May
11
2022
May 11th, 2022 by Richard

Can R2 stem the SPX bears?

 

Nb. Our comment from the 05/04/22

 

Apologies for the late update, probably made all the worse as the markets have been so expectedly volatile.

When we last published (26/05/22 and please see above) it was all about R1 at 4195, and as the market closed that day at 4175.20, it was definitely the bears in control.

However, the next day, Wednesday, saw the bulls try to wrest back control with a very decent rally. But, R1 was unchanged, despite the zone falling to where it is today, so the close at 4183.96 did look slightly ominous, despite it being so close.

A very decent gap up at the open gave the market a good start, and with the intraday low of 4183.96 coupled with an unchanged R1 showed it was still being a nuisance.

Friday saw the bears really take it to the ratios, although as we said above, it seems our strike three was rather pertinent.

On Monday and Tuesday this week R1 slipped to 4170 and 4145 respectively.

For those purists the intraday high on Monday was 4169.81, whereas the intraday low on Tuesday was 4147.08.

So, it was still being very much involved, it is just a shame we don’t publish daily anymore, as then you could see the dynamic delta in real time.

Looking forward, and a lot depends now on how the ratios evolve daily of course, but there are still some guidelines we can possibly help you with.

Firstly, the zone is likely to move to 4295-4305.

Depending on sensitivity, the rollover and expiry is next week.

The overall respective Y ratio bandwidths remain unchanged at 310 and 510-points, so really don’t expect any reduction in volatility.

Otherwise, unless you are a bear that is, fingers crossed that the dynamic delta created by R1 continues to do its job.

 

Range:            4145  to  4395           

Activity:          Poor

Type:              Neutral

 

 

 

Nb. Our comment for 05/11/22

 

It is certainly going to be a grandstand finish to this expiry, and derivatives have evidently got their work cut out for them.

A lot has gone on from our last comment but, since then, it has been all about the R ratios.

On Thursday 5th when R1 was at 4145, the market went as low as 4106.01 before finishing at 4146.87. This could have been a good sign, and on another day, it could well have been so, the bulls having fought back so hard to get the market back into the Y ratios.

The Friday saw a bad start but, again, the bulls fought back, getting the market as high as 4157.69 (nb. R1 still at 4145). Then it all went sour, with the market plummeting to R2 at 4070, with the intraday low of 4067.91.

The fact that it bounced off this level, but still closed south of R1 was a warning.

Therefore, the first two days of this week have all been about R2, which had now slipped to 3995. Monday’s intraday low was 3975.48 and the close was 3991.24. Very worrying for Tuesday. Which actually started well, but then went down to 3958.17, before rallying back above R2 for the close.

Classic bull vs bear stuff, each using the dynamic delta to advance their respective causes.

This now makes today rather critical, or should we say, holding above R2 rather critical for the bulls.

We do think there is at least one more day of R2 staying at 3995, but no denying the ratios are slipping below the zone.

Of course, we expect the zone to move down, and don’t lose sight of the fact it is the rollover and expiry next week. However, there is no front-runner at present.

We suspect, the outcome of today, and possibly tomorrow, will go a long way to defining where any likely expiry of this month will be.

We have to side with the bulls, simply because they are backed up by the R2 amount of dynamic delta futures buying but, we haven’t seen this index being so aggressive (either way) for a very long time, so our conviction level is not 100% even if the levels remain unchanged.

 

Range:            3995  to  4095           

Activity:          Poor

Type:              Bullish

 

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May
09
2022
May 9th, 2022 by Richard

Having tested R2 on Friday the FTSE has a simple choice, there again or back to its zone.

 

Nb. Our comment from the 05/03/22

All of our assumptions last week were blown out of the water before the market even opened. Or to be more specific when the market opened circa 7387 on Monday 25th, as this was actually below R2 at 7400. Best lain plans and all that.

However, had one realised that the FTSE was stuck in the R2 ratio bandwidth, then the next few days made perfect sense as it tried to fight its way back up and out of it, despite the millstone of HSBC on the Tuesday.

The intraday highs of 7463.15 and 7458.24 on Tuesday and Wednesday respectively, just went to show how hard it was trying to break back into its zone.

Then the Friday was all about the upper boundary of the zone 7550, with the intraday high of 7569.80. So, in a way, last week was mostly all about the zone.

Looking ahead, and this time it will depend on the open as London not only has to react to Friday’s Street fall, but everything from Monday as well.

Despite all this we do still think that this index just wants to be in its zone, plain and simple. Well, at least for this week, as come the rollover and expiry everything tends to change anyway.

For the record R2 has now dropped to 7350, exactly when we of course don’t know, but this is immaterial now. However, going in the opposite direction are the other ratios below this.

Above the zone, the ratios have also strengthened, which means we have lost Y2, but at the same time above the zone is still the only place where we get any Y ratio at all. So, perhaps the scope has reduced now we have hit the halfway stage but, overall, the alignment remains the same.

 

Range:            7450  to  7550       

Activity:          Strong

Type:              On balance bearish

 

 

 

Nb. Our comment on 05/09/22

 

Well, the FTSE did manage to stay in its zone for most of last week, but it was quite a fight.

And this week it was all about the upper boundary of the zone, as opposed to last week being all about the bottom boundary.

For the first three days it battered away at 7550, and on the third day, the Thursday, we thought our strike three rule had come into effect as the market got as high as 7619.39.

Sadly, it couldn’t hold onto it, mainly because of the weak Street, as it finished dead centre of the zone.

Again, the official data is misleading, as the open on Friday was around 7490, not 7503.27. This still meant that the market did open inside its zone.

Then, between 9am and 2pm the market bounced around the bottom boundary 7450.

After 14:00 it became very interesting, as once the bottom boundary was breached it went very quickly down to R2 at 7350, with the intraday low of 7354.06.

So, with two weeks still to go the FTSE is in bear territory just below its zone but, everything it has done so far, leads us to believe that it really doesn’t want to be here.

Of course, only time will tell, but as one can see, it would only take 60-points for it to recapture its zone.

And the fact that it has already tested R2 at 7350, means that we know that the market knows that there will be futures buying at that point, so it should only go there again if it is willing to take that on. And, to add icing to the cake, the next expiry is the second triple of the year, yay.  

 

Range:            7350  to  7450       

Activity:          Moderate

Type:              On balance just bearish

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May
04
2022
May 4th, 2022 by Richard

R1 Ratio still being a nuisance to the SPX bears.

 

Nb. Our comment from the 04/26/22

 

Well, it is not very old this expiry, but boy, has there been a lot going on already.

We have been warning about the extremely wide Y ratio bandwidths, and now you have just experienced why.

But, firstly, obviously the zone hasn’t moved. And we think the reason for this has been because 4395-4405 has taken over as the new potential home for the zone, rather than our suspected 4445-4455.

Nevertheless, we think a move is still imminent. However, a lot may well depend on what happens now after yesterday’s extraordinary moves.

Now, R1 hasn’t moved throughout this expiry, and even before it became the front month, so we have had it at 4195 since the 13th April. So, no excuses for not knowing it was there.

However, we may give you a bit of licence as the intraday low was 4200.82, but not much, as after plunging all the way down from its zone on Friday (intraday high 4512.94), which is a drop of over 300-points in two days making the vega spike, so we are hardly surprised the market reacted a bit early.

And, the astute, would have also noted that the close on Monday was 4296.12, just a fingertip north of Y2.

Which brings us back round to the “what happens now” bit. Was yesterday’s 100-point rally just a knee-jerk reaction to encountering the dynamic delta inspired futures buying? Or have the bulls wrested back control?

Always difficult to tell we have found. The best scenario is that the market goes back down to R1. If the bears are in charge, it will test it again, and it’s still formidable, then its either put up or shut up. If the bears are lacklustre, or wavering, and the bulls are circling, then it shouldn’t need a second test.

Finally, don’t forget our strike three rule, as this may yet be pertinent.

 

Range:            4195  to  4495           

Activity:          Moderate

Type:              On balance bearish

 

 

 

Nb. Our comment for 05/04/22

 

Apologies for the late update, probably made all the worse as the markets have been so expectedly volatile.

When we last published (26/05/22 and please see above) it was all about R1 at 4195, and as the market closed that day at 4175.20, it was definitely the bears in control.

