Quadruple Witching Friday
It's Quadruple Witching Friday today!
This means that a whole bunch of derivatives are expiring on the same day today, creating an unique market condition. Some says its a very volatile day for equities but the truth is, the unique condition is usually creates is one with very limited trading range with huge trading volume.Yes, this, happening on a Friday, makes it not that attractive a day to be putting on new positions as you are not likely to benefit from Friday's move itself and would have to hold a position through an uncertain weekend. Read more about Quadruple Witching.
Apart from Quadruple Witching day, today is also North Korea Missile Testing Day!
Yes, North Korea test fired its longest range missile ever in the morning, flying 3700km over Japan and landing in the ocean east of Japan. The last time such an event happened, the US market took a huge hit as fears surrounding the Guam threaten reemerges. However, since many missile tests ago, investors and traders have learned that such an impact on the US market usually last only a day or two and usually leads to a huge rally after that. Thats why there are people in the options community these days calling this the "North Korean Missile Play", using volatility strategies to benefit from such an event.
However, I do not see that the missile test would have the same effect it did on the market this time round.
Why is that so?
Well, its Quadruple Witching day! Its a day the witches win and the market trades largely range bound and I don't see that changing even for a North Korean Missile Test. In fact, I suspect many investors and traders are already desensitised to such an event and is unlikely to react to it. In fact, I suspect the amount of arbitrage that has been set up to take advantage of this event has already more or less reduced the impact on the market to negligible unless North Korea comes up with a serious threat.
So far, the US market has performed pretty much exactly I expected it to every step of the way. The Dow broke and continued upwards from the 22K level, exactly as I have predicted and the next thing it should do is take a little profit taking, pull down, retest and establish the 22K as a support level before going further upwards. That should happen next week.
So, have a great weekend!
For now, the US Market remains in all out bull trend.
This means that a whole bunch of derivatives are expiring on the same day today, creating an unique market condition. Some says its a very volatile day for equities but the truth is, the unique condition is usually creates is one with very limited trading range with huge trading volume.Yes, this, happening on a Friday, makes it not that attractive a day to be putting on new positions as you are not likely to benefit from Friday's move itself and would have to hold a position through an uncertain weekend. Read more about Quadruple Witching.
Apart from Quadruple Witching day, today is also North Korea Missile Testing Day!
Yes, North Korea test fired its longest range missile ever in the morning, flying 3700km over Japan and landing in the ocean east of Japan. The last time such an event happened, the US market took a huge hit as fears surrounding the Guam threaten reemerges. However, since many missile tests ago, investors and traders have learned that such an impact on the US market usually last only a day or two and usually leads to a huge rally after that. Thats why there are people in the options community these days calling this the "North Korean Missile Play", using volatility strategies to benefit from such an event.
However, I do not see that the missile test would have the same effect it did on the market this time round.
Why is that so?
Well, its Quadruple Witching day! Its a day the witches win and the market trades largely range bound and I don't see that changing even for a North Korean Missile Test. In fact, I suspect many investors and traders are already desensitised to such an event and is unlikely to react to it. In fact, I suspect the amount of arbitrage that has been set up to take advantage of this event has already more or less reduced the impact on the market to negligible unless North Korea comes up with a serious threat.
So far, the US market has performed pretty much exactly I expected it to every step of the way. The Dow broke and continued upwards from the 22K level, exactly as I have predicted and the next thing it should do is take a little profit taking, pull down, retest and establish the 22K as a support level before going further upwards. That should happen next week.
So, have a great weekend!
For now, the US Market remains in all out bull trend.
posted by Jason Ng at 2:30 AM
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