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
16
2022
March 16th, 2022 by Richard

Amazing that R2 at 4165 held let alone the SPX is in its zone on the rollover.

 

Nb. Our comment from the 03/08/22

 

Well, we obviously got our move down in the zone, but it was not so cut and dried as we believed back on the 2nd.

Essentially, we saw some strength come into the ratios, so we didn’t actually see the move down until yesterday, the 7th.

This was a bit of a surprise, especially under the circumstance, but considering the intraday low last Friday 4th was 4284.98 (Y2 was 4295) and the close was 4328.87 meant that despite the bounce off this minor ratio level, without the zone actually moving down, it resulted in the fact it was still in bear territory.

This was a shame, as it sort of scuppered our hope of the market getting back into bullish territory.

Of course, on Monday when it did move down, the market did as well.

Although, it is not all bad news, as the ratios continue to show signs of strength below the zone.

And, in fact, there is no longer any Y1 below the new zone…and don’t forget last week this index bounced off Y2 not once but twice. However, considering what is happening in the world, we suspect this is not really something to depend upon.

But it is nevertheless a good sign (please see previous comments), as is the fact that the ratios here have strengthened enough for the Y1 ratio bandwidth to shrink to 160, although overall it remains at 360-points.

Here, we would like to point out our comments on the FTSE as they are just as true here, albeit the SPX is behaving, so far at least, far more rationally than we would ever have imagined.

So, at the end of the day, the SPX is now in the R1 ratio bandwidth, with R2 now a relatively short distance away, so this market will experience some dynamic delta futures buying for certain. What they make of it is an entirely different matter, but the recent precedent is at least promising.

 

Range:            4165  to  4245           

Activity:          Moderate

Type:              Neutral

 

 

Nb. Our comment for 03/16/22

 

Promising indeed…what an interaction with the ratio at 4165, and on the very day we published, the 8th March.

So, really, it couldn’t have turned out better for us, as not only did we highlight 4165, but the market spent over two hours finding this bottom (intraday low 4157.87), so it was very plain for all to see the dynamic delta in action, and in real time too.

Last week we also mentioned the FTSE and, for those in the know, they should have spotted the fact that while the UK was searching for its bottom with the ratio at 6950 so was the SPX with the ratio at 4165.

For the rest of last week, it was all about the zone and, in fact, the very next day, the SPX got as high as 4299.40, or to put it another way, the middle of its zone. Which in itself was a very impressive 135-point bounce, although perhaps these days we are getting numbed to such big moves.

Anyway, there was a bit of a tussle going on with whether or not the zone might make another downward move, to 4195-4205, which pretty much explains the price action on Thursday and Friday last week.

It is still a possibility, although at this stage of an expiry we would expect it to be far closer to being Y1 by now than it is.

So, perhaps a sort of outside hedge at best, or should that be worst?

As it is the rollover today, and as the market has bounced up to the zone, we couldn’t be happier. Especially as you couldn’t get a more strenuous test really.

We always say, that if the market is in or around its zone on the rollover, then that is job done and it has the next couple of days to do as it wants, but it is never as simple as that we acknowledge. Simply because it is just like giving a toddler a can of red bull and then expecting it to sit quietly, in this case in its zone.

And, sometimes, especially when its all been about support, you can lose sight of the fact that the R ratios above the zone don’t even start until 4605. So, we are glad it is here now, but with so much Y ratio still about, we very much doubt it will sit still.

 

Range:            4195  to  4295           

Activity:          Very poor

Type:              On balance only just bullish

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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
08
2022
March 8th, 2022 by Richard

Has the SPX's zone bottomed out?

 

Nb. Our comment from the 03/02/22

 

The very reason we include our previous comment (above) is for easy reference and continuity. Therefore, following directly on from the test of R1 then at 4295 on the 22nd Feb we saw the market the very next day blast straight past that to R2, then at 4220, with the intraday low of 4221.51.

There is no denying that these were very nervous times so, for the ratios to have any affect at all, was very remarkable.

The day of the invasion the intraday low was 4114.65, just (again) twenty odd points above R3, but with the spike in the vega and the alacrity of the fall a bit of pre-emption was always very likely.

On the 25th Feb the zone moved down to 4395-4405, which is roughly where the market gravitated to but, very noticeably, it never tested the bottom boundary at 4395.

Yesterday, the 1st March, we saw the intraday low of 4279.54, when Y2 was at 4295.

And as we said last time “that it will respond to the dynamic delta is a good sign, as irrational fear (or greed) is never good” but as a triple expiry coupled with the fact there was so much Y ratio around it was always going to be extremely volatile even without the added issues of the invasion, so the fact that the ratios are even an influence can only be a good sign.

