Nb. Our comment from the 02/22/21
A very big hearty welcome to the first triple of the year.
And for those that still harbour any doubts as to the significance of these “biggies” then just cast your mind back to this time last year.
As everything goes up by some considerable way, it is therefore totally natural that so should a markets sensitivity.
Although, even having just said that, being sensible about it means that it does normally take a bit of time for the market to get used to everything getting so much bigger.
By way of a more practical explanation, with DR lurking ready to pounce on an unsuspecting market at 6650, we would fully expect this to be far too much dynamic delta for the market to absorb.
Or at least, in the first few days, as once this expiry gets going, then these triples have historically traded between the DR and even B1 corresponding levels of ratio.
And, even if it just trades between the DR levels, then this still gives you a potential trading range of 6650 all the way down to 6100, as things stand.
Of course, things may change, and significantly so, but at first blush this is not looking like a happy expiry for the bulls.
Therefore, it is probably welcome news that at least this one is a normal 4-week trip.
This is not to say we can’t be wrong, but the slap in the face R2 gave to this market at 6800 (Feb and also aided and abetted by the expiry), suggests that the futures that will come out onto the market by an exponential ratio level two notches above this will be very hard to digest. Not unheard of, just unlikely in our opinion.
Range: 6550 to 6650
Type: On balance bearish
Nb. Our comment on 03/01/21
Respect to the bulls, as they could not have tried any harder.
By which we mean getting over DR at 6650 on Wednesday 24th Feb.
Sadly, it was almost too painful to watch, as is so often the case in these scenarios, that the market thinks it has done the hard part, but then every 50-points it is DR (or higher) repeated constantly.
Therefore, it was no real surprise to see it come a cropper at 6700, although it was also very resilient of those bulls to keep the close a smidgen above DR, at 6651.96.
Then you get to the amazing Friday, and the market misinformation that the open and high were the same as the previous days close, 6651.96, just obfuscates the picture, so shame on you, yet again.
In reality, the open was about 6573, so significantly below DR at 6650, and the subsequent rally and resultant intraday high of the day was about 6647, so another test of DR, not that the official O,H,L,C, want you to know that of course.
Although they couldn’t hide the solid test at the other end of the R2 bandwidth, as it battered on the door of its zone at 6550 for a good half hour.
The bulls did try to hold the line, and for quite a while, but to no avail.
For the astute among you, this test of 6550 would have been immediately recognised as strike 3, the first two tests having already taken place on the Monday and Tuesday.
This now makes the bottom of the zone, 6450, a really very important level.
So, and as you can see in the table above, it is worth noting that the ratio has gone up to R2.
Hopefully, it will now reside safely in its zone for the next fortnight, but if it doesn’t, then R2 shouldn’t hold that much fear (having been in it all last week), and as it has already tussled with DR, this would then now become a possibility.
Range: 6450 to 6550