In yesterday’s video commentary I — in reference to the abundance of short-dated options being traded of late, and to today’s massive expiration — suggested that factors other than fundamentals, and other than the retail trader may be aware of, can move the market in a big way, in a hurry.
Therefore, today (largest options expiration of the year) may see yet another outsized move in the market… Where it finishes the day, directionally-speaking, of course is yet to be determined… Looking at the pre-market action, it’s clear that traders are nervous heading into today’s session.
Per Bloomberg this morning:
“An estimated $4 trillion of options may expire in today’s quarterly triple witching and worries are mounting the expiration will act as an air pocket.”
In case you missed them, two videos — market and economic updates — from yesterday sit in your inbox (and are linked here and here). Both worth watching to get a feel for the go-forward overall setup.
Asian struggled overnight, with 12 of the 16 markets we track closing lower.
As are US stocks to start the session: Dow down 215 points (0.65%), SP500 down 0.72%, SP500 Equal Weight down 0.92%, Nasdaq 100 down 0.22%, Nasdaq Comp down 0.26%, Russell 2000 down 0.59%.
The VIX sits at 23.93, up 0.44%.
Oil futures are down 2.85%, gold’s up 0.39%, silver’s down 0.19%, copper futures are up 0.15% and the ag complex (DBA) is down 0.20.
The 10-year treasury is down (yield up) and the dollar is down 0.09%.
Among our 36 core positions (excluding options hedges, cash and short-term bond ETF), 9 — led by uranium miners, Amazon, Albemarle, communication stocks and gold — are in the green so far this morning. The losers are being led lower by energy stocks, long-term treasuries, Sweden equities, utilities stocks, and base metals miners.
Worth keeping in mind — for perspective — when it comes to investing:
“An abnormal reaction to an abnormal situation is normal behavior.”
–Frankl, Viktor E.. Man’s Search for Meaning
Have a great day!
Marty