However, the next day, Wednesday, saw the bulls try to wrest back control with a very decent rally. But, R1 was unchanged, despite the zone falling to where it is today, so the close at 4183.96 did look slightly ominous, despite it being so close.

A very decent gap up at the open gave the market a good start, and with the intraday low of 4183.96 coupled with an unchanged R1 showed it was still being a nuisance.

Friday saw the bears really take it to the ratios, although as we said above, it seems our strike three was rather pertinent.

On Monday and Tuesday this week R1 slipped to 4170 and 4145 respectively.

For those purists the intraday high on Monday was 4169.81, whereas the intraday low on Tuesday was 4147.08.

So, it was still being very much involved, it is just a shame we don’t publish daily anymore, as then you could see the dynamic delta in real time.

Looking forward, and a lot depends now on how the ratios evolve daily of course, but there are still some guidelines we can possibly help you with.

Firstly, the zone is likely to move to 4295-4305.

Depending on sensitivity, the rollover and expiry is next week.

The overall respective Y ratio bandwidths remain unchanged at 310 and 510-points, so really don’t expect any reduction in volatility.

Otherwise, unless you are a bear that is, fingers crossed that the dynamic delta created by R1 continues to do its job.

 

Range:            4145  to  4395           

Activity:          Poor

Type:              Neutral

Available to buy now

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May
03
2022
May 3rd, 2022 by Richard

That has been one of the hardest fights the FTSE has ever had to hang on to its zone.

 

Nb. Our comment from the 04/25/22

Looks like the lowly Y2 at 7650 provided enough dynamic delta futures selling to scare the FTSE into turning tail.

Although, it did take over half an hour at or around its intraday high of 7656.47 on Thursday 21st to make up its mind.

And, when you couple this with a weak Street overnight and then again on the Friday, you had the FTSE in a full-blown retreat back into the safety of its zone.

What is more, is that this expiry is still only a week old. So, plenty more time for some fun and games.

On the upside, Y2 has now moved out to 7700. Although, and as we said back on the 19th, the real test should come at 7750. Even more so now, as it goes up to R2 from R1.

Of course, this is assuming the bulls wrest back control. But, as we said, there is still three weeks to go, so plenty of time.

But first, we should see a test of the bottom boundary of the zone at 7450, Which is also strengthened by the fact it is also R1. The fact that there is no Y ratio at all below the zone should give any bulls out there an excuse, even if the dynamic delta inspired futures buying doesn’t do it for them.

If the bears are really in control, and R1 isn’t enough, then backing it up is R2 immediately underneath at 7400. The big concern will be if this is not enough, then there is a very long way before we hit the next level of support, R3 at 7150.

The other alternative is that the market could just stay zone bound, which is not unheard of. If it does decide to take this easy option, then it could bounce around excitedly within its zone for the next two weeks, only breaking out in the final week, which we have seen quite a lot of in the past.

 

Range:            7450  to  7550       

Activity:          Very good

Type:              On balance only just bullish

 

 

Nb. Our comment on 05/03/22

 

All of our assumptions last week were blown out of the water before the market even opened. Or to be more specific when the market opened circa 7387 on Monday 25th, as this was actually below R2 at 7400. Best lain plans and all that.

However, had one realised that the FTSE was stuck in the R2 ratio bandwidth, then the next few days made perfect sense as it tried to fight its way back up and out of it, despite the millstone of HSBC on the Tuesday.

The intraday highs of 7463.15 and 7458.24 on Tuesday and Wednesday respectively, just went to show how hard it was trying to break back into its zone.

Then the Friday was all about the upper boundary of the zone 7550, with the intraday high of 7569.80. So, in a way, last week was mostly all about the zone.

Looking ahead, and this time it will depend on the open as London not only has to react to Friday’s Street fall, but everything from Monday as well.

Despite all this we do still think that this index just wants to be in its zone, plain and simple. Well, at least for this week, as come the rollover and expiry everything tends to change anyway.

For the record R2 has now dropped to 7350, exactly when we of course don’t know, but this is immaterial now. However, going in the opposite direction are the other ratios below this.

