September 21st, 2021 by Richard

Starting the Oct expiry below its zone was bit of a shock for the SPX it seems.

 

Nb. Our comment from the 09/16/21 (Not published)

 

Nb. Our comment for 09/21/21

 

The important aspect is that anyone who has read our comments over the last few expiries should have been in no doubt whatsoever about this potential pullback.

The only shame is that we still don’t publish the ending expiry ratio table next to the forthcoming expiry ratio table in the rollover week, as then you would have also known about which levels to watch out for.

Interestingly the zone in October has been very solid where it is, despite September’s jump to 4500. We say “interestingly” as just like the FTSE, where this index closed last Friday was below it, and therefore in bear territory.

However, the really critical level yesterday, was Y2 at 4340, as had you known that it was there you would have picked up on the support it gave this index for at least half an hour, before capitulating. The fact the market then went a further 35-points below it, had us looking at R1 as the next level but, and this was probably more to do with the DJX, it recovered. Also, on the very first day of an expiry, especially when markets are challenging virgin territory, the actual ratio levels can be somewhat formative, and as you can see in the above table, last Thursday Y2 was actually 4295. For the record, yesterdays intraday low was 4305.91.

Perhaps more significant for today, was yesterdays close, which was back above Y2.

Possibly most important of all, it has seemingly galvanised everyone as we have now had two consecutive days of “strong” activity here, on what was otherwise shaping up to be yet another expiry when the market was stuck in automatic.

The end result of this has been the Y1 ratio bandwidth only being 190-points, and the overall Y ratio bandwidth just 345-points. Of course, these are still stupidly wide, but both are considerably less wide than they have been, and furthermore, at least so far, have reversed the trend of them actually growing wider.

Also, it has certainly kick-started this intermediary expiry into life early on, which will hopefully continue.

 

Range:            4340  to  4445           

Activity:          Strong

Type:              Neutral

 

Available to buy now

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

Posted in Uncategorized Tagged with: , , , , , , ,

September 20th, 2021 by Richard

The FTSE even starts the Oct expiry in bear territory.

 

Nb. Our comment from the 09/17/21 (Not published)

Nb. Our comment on 09/20/21

 

Turns out that there was just one last “hurrah” in the September expiry, and with the EDSP of 7031.68 it was all about the zone at the end.

Which is really what is all about in the October expiry as well, as here the zone is now 7000-7100, which is in fact slightly higher than it was in September.

This does however throw a degree of confusion over whether the support at 6950 on Friday was down to the hangover of Sept’s bottom boundary, or an early test of R1 in Oct.

Either way, it held firm, but it remains a very critical level in this expiry, meaning the first couple of days could decide the next 4-weeks.

If R1 doesn’t hold, and if you compare the two tables above, it has only very recently become R1 from Y2, then the market will find itself in a 250-point wide bandwidth.

Of course, we must also point out that currently this index is below its zone, so it actually starts this expiry already in bear territory, which won’t please many.

Furthermore, the terrible irony of it all, is that all that woe this index had in Sept trying to get past R2 at 7150 and then R3 at 7200 is now no longer a problem, with R1 above the zone not kicking in until 7250.

But, first things first, and that is a hold at R1, and then to recapture its new zone. Otherwise it’s a long way down to R2 support.

Finally, don’t forget that we are now back to an intermediary expiry, so everything gets taken down a notch, or at least it should, as overall activity is about a quarter of what we saw in September’s triple witching expiry.

 

Range:            6950  to  7000       

Activity:          Very good

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.

Posted in Uncategorized Tagged with: , , , , , , ,

September 14th, 2021 by Richard

The SPX zone eventually moves, now it can get on with the rollover and expiry.

 

Nb. Our comment from the 09/07/21

 

After the first week when the SPX made full use of its enormously wide Y1 ratio bandwidth by effectively traversing the entire width of it, last week must have come as bit of a shock.

And there is no doubt about it, but the last week was all about this index struggling to make any more forward progression now it was deeply into the Y2 ratio.

Although this has not been uncommon of late, it is still rather sad, as even Y2 is classed as “minimal”. Especially in a triple.

Anyway, we have eventually seen some movement in Y2 above the zone, as it has now slipped to 4530.

The significance being that, with this level now in retreat, coupled with the market being practically at the same point now, then it is decision time for this index.

Whether to continue to struggle in Y2, or retreat back into the far more comfortable Y1 ratio bandwidth.

If it does choose the latter, then further forward movement could well be limited to how quickly Y2 continues to retreat.

All the while there remains a spectacularly wide Y1 ratio bandwidth beneath it, which still goes all the way down to 4220, a mere 310-points away.

Of course, there is the zone before then, so should the market indeed turn south, then this should provide the first line of support.

But if the SPX follows the pattern of the last few expiries, then we should see it bumping along behind Y2, knocking on that door and hopefully forcing that retreat to at least continue, if not accelerate.

In the meantime, we haven’t seen an expiry recently that the zone itself hasn’t moved up, so come the rollover and expiry next week, even that target could very easily be a lot higher. But all the time the huge Y ratio bandwidths beneath this market will be there, so that risk will also be ever-present.

 

  Range:          4405  to  4590           

Activity:          Poor

Type:              On balance bearish

 

 

Nb. Our comment for 09/14/21

 

And there we have it! The SPX’s zone moves up to 4495-4505.

TBH, it has been a bit like watching paint dry, this move having been flagged for so long.

Furthermore, it has created bit of a schizophrenic index in all truth, as on the one hand the siren-like call of the zone when it was down at 4395-4405 had the market being called in that direction.

However, it was obviously somewhat reluctant, and not just for those stale bulls who had fought so hard with Y2 just the week before but, because the move up to 4495-4505 was imminent any day.

Hence it was sort of stuck in no-man’s land between the two.

One sort of feels that now this has eventually happened, the real rollover and expiry can get underway.

In the meantime, it is going to make for a very interesting day today, as for the first time this expiry, the SPX is now actually below its zone, and therefore, by definition, in bear territory.

If nothing else, this should at least galvanise those bulls, and whether or not they succeed in getting back to the (new) zone for the rollover tomorrow is going to be the big question, a question with very interesting consequences if they don’t.

Interestingly, and as is quite normal these days, we have seen a lot of writing of otm puts, and what with just days to go this can be seen by some as “safe” money, so getting back to the new zone will be rather important to these traders especially.

Overall, the Y1 ratio bandwidth is now 295-points, with the total Y ratio bandwidth coming in at 435-points, so a slight narrowing, but not by anything significant.

This really means that the zone has moved up inside the Y1 ratio bandwidth, rather than being forced in this direction by bullish activity, which is ok, but not representative of a true bull market. Still, it makes for an exciting expiry at least.

 

Range:            4245  to  4495           

Activity:          Average

Type:              Bearish

 

Available to buy now

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

Posted in Uncategorized Tagged with: , , , , , , ,

September 13th, 2021 by Richard

Can the FTSE hold in its zone for the rollover and expiry?

 

Nb. Our comment from the 09/06/21

Here we are at the halfway point of the September triple witching expiry and all we can say is that R2 at 7150 is having an amazingly robust and everlasting effect on this index.

Far more than we would ever have credited it with, and historically far more than it has before in one of the big expiries.

The only conclusion we can draw from this is that it is not the amount of dynamic delta that is producing R2’s longevity, but rather the lack of commitment by the practitioners.

However, what we have seen before, and especially in the third week, is that equities can take control, normally by means of an upbeat note on one (or two) of the heavyweight sectors like Financials, and the resultant jump in their collective share prices tend to get the market up and over this hurdle.

The trouble here is, that just over the R2 hurdle it faces R3 at 7200, and then DR at 7250, and all the while the expiry clock is ticking.

It really is a shame, as there is no doubting it, where all-time-highs are concerned the FTSE is an exceedingly poor relation to almost every other index, scrapping a new one out by less than 10-points, which is pathetic really by comparison.

And whilst mentioning highs, the intraday high on Tuesday 31st August was apparently 7160.49, which was up from the open of 7148.01, but all we saw was an easier open and the market barely troubling 7150 from beneath. The main reason we are saying this is so that there is a record of yet more false data.

Getting back to this week, if 7150 does break, then we could see a deep incursion into R3 as quite often the euphoria of the release is a bit like an elastic band breaking. If it doesn’t then the zone is the target, which is the case in both scenarios, it’s just a question of whether or not there will be one more last hurrah.

 

Range:            7050  to  7150        or        7150  to  7200       

Activity:          Poor

Type:              Bearish

 

 

Nb. Our comment on 09/13/21

 

The FTSE certainly did go for “one more last hurrah” on last Monday, fortuitously the day we posted, as it went on to trouble R3 at 7200 with the intraday high of 7195.62.

To be honest we sought of expected a bit more gusto than that but, upon reflection, what with the meal they made out of the ratio at 7150 then this lack of more fight is perhaps more understandable.

And talking of this index’s nemesis this expiry, 7150 was the crucial level on Tuesday.

The real time close was 7152.75, so to give that up in the auction and finish below it at 7149.37 was very revealing, and the first really significant ratio point last week.

After testing the top of its zone, the very next day, Wednesday 8th, with the intraday low of 7061.13, it was the Thursday that supplied the second significant ratio point.

And there was no mucking about as it was the open, that we had circa 7038, which is again nowhere near the official 7095.53 (but you know already why this is false data), that leap-frogged the market over its upper boundary and into its zone.

Then on the Friday, and we don’t think anyone was left in any doubt about the bullish sentiment seemingly ever-present in the FTSE, as it literally spent almost the entire day trying to get back above its zone’s upper boundary at 7050.

Unless this sentiment suddenly grows a pair, then we can’t see much else than this index staying zone-bound, or at least until the rollover on Wednesday.

Quite often the hugely increased levels of activity generated by the rollover and expiry, even more so in a triple, can be misdiagnosed and used by bulls (or bears) to justify their own agenda.

This may well happen, but if derivatives can hold the index inside its zone for at least the rollover, then there will be a lot of smiley people out there.

 

Range:            6950  to  7050       

Activity:          Poor

Type:              Bearish

Available to buy now

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

Posted in Uncategorized Tagged with: , , , , , , ,