Feb

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

Then on Wednesday 23^rd 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

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.

Posted in Uncategorized Tagged with: derivatives, FTSE, ftse100, Futures, indices, investing, Markets, Options, shares, stock exchange, stocks, trading

Feb

23

2022

February 23rd, 2022 by Richard

The March triple expiry starts deep in bear territory.

Nb. Our comment from the 02/18/22 (Not published)

Nb. Our comment for 02/23/22

The February settlement price was 4383.70, so a little way below the zone (which finished at 4445-4455) but easily within the Y1 ratio, so as good as it was going to get.

Of course, US markets were closed on Monday, so this is only the second day of the first triple witching expiry of 2022, an expiry that was always destined to start life below its zone.

Which should have come as no surprise, as this market has been in bear territory for some time, on top of which the zone had started falling, having threatened to for so long.

So, with everything else going on, the overriding question was where, or if, this market would get some support.

As one can see in the tables above Y2 was 4390, last Friday as well as Tuesday, but has fallen today to 4345. Considering the market closed on Friday at 4348.87 this was a moot point anyway.

The real level to watch would have been R1, which has remained the same since last Friday. So, yesterdays intraday low of 4267.11 gives us a very good insight as to what level of sensitivity exits in this expiry. And, although it did overshoot by twenty odd points, this is not disappointing because firstly, yesterday was the first day so the market naturally takes a bit of time to adjust, and secondly, it was always going to react to the geopolitical news and be playing catch-up with Europe.

The telling point was the close, back above R1.

Then, the fact R1 has remained at this level today is also reassuring.

It is by no means out of the fire yet, but as an early indication that it will respond to the dynamic delta is a good sign, as irrational fear (or greed) is never good.

Now, we just have to see how the ratio levels evolve, and as they are already dropping below the zone this is a bearish sign but, early days.

Range: 4295 to 4495

Activity: Poor

Type: Neutral

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.

Posted in Uncategorized Tagged with: derivatives, Futures, indices, investing, Markets, Options, shares, SP500, spx, stock market, stocks, trading

Feb

16

2022

February 16th, 2022 by Richard

At last the SPX's zone moves, but is it too little too late?

Nb. Our comment from the 02/08/22

As we said last week, the rally told us nothing until it reached its zone.

Which it did on Wednesday 2^nd with the intraday high of 4595.31 just touching the bottom boundary of its zone.

The fact that the market is well below 100-points this level now just tells us how thin it all is out there, and that the bulls last week were just not interested in taking on any futures at all.

Unfortunately, after Wednesday it gets a little bit more complicated as, although the bulls are still waiting in the wings, it seems like so are the bears.

The real problem for us is the total lack of interest in getting the zone to move down to 4495-4505, and thereby confirming the down trend.

To make matters worse, it hasn’t really changed at all. So, a small push could easily still see 4500 become the next zone, but it seems practically frozen in time. Made all the weirder when you consider this market has been at or below it for the last three days, providing ideal conditions for it to actually decide.

Obviously, we would love this to be all cut and dried for you, but the fact remains that if the market doesn’t know what it wants to do then it will quite simply reflect that here.

We have seen a pickup in bullish activity over the last few days, but this has hardly been conclusive.

So, all we can say, is that being below its current zone the market is in bear territory. And that, as evidenced by the pullback from the zone, the bulls are currently in hiding.

However, there is one further aspect we should add, and this is that sometimes, just like the turning of the tide, you get that indecisive period where it just doesn’t know whether it’s meant to be coming or going.

Basically, watch this space, as we will let you know as soon as possible when we get something more definitive.

Range: 4320 to 4595

Activity: Moderate

Type: On balance just bearish

Nb. Our comment for 02/08/22

When we said last week “to watch this space…until we get something more definitive”, well that was last Wednesday 9^th. Basically, with the intraday high of 4590.03 falling just shy of the then zones bottom boundary, having tested it the week before with 4595.31, then this should have been the definition you were looking for.

Of course, many, including us, would have very probably waited until the open the next day, as it could have easily been one of those instances when they stop just shy (knowing full well what awaits them in real time) and then use the opening auction to leap-frog the problematic level. Although 5-points in this index is quite a gap.

Anyway, the rest is history as they say as we come onto our next point, which is that the focus this week, being rollover and expiry, is the zone.

And, as we mentioned in Monday’s comment on the FTSE that although their zone was below the market, here, even if the zone here moved to 4500, it would still be above the market.

The delay in moving persisted, and although it was increasingly obvious from Thursday last week, the actual move down didn’t occur until yesterday.

Happily coinciding with a bit of a rally, which sadly stopped short.

