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
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
Type: On balance just bearish