Nb. Our comment from the 01/31/22
Well, what can one say about last week? Well, quite a lot actually.
Monday was a remarkable day, as it is not often that London loses 200-points. And although the intraday low was 7283.38 and R1 was then at 7250, when you take into consideration not only the magnitude of the fall but also the velocity of it, then that is close enough for us.
And if Monday wasn’t enough for you, then Tuesday was all about Y2, then at 7350.
And the last three days have all been about the zone, 7450 and 7550. And, although the official close on Thursday was 7554.31, that was down to the auction as the real time close was 7550.15, right on the upper boundary.
Which makes the range on Friday, from this intraday high to the intraday low of 7420.20 coupled with the close of 7466.07 (real time 7472.04) a zone bandwidth test. And we did check the honest open, not the official it is the same as the previous days close, and it was circa 7550. Which normally means a breakout the next trading day.
Of course, when we said above that it might be beneficial to the bulls if this market spent the first week in its zone and, although this was the case for most of it, this did not take into consideration the extreme start to the week and then the ensuing no quarter battle to get it back in there.
Therefore, it is scant surprise that there has been considerable change in the ratios. Naturally necessitated by continued high levels of activity.
The changes can be seen above but what is not so evident is the fact that the zone could easily move down to 7250-7350 and, should this happen, it would materially change the entire dynamic of this index for the rest of this expiry.
Otherwise, the main takeaways are the disappearance of all the Y ratio above the zone, and the fact there is now 200-points of the minimal Y1 ratio below it. So, for us, keeping this market in its zone will be hard enough, but if it in itself falls, then a really tough ask, despite the zone bandwidth test on Friday.
Range: 7450 to 7550
Type: On balance only just bullish
Nb. Our comment on 02/07/22
Despite it being “a tough ask” they did manage to keep this market in its zone.
And by doing so, we have now seen a very decent build up in the ratios below the zone.
Again, it was an exciting start to the week, and if you were watching on Monday then that would have given you a massive clue about what might be in store for the rest of last week. At 10:30 the market went down to 7452 before recovering. Then again at 14:50 it had another go, getting back down to 7451 before one final attempt just before the close when it hit 7451 again. Three tests of the bottom boundary, and not one breach in sight.
Therefore, it was hardly surprising when we saw the intraday high of 7549.29, the upper boundary, the very next day.
Of course, we don’t know when 7550 dropped from R1 to Y2, but three days in row where the intraday high was around 7600 suggests it was about Wednesday or Thursday. Interestingly, only the Thursday closed outside of the zone.
It is not unheard of for this market to spend a third week in its zone but, as activity has continued to be so good, we suspect this is going to be even harder to achieve this week
However, there is now some Y ratio either side of the zone, so plenty of scope for it to escape should it want to.
Below the zone is still where there is the more scope, with R1 now starting at 7350.
Above the zone is still rather limited, with R1 remaining at 7600 and thereafter the exponential ratios climb one rung up every 50-points so, if they want a new all-time-high, then they are going to have to work for it and be prepared to take on all those futures forced out by the dynamic delta.
Range: 7450 to 7550
Type: On balance bearish