And this is part of the problem when the zone takes so long to move, although in its defence this is the first meaningful backwards move it has made in years, so perhaps a bit understandable, is that the ratios underneath continue to erode. Especially so if the market goes way below it.

The end result being that 4470-4480 is now where 4500 was a week ago, so perhaps it hasn’t stopped short? In fact, it could even be 4445-4455, such is the dearth of ratio.

And this is the big takeaway at the moment, by delaying the move down in the zone, the ratios below the intended target have eroded so much that the entire Y1 ratio bandwidth now stretches for an amazing 340-points. So, wherever the zone does end up, it will be a blessing that this index is even close to it as it could literally be anywhere within this enormous bandwidth.

The only other saving grace might be that the first triple of the year, the March expiry, may just affect proceedings to a degree.

Range: 4365 to 4495

Activity: Moderate

Type: Neutral

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.

Posted in Uncategorized Tagged with: derivatives, Futures, indices, investing, Markets, Options, shares, SP500, spx, stock market, stocks, trading

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

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.

Posted in Uncategorized Tagged with: derivatives, FTSE, ftse100, Futures, indices, investing, Markets, Options, shares, stock market, stocks, trading

Feb

08

2022

February 8th, 2022 by Richard

Is the tide turning for the SPX?

Nb. Our comment from the 01/26/22

Well, they have certainly stabilised the ship, but whether the initial issue has been corrected we feel the jury is still out on that one.

As this index has plumbed the depths, well R2 to be precise, then it is no surprise at all that there has been a considerable change in the ratios.

Though the question is this; has the “norm” been reversed?

By this we mean the normality of the last couple of years where the ratios recede above a rising zone while the market just keeps knocking on the door until it relents.

The answer is that it did change, with the “very good” activity resulting in the ratios above the zone advancing while those below receded. And, although 4500 came within a whisker of being the new zone, we haven’t had a down move yet.

This is not to say this may not happen again but, at the moment at least, normal service has been resumed.

However, the huge changes in the ratios can be seen in the above table, where our old friend 4295 is now R1. Incidentally, both R2 and R3 have been lower, today has seen them recover slightly. Seemingly, the biggest changes have been saved for above the zone, where Y2 has gone altogether and R3 makes an appearance, which doesn’t happen often these days, especially in an intermediary expiry. But, both R1 and R2 have made considerable inroads, something we are just simply not used to these days.

Looking ahead, then 4495-4505 is still an important level, and therefore what the market does today may well decide whether or not it still has any designs on becoming the next zone, at least for the rest of this week that is.

Otherwise, this market has bounced of R2, and has now powered all the way back up through the minimal Y ratio, so no prizes there. And, as we have said so many times before, this is just how it is these days because of the amazingly wide Y ratio bandwidths.

Depending on what happens with 4500, this rally tells us very little, and it won’t until, or if, it reaches the current zone. So, enjoy the Y ratios volatility and potential whipsaw, but don’t fooled into believing it’s something it is not.

Range: 4295 to 4595

Activity: Poor

Type: Bearish

Nb. Our comment for 02/08/22

As we said last week, the rally told us nothing until it reached its zone.

Which it did on Wednesday 2^nd with the intraday high of 4595.31 just touching the bottom boundary of its zone.

The fact that the market is well below 100-points this level now just tells us how thin it all is out there, and that the bulls last week were just not interested in taking on any futures at all.

Unfortunately, after Wednesday it gets a little bit more complicated as, although the bulls are still waiting in the wings, it seems like so are the bears.

The real problem for us is the total lack of interest in getting the zone to move down to 4495-4505, and thereby confirming the down trend.

To make matters worse, it hasn’t really changed at all. So, a small push could easily still see 4500 become the next zone, but it seems practically frozen in time. Made all the weirder when you consider this market has been at or below it for the last three days, providing ideal conditions for it to actually decide.

Obviously, we would love this to be all cut and dried for you, but the fact remains that if the market doesn’t know what it wants to do then it will quite simply reflect that here.

We have seen a pick up in bullish activity over the last few days, but this has hardly been conclusive.

So, all we can say, is that being below its current zone the market is in bear territory. And that, as evidenced by the pullback from the zone, the bulls are currently in hiding.

However, there is one further aspect we should add, and this is that sometimes, just like the turning of the tide, you get that indecisive period where it just doesn’t know whether it’s meant to be coming or going.

Basically, watch this space, as we will let you know as soon as possible when we get something more definitive.

Range: 4320 to 4595

Activity: Moderate

Type: On balance just bearish

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

Posted in Uncategorized Tagged with: derivatives, Futures, indices, investing, Markets, Options, SP500, spx, stock market, trading

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