on both Monday and Tuesday the actual open was 6890 and 6870 respectively, both being significantly below B1 at 6950, not the official 6987 and 6959.

Although on the Monday the market jumped 100-points straight up in just a few minutes such was the reaction to the dynamic delta unleased at the open.

Despite the deep incursion into B1, almost entirely down to huge gap downs at the open, the close on Monday was 6959.48 and on Tuesday 6964.11. Job done really.

Considering the gravity of the situation coupled with the obvious panic out there it was truly fascinating to watch how the market reacted to the dynamic delta and, naturally, we can’t not mention the SPX and their encounter with R2 at 4165.

Looking ahead, it is significant that the zone has fallen yet again and, it’s not beyond the possible that it might even return to where it started this expiry, at 7150-7250.

Although we have listed below the activity level as “moderate”, as this is a triple, where the numbers are just far far greater than an intermediary, this is actually very good. So, should this continue then there will no doubt be more changes.

It seems a very long time ago indeed when this index challenged R1 at 7550 north of its zone, the expiry high being on the very first day (21st Feb) at 7571.07 and again on the following Wednesday with the intraday high of 7549.98.

Therefore, considering how far this market has come back, and the nomadic nature of the zone, we think it will do well to hold the rollover and expiry in the Y ratio bandwidth. Although, we of course would like to see it end in its zone, but we have to be practical to a degree.

As 7250 is the current bottom boundary of its zone, which if it does return to its starting point, this would make 7250 the upper boundary, so in both scenarios we see this as a critical level this week.

 

Range:            7150  to  7250       

Activity:          Moderate

Type:              Bullish

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Mar
07
2022
March 7th, 2022 by Richard

Huge Ratio level coming up in the FTSE.

 

Nb. Our comment from the 02/28/22

Apologies for not publishing last week, especially as we appreciate it might have been rather useful to know the ratio levels. In particular, that the zone at the start of this expiry was at 7200. Coincidentally, 7200 was the low and close on Thursday.

However, before this, the pertinent ratio level was R1 at 7550.

On Monday 21st the intraday high was 7571.07 before the market gave up just under 100-points.

Then on Wednesday 23rd it revisited it with the intraday high of 7549.98, before giving up 50-points.

The fact that the zone has moved up to its current position was always on the cards but, as we have mentioned previously, because triple witching expiries are so much bigger than the intermediaries then it’s like turning an oil tanker, very slow.

The problem the FTSE faces now, is that by leaving the move so late, it has left a vast swathe of the minimal Y ratio around, but especially below the zone.

And if this wasn’t bad enough, as triple expiries progress, they tend to get far less sensitive than intermediaries, so rather than reacting to R1 it would be entirely in keeping if March went on to test R3 or even higher levels.

And March still has three weeks to go, so we could easily see a range of 7050 all the way up to 7650, although it hasn’t done badly already, going from 7550 down to 7200 and back up again.

Probably be too big an ask to see it see this week out in its zone, but you never know.

 

Range:            7450  to  7550       

Activity:          Poor

Type:              Bearish

 

 

 

Nb. Our comment on 03/07/22

 

Well, we did say we could easily see a test of 7050 as, not only would that be in keeping with a triple, but under the present circumstances probably even more so.

The fact that this meant a tumble of just over 400-points, or 5.36%, meant that there was a huge amount of momentum inherent in the market, and obviously too much for the ratio at 7050 to cope with.

Although, having just said that, after the initial fall on Friday for most of the rest of the trading day the action did revolve around 7050, only capitulating in the final half hour.

And that is how the dynamic delta works, as the ratios just tell you where it is and how much of it to expect. What the ratios can’t tell you is the appetite of the market. So, at 7050 we know there will be a “DR” number of futures buying courtesy of the dynamic delta, what we don’t know is if this will be met by as many willing sellers.

However, generally we do get a feel for the market’s sensitivity, or an indication of how it will react to the levels of ratio, but under the current climate we can safely say that these are not normal times.