Above the zone, the ratios have also strengthened, which means we have lost Y2, but at the same time above the zone is still the only place where we get any Y ratio at all. So, perhaps the scope has reduced now we have hit the halfway stage but, overall, the alignment remains the same.

 

Range:            7450  to  7550       

Activity:          Strong

Type:              On balance bearish

 

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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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Apr
26
2022
April 26th, 2022 by Richard

And now you know why we warn about such huge Y ratio bandwidths.

 

Nb. Our comment from the 04/20/22

 

Firstly, we have to say what a tremendous and fascinating expiry the April one was.

Basically, if you can cast your minds back to last week, on Thursday 13th it jumped 49.14-points to close at 4446.59, which essentially enabled the settlement price to come in on that Friday at 4452.07, right in our zone. So, you can probably add remarkable to that superlative list as well, as with so little ratio around at all, you are talking fine-tuning to the “n’th” degree.

Anyway, looking at the ratio alignment in the new May expiry, which is in fact two trading days old now, and it’s basically more of the same.

Albeit, with a couple of noticeable differences. The first being, that immediately after the expiry, the SPX gave up everything it gained on the Thursday.

This just cemented the fact it was going to start May below its zone, which has remained unchanged whereas April’s zone ended at 4445-4455 so, it was more of a case of exaggerating it.

The second difference is the Delta Ratio, which was 39.0% on the 18th, way below the 50% mark, which indicates an upward bias.

Otherwise, it is probably even scarier than the last expiry as the Y1 ratio bandwidth currently stands at 335-points, and the overall Y ratio bandwidth at 535-points, a colossal 12%.

At the moment the SPX is still exhibiting signs of ultra-sensitivity (vis a vis the expiry on Friday) but, if this dissipates, then we really could see some big moves. And by that we do mean a lot bigger than yesterday’s 70-points.

Also, although we do admit we are currently dealing with extremely fine margins, it is looking possible that 4445-4455 could become the next zone in May as well, which means the market is actually above it at the moment.

 

Range:            4295  to  4495           

Activity:          Moderate

Type:              On balance only just bearish

 

 

 

Nb. Our comment for 04/26/22

 

Well, it is not very old this expiry, but boy, has there been a lot going on already.

We have been warning about the extremely wide Y ratio bandwidths, and now you have just experienced why.

But, firstly, obviously the zone hasn’t moved. And we think the reason for this has been because 4395-4405 has taken over as the new potential home for the zone, rather than our suspected 4445-4455.

Nevertheless, we think a move is still imminent. However, a lot may well depend on what happens now after yesterday’s extraordinary moves.

Now, R1 hasn’t moved throughout this expiry, and even before it became the front month, so we have had it at 4195 since the 13th April. So, no excuses for not knowing it was there.

However, we may give you a bit of licence as the intraday low was 4200.82, but not much, as after plunging all the way down from its zone on Friday (intraday high 4512.94), which is a drop of over 300-points in two days making the vega spike, so we are hardly surprised the market reacted a bit early.

And, the astute, would have also noted that the close on Monday was 4296.12, just a fingertip north of Y2.

Which brings us back round to the “what happens now” bit. Was yesterday’s 100-point rally just a knee-jerk reaction to encountering the dynamic delta inspired futures buying? Or have the bulls wrested back control?

Always difficult to tell we have found. The best scenario is that the market goes back down to R1. If the bears are in charge, it will test it again, and it’s still formidable, then its either put up or shut up. If the bears are lacklustre, or wavering, and the bulls are circling, then it shouldn’t need a second test.

Finally, don’t forget our strike three rule, as this may yet be pertinent.

 

Range:            4195  to  4495           

Activity:          Moderate

Type:              On balance bearish

 

Available to buy now

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

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Apr
25
2022
April 25th, 2022 by Richard

After testing Y2 the FTSE retreated back to its zone, the question is, can it stay there?

 

Nb. Our comment from the 04/19/22

Firstly, a quick word about how the April expiry ended last Thursday, and the EDSP was 7582.04. So, it didn’t manage to get back in its zone, the upper boundary being 7550, but it came close, and it finished in Y1, so no great harm done.

Although, it was interesting to see the intraday lows on the last three trading days of this expiry coming in at 7543.03, 7550.94 and 7551.39 respectively.

