The past week on the domestic market was marked by the establishment of new historical maximums for the ruble index. The Moscow Exchange index showed a peak at the level of 3837.73 points, the local upward trend has been operating in it since May 20, and the medium-term one since November 2, 2020.
December, March, June and September are the months in the middle of which the quarterly expiration of futures and options occurs. Since the beginning of the current medium-term uptrend, two expirations have already passed (December 18, 20 and March 18, 21), ahead of the third – June 17.
And in connection with this event, I decided to share my observations.
So, the first observation: in a growing market, expiration takes place near local highs and there is no trend change before the expiration.
Observation two: near the expiration date in 1-2 days or directly on the expiration day itself, you can be ready for a local correction. To a pullback in a growing market, to a rebound in a falling market. For examples, see the chart of the Moscow Exchange index near the above dates.
Observation three: the market grows on expectations, or trade on expectations – fix on the facts. This observation is not new, but I want to tie it to a future meeting between Biden and Putin. As you know, the Russian-American summit will be held on June 16 in Geneva, where intercountry relations, strategic stability, and the fight against the coronavirus pandemic will be discussed.
As a result, we have the following – a growing market, which showed peaks 1-2 days before the two previous expirations and positive expectations associated with the meeting of the leaders of America and Russia. From which it turns out that our market has a positive charge until the 16-17th, which can just reach its climax when approaching the indicated dates.
And also my experience confirms the rule: “What happened once may never happen again. But what happened twice (see above) will certainly happen the third time. “
It is worth reminding stockists that on June 14 in Russia there is a day off (postponed from the 12th), that is, after it, the very dates will come when the game from the sale will be logically, technically and cyclically justified. But in the next week, either purchases will prevail, or the market will go sideways (as it was before the December expiration).
As for the potential for a rollback, for now we will focus on the size of rollbacks of previous periods, that is, a decrease of about 3-4.5%, and then we will be guided by the fact.
Here are the conclusions I came to. Use them or not, it’s up to you.
Scavo (Ignatenko) Anastasia
Statistics for May here