Quadruple Witching Puts Pressure On Markets

You might be wondering what "Quadruple Witching" is and why it would have a negative effect on the market. Quadruple witching refers to a date on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously. For example, while stock options contracts and index options expire on the third Friday of every month, all four asset classes expire simultaneously on the third Friday of March, June, September, and December.

Quadruple witching days witness heavy trading volume, thus putting strain on the markets, which often leads to down trading days like we see today. In fact, the week following quadruple witching, the market indices such as the S&P 500, DOW, and NASDAQ tend to decline, perhaps due to exhausting the near-term demand for stocks. Something to keep in mind as we head into next week.

For the Friday close, the DOW dropped 166.44 points or -0.48%, to close at 34,584.88. The S&P 500 dipped -0.91% to close at 4,432.99, and the NASDAQ -0.91% to close at 15,043.97.

The DOW finished down -0.1% this week for its third straight week of losses. This is the first 3-week losing streak since September of 2020 for the DOW. The S&P 500 fell -0.58%, and the NASDAQ dropped -0.47%.

For the month, stocks are also in the red. The DOW is down -2.25% in September. The S&P 500 is off by -2% this month but still just 2.5% from its all-time high, and the NASDAQ has lost -1.5% this month.

Key Levels To Watch Next Week:

Every Success,
Jeremy Lutz
INO.com and MarketClub.com