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Beware The Quadruple Witch - Morning Market Squeeze

Key Tactical Takeaways: > The S&P's struggle to close back above the bearish NT Trailing Stop at 3427 continued on Wednesday. This leaves the index vulnerable to a deeper correction ahead of the next buying opportunity somewhere between ...

> The VIX is up sharply this morning, which increases the likelihood that > 1-sigma daily range is in the making for Thursday. In order for outsized daily ranges to become the norm, however, VIX needs to close above ...

> Crude's close above the NT Trailing Stop at 37.22 on Wednesday was meaningful, since it ...

> We're participating in the recent surge in basic materials by adding a long position in ... to the trade ideas sheet.

Some Quick Thoughts: With a M-O-M increase of just 0.60% vs. expectations of +1.0%, following a downwardly revised 0.9% gain in July, Wednesday's retail sales report confirmed fears that spending would start to slow as the effects of pandemic relief start to dry up. There were some bright spots, such as the increase in spending on things such as clothing, furniture and electronics. However, this is ...

For the most part, the market is still a discounting mechanism, which is to say that some portion of the September correction has been in anticipation of a spending slowdown. The other portion, however, has to do with the ongoing unwind of the late-August extreme in call option buying. With index options, single stock options, options on futures and the futures themselves all expiring tomorrow (i.e., quadruple witching), this post-Fed pick-up in volatility makes sense. While we still think this downturn is going to lead to the next buying opportunity, the potential exists for this next stage of the correction to be.... Technically, SPX 3... to 3... is hugely important support. If we start to see sustained intra-day selling below this zone, losses could ...

Updating you on what we warned of in yesterday's note, the yen's recent popularity as a safe haven currency has progressed to the point where EURJPY has confirmed a... The Nikkei closed 0.67% lower and looks vulnerable to a breach of its bullish short-term stop of 23286.33. The Shanghai Comp. also looks vulnerable after an overnight drop of 0.41% to its bullish short-term stop at 3243.90. Lastly, the DAX is 0.63% lower, and threatening a breach of its bullish short-term stop at 13027.30. 

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