That said, the next ratio level coming up in the FTSE is B1 at 6950.

And as our levels are exponential, then this is a very significant number of futures buying generated by the dynamic delta. What we don’t know is whether this will be more than the market is willing to sell.

Under normal conditions we would have no hesitation in saying that this would be more than sufficient to turn the market but, with a war raging, who knows.

Finally, in the midst of all this excitement, it would be easy to miss the fact that the zone has slipped down to 7350-7450. This might not be so important in the next few days but, if any hint of normality returns, then it could become significant when we get closer to the rollover and expiry.

 

Range:            6950  to  7050       

Activity:          Poor

Type:              Bearish

 

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Feb
28
2022
February 28th, 2022 by Richard

The FTSE March expiry ratios need to settle.

 

Nb. Our comment from the 02/21/22 (Not published)

Nb. Our comment on 02/28/22

 

Apologies for not publishing last week, especially as we appreciate it might have been rather useful to know the ratio levels. In particular, that the zone at the start of this expiry was at 7200. Coincidentally, 7200 was the low and close on Thursday.

However, before this, the pertinent ratio level was R1 at 7550.

On Monday 21st the intraday high was 7571.07 before the market gave up just under 100-points.

Then on Wednesday 23rd it revisited it with the intraday high of 7549.98, before giving up 50-points.

The fact that the zone has moved up to its current position was always on the cards but, as we have mentioned previously, because triple witching expiries are so much bigger than the intermediaries then it’s like turning an oil tanker, very slow.

The problem the FTSE faces now, is that by leaving the move so late, it has left a vast swathe of the minimal Y ratio around, but especially below the zone.

And if this wasn’t bad enough, as triple expiries progress, they tend to get far less sensitive than intermediaries, so rather than reacting to R1 it would be entirely in keeping if March went on to test R3 or even higher levels.

And March still has three weeks to go, so we could easily see a range of 7050 all the way up to 7650, although it hasn’t done badly already, going from 7550 down to 7200 and back up again.

Probably be too big an ask to see it see this week out in its zone, but you never know.

 

Range:            7450  to  7550       

Activity:          Poor

Type:              Bearish

 

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Feb
14
2022
February 14th, 2022 by Richard

As the FTSE enters the rollover and expiry the focus should revert back to its zone.

 

Nb. Our comment from the 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

 

 

Nb. Our comment on 02/14/22

 

And work for it they did, although they did wait until Tuesday before attacking R1.

Well, we presume R1 was still at 7600 on Tuesday but we just don’t know for sure as we should, but we don’t, calculate these ratios daily.

Even last Monday it was just over the threshold, as was R2 at 7650, so it wouldn’t have taken very much at all to get it to slip a little bit further.

Both R1 and R2 are today about the middle of their range, so we would expect them to be the same tomorrow.

But, this week, being the rollover and expiry, it should all return to being about the zone.

As it stands that means a target of below 7550 but, as is always the way when the time runs out, there are a lot of position changes. Obviously, we can’t predict what these will be but, on the evidence so far, if 7600 continues to lose its ratios at the same pace as it is currently, then we could easily see a zone move to 7550-7650 for example.

Which is a very long way from the start of this expiry when it was looking like 7250-7350 might be the next zone.

Whether or not the zone does actually move it means that 7650 is going to be the critical point this week, so watch it closely.

Another aspect to bear in mind is what is happening across the pond, as although the SPX has been around or below 4500, we still haven’t seen that zone move. Interestingly, in the potentially opposite direction to what may happen here. But the point is, that as expiry approaches it is looking like the ratio forces that will come to bear here should exert a downward pressure, whereas over there it should be upwards.

And, don’t forget, next up is the first triple of the year.

 

Range:            7550  to  7650        or        7650  to  7700       

Activity:          Average

Type:              Bearish

 

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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

 

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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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

 

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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