Looking ahead now to the May expiry, and the first aspect to note is that the zone is at the same level.

Then the second major thing to note is that in May 7650 is only Y2. And, perhaps significantly, it is only just Y2, having crept over the threshold by just a little bit.

For the record, 7700 is a far more solid Y2, and is in fact at the other end of this bandwidth, being just below the threshold of R1.

And, by comparing the tables above you would be correct in thinking that activity has been towards the top end of the scale, reinforced as well by the “very strong” description below, but overall, activity is an awful lot lower than it was in the April expiry.

Although, April was larger than normal, so despite the difference being very noticeable, in fact, May is just a little bit below the historical normal. Nevertheless, we would have expected at least a large chunk of the April activity to rollover into May. It could still do so, but if it doesn’t, money coming off the table is never a good sign.

Otherwise, despite the market being above its zone, it now has a lot more room to manoeuvre to the upside, whereas below the zone it is nicely underpinned by there being no Y ratio at all.

 

Range:            7550  to  7750       

Activity:          Very strong

Type:              Neutral

 

 

Nb. Our comment on 04/25/22

 

Looks like the lowly Y2 at 7650 provided enough dynamic delta futures selling to scare the FTSE into turning tail.

Although, it did take over half an hour at or around its intraday high of 7656.47 on Thursday 21st to make up its mind.

And, when you couple this with a weak Street overnight and then again on the Friday, you had the FTSE in a full-blown retreat back into the safety of its zone.

What is more, is that this expiry is still only a week old. So, plenty more time for some fun and games.

On the upside, Y2 has now moved out to 7700. Although, and as we said back on the 19th, the real test should come at 7750. Even more so now, as it goes up to R2 from R1.

Of course, this is assuming the bulls wrest back control. But, as we said, there is still three weeks to go, so plenty of time.

But first, we should see a test of the bottom boundary of the zone at 7450, Which is also strengthened by the fact it is also R1. The fact that there is no Y ratio at all below the zone should give any bulls out there an excuse, even if the dynamic delta inspired futures buying doesn’t do it for them.

If the bears are really in control, and R1 isn’t enough, then backing it up is R2 immediately underneath at 7400. The big concern will be if this is not enough, then there is a very long way before we hit the next level of support, R3 at 7150.

The other alternative is that the market could just stay zone bound, which is not unheard of. If it does decide to take this easy option, then it could bounce around excitedly within its zone for the next two weeks, only breaking out in the final week, which we have seen quite a lot of in the past.

 

Range:            7450  to  7550       

Activity:          Very good

Type:              On balance only just bullish

 

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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Apr
20
2022
April 20th, 2022 by Richard

The SPX May expiry has a couple of differences to April's, but probably the scarier for them.

 

Nb. Our comment from the 04/13/22   (Not published)

 

Nb. Our comment for 04/20/22

 

Firstly, we have to say what a tremendous and fascinating expiry the April one was.

Basically, if you can cast your minds back to last week, on Thursday 13th it jumped 49.14-points to close at 4446.59, which essentially enabled the settlement price to come in on that Friday at 4452.07, right in our zone. So, you can probably add remarkable to that superlative list as well, as with so little ratio around at all, you are talking fine-tuning to the “n’th” degree.

Anyway, looking at the ratio alignment in the new May expiry, which is in fact two trading days old now, and it’s basically more of the same.

Albeit, with a couple of noticeable differences. The first being, that immediately after the expiry, the SPX gave up everything it gained on the Thursday.

This just cemented the fact it was going to start May below its zone, which has remained unchanged whereas April’s zone ended at 4445-4455 so, it was more of a case of exaggerating it.

The second difference is the Delta Ratio, which was 39.0% on the 18th, way below the 50% mark, which indicates an upward bias.

Otherwise, it is probably even scarier than the last expiry as the Y1 ratio bandwidth currently stands at 335-points, and the overall Y ratio bandwidth at 535-points, a colossal 12%.

At the moment the SPX is still exhibiting signs of ultra-sensitivity (vis a vis the expiry on Friday) but, if this dissipates, then we really could see some big moves. And by that we do mean a lot bigger than yesterday’s 70-points.

Also, although we do admit we are currently dealing with extremely fine margins, it is looking possible that 4445-4455 could become the next zone in May as well, which means the market is actually above it at the moment.

