Quad Triple Witching Rebalance
What?
The Markets
We made it through the week.
And that meant dealing with FOMC, Quadruple witching, index rebalance, and a whole lotta headlines.
What the heck does all that mean?
Simply, it means the market was prone to (more so than usual) erratic action with many fake-outs and reversals.
Technically, (in case of the unlikely event that anyone cares) quadruple witching occurs on the third Friday of March, June, September, and December each year, when stock index futures, stock index options, and stock options expire simultaneously. (Note that single-stock futures, which used to be part of the "quad" in quadruple witching, stopped trading in the U.S. in 2020, making it effectively "triple witching," though the term "quadruple witching" is still widely used.)
Back to the real-world implication, we did have a choppy but potentially constructive week.
We’ll take a brief look with two charts.
The Charts
SPY QQQ IWM DIA - The Roadmap🗺️
This is my ‘go-to’ chart for a quick look at the four major stock indexes - a 65-minute timeframe with a few simple indicators.
The thick blue line is a 5-day moving average. The shaded areas tell us very quickly whether we are:
🟢 above a rising 5-day MA
🔴 below a declining 5-day MA
🟡 below a rising or above a declining 5-day MA
The pink line is the year-to-date anchored VWAP, while the purple has a week-to-date anchor. Finally, orange AVWAPs are added manually from pivot highs, lows, or particular events.
The takeaway is that we were below a declining 5-day MA for many weeks. Now, that is changing and showing evidence of a potential bottoming process - or, at least, an attempt at one, as indicated by the patterns of higher highs and higher lows.
Stocks came very close to breaking that pattern today, with low prices that exceeded those of the last trip down - look at the U-shaped drawings. Prices did pierce those pivot lows but didn’t stay there long. So it’s close.
Next week, we’ll want to see new highs first, followed by a move to test and/or get above the AVWAPs from the early March pivot highs. For caution, we can watch for low prices exceeding this week's lows to get more defensive.
TSLA Tesla also shows progress, bouncing at an area of support from the October ‘24 earnings price range. It’s well above its 8-day MA, moving toward a gap pivot just above $256. Constructive action. Next week, we will watch the 5-day MA, just like the indexes, to see if 1) it can turn higher, and 2) it can provide support on dips.
(EpicTrades bought calls for this move. See the chart and links below to get your real-time alerts.)
The Trade
The current trade: have a good weekend. Rest, relax, and recharge.
The week was challenging for many, requiring tons of focus and energy. Time away from the charts and the screens is crucial.
To that end, I will be outdoors as much as possible, meaning the 📈Weekly Chart📉 thread will be delayed, possibly even sporadic.
I’ll send an alert here when they are posted.
HAGW!
Looking For More?
Elevate Your Trading Adventure Even Further With These Offerings.
EpicTrades Options Newsletter
Real-time trade ideas and insights, providing actionable trading insights focusing on options trades with short-term horizons, aiming to capitalize on weekly market movements.
The approach includes detailed reasoning for trades, specific options, and profit targets. It focuses on quick gains with a minimal time commitment from subscribers.
Speaking of Tesla - TSLA, it was a focus for EpicTrades on this move, and we bought calls that quickly returned +28% for us and moved even further into today’s close.
Don’t miss the next trade! Hit the link to get your real-time alerts.
The Inner Circle
The Inner Circle is a Virtual Trading Floor (VTF) at T3 Live. I’ve been working and trading with this group since 2022. You may have noticed the logo in the watermarks on my charts.
Founded by David Prince and led by him, Rick March, and Kira Turner, the Inner Circle is a community of elite traders, including hedge fund managers, family office heads, corporate executives, financial advisors, and even professional poker players.
Fundamental, Macro, and Technical Analysis all combine to find and discuss the best opportunities in current markets.
The Disclosures
***This is NOT financial advice. This is NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
