Nb. Our comment from the 06/21/21
The most striking aspect in the July expiry is the fact that the zone is 7050-7150.
This is very significant as at this level the market is currently below it, so by definition in bear territory.
However, it is never that straightforward, today being the first day of the July expiry being the front month, so where the market finished on Friday is, or can be, as much to do with the June expiry than this one.
And in June, over the last couple of days, 6950-7050 was looking a shoe-in to be the next zone.
So, in this context, where the market finished on Friday is just natural, so no bull or bear agenda at all.
Nevertheless, having just said that, if the bulls have any remaining aspirations, they won’t want to stay below the zone for long, if at all.
Therefore, our trading range, shown below, takes on an entirely new perspective, as it has been a very long while since the bears were in charge.
This is again a more normal 4-week expiry, but it is an intermediary, so all the numbers basically drop by about two thirds, so the big question now, is whether or not the market’s sensitivity will also adjust, as it should, but is never guaranteed.
Also, the delta ratio is just below 150, currently standing at 148.9%, so marginally inside the tolerance level, although at this point in the June expiry, when it stood at 178.9%, it didn’t adversely affect the bulls that much, or at least not at the start anyway.
So, 7050 is key, at least this week it will be, otherwise the bears will have a chance to shine, but judging by their absence over the last couple of expiries, it is highly questionable just how aggressive they might actually be.
Range: 6950 to 7050
Nb. Our comment on 06/28/21
Prophetic words, as indeed our trading range mentioned in our last comment (please see above) did prove key. In fact, we started including our previous comment just for ease of reference, and to make it unnecessary for us to quote it.
Last Monday, the first day of this expiry, the intraday low of the FTSE was 6948.63, or to us, R1 at 6950.
It then went on to have an afternoon long embrace with the bottom of its zone, or 7050 to us, before managing to finish just above it.
Essentially, once the June expiry was over, the bulls took charge again.
For the remainder of last week, the FTSE just meandered around in its zone, which was quite a feat in itself, especially considering how much ground the US indices were making.
Ironically, they both gained almost the same number of points, but due to the overall index numerical size, this equates to the SPX adding almost an entire 1% more gain.
However, getting to the far more important present, it is worth noting that the ratios have changed considerably in a week.
Both sides have shown very good gains, below the zone being the more uniform.
But, above the zone, we now see R2 appear and B1, otherwise it is just a slight improvement in DR.
Obviously, the market being in its zone is the big thing, and was the intraday high of 7139.08 on Friday the first test of the upper boundary? We think not, but in the first instance the zone, and therefore our trading range is key.
One major point to note is R1 turned the market below the zone, and that’s what awaits it at 7050, and if it does break through, it is then in a world of exponentially increasing ratios every fifty-points, so extremely hard works for the bulls, work we find hard to believe they will expect let alone succeed at.
Range: 7050 to 7150
Type: On balance only just bearish