Nb. Our comment from the 03/30/21
Considering how little ratio there is, we are a bit surprised by the lack of real volatility.
Of course, it is at the start of an expiry, so that by its very nature it is a bit timid, but nevertheless, we were only seeing 40 to 50-point moves (apart from Friday granted), which under these conditions 1% plus a bit is not much at all.
Despite there being nothing in its way, the market hasn’t even tested Y2 for example.
Therefore, we would be very surprised if this continued.
Perhaps one contributing factor has been a distinct lack of activity, and as the base-line is so low in an intermediary, then “moderate” is in fact pretty meagre.
Although, we have seen the Y2 ratio bandwidth shrink from 385 to 335-points, but as this still represents almost 10%, then we don’t see it as having any great influence.
And, in fact, the Y1 ratio bandwidth, has remained the same at 210-points.
Should this market actually take on Y2, then we will reappraise the situation, in the meantime, it is just an indication of how much the ratios have moved.
On a more positive note, at least they are moving, as with them strengthening below the zone it at least may eventually give some validation to this bull market.
And, as there is so little ratio, the zone moving to 3995-4005 by the rollover, is very likely.
But, as we still have almost a full three weeks to go, it would be a lot more fun if it went down to 3795 before it made a nice run back up in time for the 14th April.
We have already seen this index test its zone, and in fact, it did even close 6-points below its lower boundary last Wednesday, so it has already fulfilled that aspect, but the lack of any great stampede forward to test Y2 at 4005 doesn’t exactly cover the bulls with any great degree of conviction, or at least not to us anyway.
At the end of the day, this market is in minimal ratio from the top boundary of its zone, 3905, all the way up to Y2 at 4005, so daily, or over 2/3 days, moves of 100-points is what we should be experiencing.
Range: 3905 to 4005
Activity: Moderate
Type: On balance bearish
Nb. Our comment for 04/05/21
Was it worth the wait?
Probably not, but at least we have got the movement we have been anticipating.
The real shame was, that because it took so long to come, the starting point was 3973 (Wednesday’s close), so it didn’t have a very long way to go.
And when it hit Y2 at 4005, all the steam went out of the market, as it flatlined just above here for the best part of the day, only managing to eke out a reasonable beachhead in the final few minutes.
But a beachhead in Y2 it now has, so R1 is the next level of resistance.
A ratio level that hasn’t needed much persuasion to retreat straight back to where it started this expiry at, 4080.
Obviously, having been so indecisive at 4005 last Thursday, we are not altogether convinced the bulls are as adamant and confident as the market move suggests.
Therefore, it might be worth noting that there is what we call a step-up in the ratio at 4030, and of course at last week’s R1 Level, 4055.
So, it might be wise to play close attention to these specific levels just to try and gauge how committed the bulls really are.
However, a good sign is that the ratios are moving up below the zone, which in itself is also likely to move up, which are all bullish signs.
The total Y1 ratio bandwidth has now shrunk (?) to 185-points, whereas the Y2 on remains the same at 335-points.
So, yeah, it all looks good, the signs are tentatively bullish, but please don’t lose sight of the fact that we are now approaching the R ratios, and that the corresponding one does not make an appearance until 3745, so this is most definitely not a risk-free environment.
Range: 3905 to 4080
Activity: Moderate
Type: On balance only just bearish
