For the second straight session, stocks closed mixed, with the Dow and S&P finishing in the red while the NASDAQ and NYSE Composite registered marginal gains.
Essentially, markets were flat as the trudge through June continues.
As the week draws to a close, Friday looks to be a troublesome day, owing largely to options expiration and the fact that with the exception of the Dow, the major indices are right back where they began the month.
This condition - known as quadruple witching - may result in increased volatility, and, with prices flat, many stock options and futures may close without redemption, i.e., losses.
Quad witching is the simultaneous expiration of options and futures tied to individual stocks and stock indexes occurring on the last month of each quarter.
While the name may sound frightening, it often is not, especially when stocks are gaining, which, over the past eight years, has been more often than not. This quarter may prove a hurdle too high, sending stocks screaming lower.
Psychologically, losing money on a Friday sends traders home to unhappy weekends with thoughts of carnage fresh in their minds, so Monday's trading may prove more prescient in terms of market direction.
Meanwhile, bonds are telling. The 10-year note slipped to 2.15 on Thursday, with the 30-year bond holding steady at 2.72. The curve has continued to flatten, and that could actually be due to the Fed's tightening. With the overnight federal funds rate at 1.00-1.25 - the highest in nearly a decade - the Fed may be - inadvertently or otherwise - prompting the US economy into a recession.
GDP growth continues to flag and employment is stagnant. Raising rates during a period of slow to no growth makes sense only to Federal Reserve governors or others who bear no consequences for their actions.
Friday's action in the markets deserves close attention.
At the Close, 6/22/17:
Dow: 21,397.29, -12.74 (-0.06%)
NASDAQ 6,236.69, +2.73 (0.04%)
S&P 500 2,434.50, -1.11 (-0.05%)
NYSE Composite: 11,712.52, +16.24 (0.14%)
Showing posts with label quadruple witching. Show all posts
Showing posts with label quadruple witching. Show all posts
Friday, June 23, 2017
Friday, June 19, 2009
Dull Trading with Minimal New Flows
Considering what the US economy has been through the past 2 years, maybe a little break in the action now and then is a welcome relief. The considerable slowing of news flows over the past few weeks have truncated trading volumes in US equity markets by as much as 40% in recent days.
There were absolutely no economic reports on which to hang a trade on Friday.
Volume was quite a bit healthier due to a quadruple witching condition which produced a touch of volatility and a good deal more trading activity than has been the norm of recent days. It was another split session for stocks, the third in as many days, which is likely a symptom of the general insecurity and lack of direction which has plagued the markets for two weeks running.
The general direction is down, but people are far from convinced. Meanwhile, many of the biggest players have already headed for vacation spots and have money parked in either defensive positions or fixed investment vehicles.
This was, however, the worst week for the major indices since the week ended May 15 this year. The Dow surrendered 260 points, the S&P gave back 25 points, the NASDAQ shed 31 points, and the NYSE Composite lost 214 points.
Dow 8,539.43, -16.17 (0.19%)
NASDAQ 1,827.47, +19.75 (1.09%)
S&P 500 921.19, +2.82 (0.31%)
NYSE Composite 5,934.05, +27.85 (0.47%)
For the day, advancers finished far ahead of decliners, 3854-2487. New lows narrowly led new highs, 56-55. It was the 6th straight session marking the lows above the highs, though the margin continued to deteriorate over the past 3 sessions.
NYSE Volume 2,127,423,000
NASDAQ Volume 2,954,731,000
Finally, the speculators eased off their ridiculous bid on crude oil, sending it to steep losses, down $1.82, to $69.55. Perhaps this is a sign of a topping point in the seasonal bid. With no real demand rationale to push prices higher, maybe the speculators thought better of their positions and see an end to the over-hyped, and over-extended, trade.
Gold gained $1.60, to $936.20; silver went the other way, down 4 cents, to $14.20.
There is scant economic news next week as the end of the second quarter approaches. After a blank Monday, figures for Existing Home Sales are released on Tuesday, with New Home Sales on Wednesday along with Durable Goods Orders and Crude Inventories. Wednesday is also slated for a rate decision by the Fed's FOMC, so trading should be less than robust until 2:15 in the afternoon, in anticipation of what is surely to be a "no change" call. Regardless, many market participants will hang breathlessly on every word and make trades according to the whims and innuendo of the FOMC.
Markets really ought to begin churning a little bit just before the 4th of July weekend, because right after that, companies will be reporting 2nd quarter earnings, so there will be some fur flying. Until then, investors are either getting out of the way or just staying put, waiting for another seminal trading moment. That next moment may come when the Dow breaches 8000, probably within a month's time.
There were absolutely no economic reports on which to hang a trade on Friday.
Volume was quite a bit healthier due to a quadruple witching condition which produced a touch of volatility and a good deal more trading activity than has been the norm of recent days. It was another split session for stocks, the third in as many days, which is likely a symptom of the general insecurity and lack of direction which has plagued the markets for two weeks running.
The general direction is down, but people are far from convinced. Meanwhile, many of the biggest players have already headed for vacation spots and have money parked in either defensive positions or fixed investment vehicles.
This was, however, the worst week for the major indices since the week ended May 15 this year. The Dow surrendered 260 points, the S&P gave back 25 points, the NASDAQ shed 31 points, and the NYSE Composite lost 214 points.
Dow 8,539.43, -16.17 (0.19%)
NASDAQ 1,827.47, +19.75 (1.09%)
S&P 500 921.19, +2.82 (0.31%)
NYSE Composite 5,934.05, +27.85 (0.47%)
For the day, advancers finished far ahead of decliners, 3854-2487. New lows narrowly led new highs, 56-55. It was the 6th straight session marking the lows above the highs, though the margin continued to deteriorate over the past 3 sessions.
NYSE Volume 2,127,423,000
NASDAQ Volume 2,954,731,000
Finally, the speculators eased off their ridiculous bid on crude oil, sending it to steep losses, down $1.82, to $69.55. Perhaps this is a sign of a topping point in the seasonal bid. With no real demand rationale to push prices higher, maybe the speculators thought better of their positions and see an end to the over-hyped, and over-extended, trade.
Gold gained $1.60, to $936.20; silver went the other way, down 4 cents, to $14.20.
There is scant economic news next week as the end of the second quarter approaches. After a blank Monday, figures for Existing Home Sales are released on Tuesday, with New Home Sales on Wednesday along with Durable Goods Orders and Crude Inventories. Wednesday is also slated for a rate decision by the Fed's FOMC, so trading should be less than robust until 2:15 in the afternoon, in anticipation of what is surely to be a "no change" call. Regardless, many market participants will hang breathlessly on every word and make trades according to the whims and innuendo of the FOMC.
Markets really ought to begin churning a little bit just before the 4th of July weekend, because right after that, companies will be reporting 2nd quarter earnings, so there will be some fur flying. Until then, investors are either getting out of the way or just staying put, waiting for another seminal trading moment. That next moment may come when the Dow breaches 8000, probably within a month's time.
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