 

Range:            4295  to  4495           

Activity:          Moderate

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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Apr
19
2022
April 19th, 2022 by Richard

For the FTSE 7650 is no longer a problem as in the May expiry it is now only Y2.

 

Nb. Our comment from the 04/11/22 (Not published)

Nb. Our comment on 04/19/22

 

Firstly, a quick word about how the April expiry ended last Thursday, and the EDSP was 7582.04. So, it didn’t manage to get back in its zone, the upper boundary being 7550, but it came close, and it finished in Y1, so no great harm done.

Although, it was interesting to see the intraday lows on the last three trading days of this expiry coming in at 7543.03, 7550.94 and 7551.39 respectively.

Looking ahead now to the May expiry, and the first aspect to note is that the zone is at the same level.

Then the second major thing to note is that in May 7650 is only Y2. And, perhaps significantly, it is only just Y2, having crept over the threshold by just a little bit.

For the record, 7700 is a far more solid Y2, and is in fact at the other end of this bandwidth, being just below the threshold of R1.

And, by comparing the tables above you would be correct in thinking that activity has been towards the top end of the scale, reinforced as well by the “very strong” description below, but overall, activity is an awful lot lower than it was in the April expiry.

Although, April was larger than normal, so despite the difference being very noticeable, in fact, May is just a little bit below the historical normal. Nevertheless, we would have expected at least a large chunk of the April activity to rollover into May. It could still do so, but if it doesn’t, money coming off the table is never a good sign.

Otherwise, despite the market being above its zone, it now has a lot more room to manoeuvre to the upside, whereas below the zone it is nicely underpinned by there being no Y ratio at all.

 

Range:            7550  to  7750       

Activity:          Very strong

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.

Available to buy now

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Apr
12
2022
April 12th, 2022 by Richard

As the huge Y1 ratio bandwidth remains so does the zones nomadic behaviour.

 

Nb. Our comment from the 04/05/22

 

The zone here in the SPX has indeed moved up, so no surprise there. As is the fact that it probably hasn’t finished yet.

The move to 4495-4505 was actually yesterday, which coincides neatly with the move up in the FTSE, although if there is a relevance to this concurrence, we have yet to discern it.

Of far more importance is how the moves up have occurred. For the SPX it is more of a case of by default, as there was such a huge minimal Y1 ratio bandwidth it really doesn’t take much activity for this to happen.

This is, of course, as opposed to the situation where the ratios are constantly building below the zone while at the same time being in retreat above, and so in this instance the move up is by design.

Which brings us neatly round to the fact that although the Y1 ratio bandwidth has narrowed to 335 (370) this is hardly significant and, anyway, the overall Y ratio bandwidth is now 610 (565), so actually wider, and that’s the case even if you account for the reduction in the Y1 one.

Of far more importance was when we last published (31/03/22) this index was in a tussle with Y2, then at 4615. In the meantime, it dropped back to 4507.57 before recovering, while Y2 has moved out to 4630.

Will 4605 and 4615 still have an impact as steps-up, quite possibly, but please don’t lose sight of the fact that all Y ratio is described as minimal.

In fact, back in the day, the sole purpose for even recording them was as an early indication of momentum and momentum changes. Never did we ever consider back then that one day these markets would react like this to them.

At the end of the day R1 above the zone is just 50-points away, whereas R1 below the zone is 435-points away, so at the very least adjust your risk profile accordingly.

 

Range:            4505  to  4630           

Activity:          Poor

Type:              On balance bullish

 

 

 

Nb. Our comment for 04/12/22

 

It really is a case of more of the same in the SPX.

Basically, everything we said on the 5th (please see above) about how and why the zone here is being so nomadic still holds true now.

So, the zone moves down to 4445-4455 and, again we see this as by default, mainly because the market moved down, Which, frankly, was always on the cards when it was too scared to take that final 10-point move to challenge Y2 again. Or at least where it had been, the last time this market had felt brave enough.

Admittedly the Y1 ratio bandwidth has now come in from 335 to 310-points, but this is still insanely wide, and exactly why we are seeing this behaviour.

