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Quadruple Witching to Spur Volume Surge, Eyes on Fed Risk | Webinar

Quadruple Witching to Spur Volume Surge, Eyes on Fed Risk | Webinar

2018-09-21 12:14:00
Justin McQueen, Analyst
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Equity Analysis and News

  • Quadruple Witching to Spur Volume Pick Up
  • Fed Rate Decision Poses Key Risk

Price

50DMA

100DMA

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Europe

FTSE 100

7429

7574

7611

7486

46

Mixed

DAX

12434

12378

12499

12494

60

Mixed

CAC 40

5494

5409

5407

5370

64

Bullish

US

S&P 500

2937

2867

2815

2755

67

Bullish

DJIA

26751

25785

25289

24961

76

Bullish

Nasdaq 100

7594

7461

7330

7048

57

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Quadruple Witching to Spur Volume Pick Up

Today marks Quadruple Witching which represents the expiry of stock index and single stock futures and options. This occurs on the 3rd Friday of the last month in each quarter (January, March, June, September) and typically leads to a surge in volume.

Dow Jones Industrial Average Volume

Quadruple Witching to Spur Volume Surge, Eyes on Fed Risk | