The FTSE now deep in very high ratios, which will be a tough out.
Nb. Our comment from the 02/26/20
We made a point out of saying the FTSE had been zone bound for the entire Feb expiry, even when it was knocking on the upper boundary at 7650 at the very start.
Of course, the March expiry on the 21st was not published, but as you can see the zone was 7200 to 7300.
So, the FTSE did remarkable well to expire in its zone on Friday, the EDSP was 7417.38 out of interest, but March was again different.
So, the zone at the start of Feb was 7550-7650, and it moved to 7400-7500, and now you have March kicking off at 7200-7300.
The fact that Monday closed at 7156.83, meant it had already overshot, and, therefore, was in trouble.
There is a step-up in the ratio at 6950, hence why it is in brackets in our range.
Also, the top is where B1 starts, so could provide some resistance.
However, we would anticipate this being rather minimal, as given half a chance, this market should erupt out of from being in the B ratios, like a scalded cat.
If it doesn’t make it soon, it means this trip is going to be one very hard slog through this level of ratio.
Range: (6950) to 7050
Type: On balance bearish
Nb. Our comment on 03/02/20
As we said back on the 26th February “this market should erupt out of from being in the B ratios, like a scalded cat”, and it certainly did try, closing that day at 7042.47.
The step-up level we talked about, 6950, did a remarkable job, and held up the collapse for quite a considerable time.
However, the fact that the intraday low was 6871.85, way below our step-up level, was a very specific warning, even though that day it did hold.
The other aspect that should have given you a significant clue was our resistance level, also ergo the top of our trading range, 7050, as the intraday highs on Wednesday and Thursday was 7044.66 and 7042.47 respectively.
All history, like our warnings, but we suspect what everyone really wants to know is the future.
When a market gets the “dreads” it takes a lot to change that emotion, so we have gone as far as we can in calculating the ratios.
Sadly, we should do this daily, so please bear this in mind, as we can’t see how these extremes have evolved, just what they are now.
Suffice it to say, B1 is a staggering amount of dynamic delta, in this instance futures buying, and breaching this just shows the extreme strength of dread out there.
But, B2 and B3, are exponentially calculated ratios, and B3 is now in the frame, and this is an incredibly huge ratio.
In fact, the biggest there is in this expiry, so literally the last line of defence.