Nb. Our comment from the 07/06/20
Well we hope you enjoyed last week, exciting as it was, it actually went absolutely nowhere.
Which is not quite true, as you can see in the table above, it has actually fallen two-points.
Nevertheless, had you been aware of the ratio levels you would have had a wonderful trading week.
Monday the 29th saw the first test of Y2, still at 6250, with the intraday high of 6251.96, with the eventual close at 6225.77.
Then you had to wait until Thursday 2nd July for the next test, with the intraday high of 6258.60.
Friday saw strike three, and naturally, the incursion was a bit deeper this time, with the intraday high of 6262.71, and the eventual close way down at 6157.30.
We think Y2 has done its job now, and three times at that, so we rather doubt it will be as robust again, should it be retested.
Apart from the market’s persistence attacking Y2, it is rather revealing that such a low level of ratio has had such an effect, while at the same time, the market has yet to trouble the other end, namely the top boundary of its zone.
Now we are exactly half way through this expiry, the FTSE needs to test 6050, and if that holds, then it should empower the bulls enough to be able to push through Y2.
There have been big daily moves in this market, 100-points plus every day, and yet still no test of 6050, but three of Y2 at 6250, which says a lot, and that is that it is blinkered, but timid.
Range: 6050 to 6350
Type: On balance bullish
Nb. Our comment on 07/13/20
The third week of the FTSE July expiry was just as exciting as the previous ones.
First up, on Monday, we did indeed get the fourth test of Y2, and exactly as anticipated, it wasn’t nearly as “robust” as it had been, witnessed by the intraday high of 6304.19.
The fact the market didn’t really capitalise on this breakthrough was a worrying sign, and bit of a warning.
For those more familiar with the ratio levels, when one does eventually capitulate, it is normally like a bungee cord breaking, with a resultant leap forward.
Then we had to wait until Thursday before the second part of last weeks comment was fulfilled, with the test of the market’s zones upper boundary, with the intraday low of 6040.26.
Actually, it was quite a revealing test, as it rebounded from that low, to close, in real time, at 6052.46.
It was the auction that took it to the official close of 6049.62.
Then on Friday we saw the intraday low of 6003.19, but as you can see from the above table, the zone is now 6150-6250, so no wonder it didn’t stay down there.
But being in bear territory, courtesy of the zone moving, so by default really, not design, shouldn’t really have that much impact.
Rather, being in the middle of a Y1 ratio bandwidth, should make life a lot simpler, as it should now target the new zone for Wednesday.
As an aside, this also makes 6250 a significant level, again, but just for two reasons now, which might be worth bearing in mind.
Range: 5950 to 6150