Nb. Our comment from the 08/03/20
Wow, there is so much going on in the FTSE, just as there isn’t in the SPX, bizarre.
As we said, after the first week being all about either end of its zone, last week was all about the Y2 ratio bandwidth.
Really, the absolutely epic battle the FTSE had with 6150 on Tues, Wed and Thu was nothing short of awesome.
And, those that knew it was the bottom boundary of the zone, also knew, and realised, how important it was for this market to extricate itself from bear territory.
The fact it failed, meant the other end of the Y ratio bandwidth was the next target.
Of course, Thursday saw a deep incursion into R1, the intraday low being 5924.70, but as the intraday high was 6145.83, we were not at all surprised it was this deep considering all the momentum it had built up in collapsing 200-points.
Those that have followed this analysis would also, hopefully, have recognised that this was also a ratio bandwidth test.
These almost always, result in a breakout the next day.
So, Friday’s drop was all natural.
However, what isn’t, and is also totally misleading, is this auction obfuscation.
The real time close was 5924.59, so the auction has actually established a new low and close, which is basically not open, fair or transparent, so just wrong, wrong, wrong.
Therefore, worth noting, is that 5900 is only just below the R2 threshold, so had all the markets been open, especially futures, the dynamic delta hedging that would have occurred at this point would have, very probably, not allowed the market to pass it.
And as the open today is the same as Friday’s close, which in real terms it obviously won’t or can’t be, so more obfuscation, but in the real world, today’s proper open is going to be exceedingly important. So, watch 5850 and 5900 very closely, if you can.
Range: 5800 to 5950
Activity: Moderate
Type: Neutral
Nb. Our comment on 08/10/20
We sincerely hope you did read our note last Monday, and if you need to check what we said it is just above here.
But after the auction aberration On Friday 31st July the market was left at 5897.76, the wrong side of 5900, which has since turned into R2 as we did mention it was just underneath the threshold, so it didn’t take much.
The market opened a bit easier, then rallied to 5900, where it now found R2, so it promptly collapsed to hit the other level we mentioned, 5850.
Thereafter it was a spectacular bounce, 181-points spectacular.
To be honest, after that, London was a bit boring.
It never quite got low enough for us to call it a test of R1 at 5950, and nor did it get high enough for us to call it a test of the zones bottom boundary at 6150.
However, there is still two weeks to go, so it’s not in any real hurry.
And, anyway, it is probably a bit shell-shocked having been forced to bounce around in R2 ratio, a bit of futures related dynamic delta PTSD if you like.
But don’t despair, as there is still a lot of potential for the FTSE, and we will be keeping a close eye on 6250-6350, as that could easily become the next zone, which should, or could, give this market a decent fillip.
The one problem could be from across the pond, as the SPX was knocking on its R1 ratio door on Friday, so this may transfer across some bearish energy, so best be a bit wary around 14:30 when they open over there.
Range: 5950 to 6150
Activity: Poor
Type: Bearish
