Nb. Our comment from the 12/20/21
In our last comment on the December expiry, we said “then holding this market between 7250 and 7350 should be the order of the week” and as the EDSP was 7264.53 we can only surmise that they did a good job.
However, quite often the settlement of one expiry can lead to problems for the next one, especially if the zones are not aligned.
And although this is the case here, the discrepancy isn’t so great and anyway there is a hundred points of the very minimal Y1 ratio above the January zone.
This should make for a very decent start to this expiry, as this 100-points of Y1 ratio together with a 100-points of the zone means that there is plenty of space for this index to play around in.
The one word of caution is that in just a few days, which you can see by comparing the two tables above, there has been a huge loss of Y ratio already. Although this may not continue, it is perhaps wise to be aware of the trend.
Also, January is a 5-week expiry and this, the first “extra” week can therefore sometimes be very quiet, although with everything that’s going on at the moment, we can’t see it getting away with this in the current climate.
Otherwise, looking at the above table, it is obvious there is far more ratio above the zone than below it, although this bias has been undone by the recent activity to a large extent, it is still significant and may yet come into effect as this expiry progresses.
In the meantime, obviously 7250 is the first critical level to watch out for, thereafter the next ones are in the table above for you.
Range: 7250 to 7350
Type: On balance bearish
Nb. Our comment on 01/04/22
Happy New Year to you all and may 2022 bring you all health, wealth and happiness.
Just to recap the first two days of this expiry were all about the zone, and 7250 did prove critical (please see above).
But thereafter it definitely got its Santa rally hat on and R1 was the next stop, then at 7350.
When we last published it had only just become R1 by a fingernail from the Y2 it had been on the 16th Dec, two trading days prior, so coming under assault from the rampant market we suspect it beat a very hasty retreat.
This means that by the end of last week we firmly believe R1 was at 7400, where it is today.
This then makes perfect sense of the price action last week, especially all the concentrated activity around 7403 on the Thursday and Friday.
Looking forward, as you can see in the above table, 7400 is still R1, but only just, and we wouldn’t expect it to remain so for much more than a day.
7450 is another matter entirely, and is in fact just a smidgen below the R2 threshold.
Which is actually the same situation for 7500, apart from this threshold being R3.
So, it is great it made a new all-time-high, and there is even scope for it to go back there again, but the dynamic delta futures selling brought about by R1 at 7450 and backed up by R2 at 7500 will certainly take the steam, and perhaps enthusiasm out of this market should it test these levels we believe.
On the other hand, and don’t forget we still have three weeks to go in this expiry, the zone is now 200-points south, with virtually no ratio in-between.
Range: 7250 to 7400