However, that’s pretty much where the good signs end, as the zone will almost definitely move down to 4295-4305, making the third downwards move in this expiry already.

Well, perhaps there maybe one more good sign, as if the zone does move down AND the market stays above 4305 then, by default, this market will find itself in bullish territory, and it has been a while since we have last seen that.

For the record the Y1 ratio bandwidth has shrunk from 260 to 210-points, and the overall Y ratio bandwidth from 435 to 360, so still ridiculously wide, meaning that even under normal conditions we would expect a trading range of at least 5% this expiry and yet, here we are, seven days in and the market literally hasn’t moved, albeit in a very exciting way.

 

Range:            4295  to  4395           

Activity:          Moderate

Type:              On balance decently bullish

 

 

Nb. Our comment for 03/08/22

 

Well, we obviously got our move down in the zone, but it was not so cut and dried as we believed back on the 2nd.

Essentially, we saw some strength come into the ratios, so we didn’t actually see the move down until yesterday, the 7th.

This was a bit of a surprise, especially under the circumstance, but considering the intraday low last Friday 4th was 4284.98 (Y2 was 4295) and the close was 4328.87 meant that despite the bounce off this minor ratio level, without the zone actually moving down, it resulted in the fact it was still in bear territory.

This was a shame, as it sort of scuppered our hope of the market getting back into bullish territory.

Of course, on Monday when it did move down, the market did as well.

Although, it is not all bad news, as the ratios continue to show signs of strength below the zone.

And, in fact, there is no longer any Y1 below the new zone…and don’t forget last week this index bounced off Y2 not once but twice. However, considering what is happening in the world, we suspect this is not really something to depend upon.

But it is nevertheless a good sign (please see previous comments), as is the fact that the ratios here have strengthened enough for the Y1 ratio bandwidth to shrink to 160, although overall it remains at 360-points.

Here, we would like to point out our comments on the FTSE as they are just as true here, albeit the SPX is behaving, so far at least, far more rationally than we would ever have imagined.

So, at the end of the day, the SPX is now in the R1 ratio bandwidth, with R2 now a relatively short distance away, so this market will experience some dynamic delta futures buying for certain. What they make of it is an entirely different matter, but the recent precedent is at least promising.

 

Range:            4165  to  4245           

Activity:          Moderate

Type:              Neutral

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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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Mar
02
2022
March 2nd, 2022 by Richard

Very revealing how the SPX reacts to the ratios in a time of war.

 

Nb. Our comment from the 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, yesterday’s 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

 

 

 

Nb. Our comment for 03/02/22

 

The very reason we include our previous comment (above) is for easy reference and continuity. Therefore, following directly on from the test of R1 then at 4295 on the 22nd Feb we saw the market the very next day blast straight past that to R2, then at 4220, with the intraday low of 4221.51.

There is no denying that these were very nervous times so, for the ratios to have any affect at all, was very remarkable.

The day of the invasion the intraday low was 4114.65, just (again) twenty odd points above R3, but with the spike in the vega and the alacrity of the fall a bit of pre-emption was always very likely.

On the 25th Feb the zone moved down to 4395-4405, which is roughly where the market gravitated to but, very noticeably, it never tested the bottom boundary at 4395.

Yesterday, the 1st March, we saw the intraday low of 4279.54, when Y2 was at 4295.

And as we said last time “that it will respond to the dynamic delta is a good sign, as irrational fear (or greed) is never good” but as a triple expiry coupled with the fact there was so much Y ratio around it was always going to be extremely volatile even without the added issues of the invasion, so the fact that the ratios are even an influence can only be a good sign.

However, that’s pretty much where the good signs end, as the zone will almost definitely move down to 4295-4305, making the third downwards move in this expiry already.

Well, perhaps there maybe one more good sign, as if the zone does move down AND the market stays above 4305 then, by default, this market will find itself in bullish territory, and it has been a while since we have last seen that.

For the record the Y1 ratio bandwidth has shrunk from 260 to 210-points, and the overall Y ratio bandwidth from 435 to 360, so still ridiculously wide, meaning that even under normal conditions we would expect a trading range of at least 5% this expiry and yet, here we are, seven days in and the market literally hasn’t moved, albeit in a very exciting way.

 

Range:            4295  to  4395           

Activity:          Moderate

Type:              On balance decently bullish

 

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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

 

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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 2nd 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 9th. 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

 

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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

 

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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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 2nd 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

 

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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