Quadruple Witching Brings Choppy Action To The Markets

Posted Friday, March 20, 2020 by
Shain Vernier • 1 min read

Quadruple witching hits the markets on the third Friday of March, June, September, and December. If you are wondering what quadruple witching is, the answer is simple ― it’s the simultaneous expiration of stock options, futures options, index options, and outright futures contracts. Historically, these sessions can be choppy; today has proven past tendencies true.

Going into the final hours of the trading week, the DJIA DOW (-50), S&P 500 SPX (-15), and NASDAQ (+16) are all trading in whipsaw fashions. During the U.S. overnight, NASDAQ 100 futures went limit up; now, the June contract is trading in the red. For the time being, traders and investors appear to be limiting exposure ahead of the weekend COVID-19 news cycle.

During the pre-market hours, several real estate metrics were released to the public. The numbers came in strong:

Event                                                                  Actual          Projected      Previous

Existing Home Sales (MoM, Feb.)                    5.77M             5.50M             5.46M

Existing Home Sales Change (MoM, Feb.)      6.5%                  0.7%              -1.3%

While these figures are robust, not many analysts expect them to last. Projections for March will be vastly reduced amid coronavirus-driven market fallout.

U.S. Markets Choppy, Gold Near $1500.0

It has been a chaotic day on the financial markets, featuring heavy volatility. April gold futures have also been active, posting a 619 tick intrasession range.

April Gold Futures (GC), Daily Chart

As we roll toward next week’s trade, there are two levels in this market worth keeping an eye on:

  • Resistance(1): 38% Retracement, 1547.7
  • Support(1): 2020 Low, 1450.9

Bottom Line: In the event we see an early-week rally in the bullion markets, a short from the daily 38% Fibonacci retracement may come into play. As long as 1450.9 holds as the swing low, I will have sell orders in the queue from 1544.4. With an initial stop loss at 1558.4, this trade produces 140 ticks on a standard 1:1 risk vs reward management plan.

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