On a good note, at least activity is picking up, although as this is the rollover and expiry, this is perhaps not unexpected.

There is not a lot else we can say about this expiry, apart from it might perhaps be wise to be thankful for small mercies.

As even though we saw a decent assault on Y2 above the zone, when the intraday high was 4603.07 and Y2 was at 4605, and then it fell just short the week after, but at least we haven’t seen it test the corresponding Y2 below the zone.

As, don’t forget, at the start of this expiry it stood at 4195, before moving up to where it has been for the last week 4295.

By small mercies we mean the 185-point decline since we mentioned it might be wise to adjust your risk profile five days ago, as if it had fallen down to Y2 at 4295, and in a less controlled manner, then the market mood might have been a lot more on edge than it is now.

Of course, there is still time but, the last few days have shown us that this market is currently being extremely sensitive to even the smallest amounts of dynamic delta. Which is currently a good thing but, should the mood change, there is no real support for quite some distance still. As ever however, this is always a two-way street.

 

Range:            4295  to  4445           

Activity:          Average

Type:              On balance only 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.

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Apr
11
2022
April 11th, 2022 by Richard

Huge ratio level just ahead for the FTSE but will the early expiry get in the way?

 

Nb. Our comment from the 04/04/22

This is a very skittish zone this expiry, as it makes yet another move.

This time it goes back up to 7450-7550, which means the level we highlighted last week as important, 7550, took on a joint significance. Last week it was just where R1 started but, what with the zone move, it also became the upper boundary of the new zone.

Again, we should calculate this daily, but as we don’t, we believe it is a fair assumption that last week’s obsession with 7550 was for two different distinct reasons.

At the start of the week, it was all about the dynamic delta caused by R1 but, by the end, it was all about the fact it was now the upper boundary. Which was quite unusual as a move in the zone should be quite rare in this index, and yet here we are at the midpoint, and this is move three already.

And it’s not as if these are small moves, this latest being a jump of 200-points.

Can we say these moves are over, sadly no. Although, it may prove to be significant that there is no more Y1 ratio around.

However, there is still 500-points of Y2 ratio out there, which is still a ridiculously huge amount, so the potential for big moves is ever present.

So, the good news is that if it can break out of its zone, then R1 now doesn’t start until 7650.

However, the bad news, again if it breaks out of its zone, is that R1 below the zone doesn’t now start until 7150.

And with two weeks still to go in this expiry, then there is plenty of time remaining, and who knows, we may even get another zone move.

 

Range:            7450  to  7550       

Activity:          Moderate

Type:              Bearish

 

Nb. Our comment on 04/11/22

 

At least the zone hasn’t moved again but, as last week panned out, the market never quite got away from it so it had every reason to stay put.

And it really was a week of concentrating on the intraday highs and the lows.

Firstly, the lows, and in order they were 7532.23, 7536.21, 7536.20, 7537.25 and 7551.81. So, every day the market was clinging to its zone, apart from the Friday when the low was just under two-points above the upper boundary.

Of course, surprise surprise, on Friday we saw the first test of R1 at 7650. In the morning it took 15 minutes of interaction before it fell back and waited for Wall Street.

Even then it was hardly convincing, and in real time the close was 7659.82, so it was the auction that took it back up to make its high of the day.

The fact that the significant ratios above the zone haven’t changed makes life a bit easier, as does seeing how hard the market found coping with the dynamic delta created by R1. And, don’t forget, this is test two, as the week before it also suffered at the hands of R1 when it was at 7550 (see comment above).

Therefore, make note that the next level is R3, which skips a level (R2) altogether, and as these are exponential, this will be like running into the proverbial brick wall, apart from the fact that the bricks in this instance will be futures selling.

On top of all this we are now into the rollover and expiry week. One that finishes on the Thursday, not the more usual Friday, it being a Bank Holiday. So, apart from a confusing rollover, which theoretically should now happen on the Tuesday, the gravitational pull of the zone should exert an influence.

But, for those traders out there, hopefully not before we get a sniff of R3 at 7700.

As an aside, we seriously hope we do, as in our opinion it would be a real travesty that the new all time high came about because of the closing auction, in other words, as a result of abnormal market conditions.

 

Range:            7650  to  7700       

Activity:          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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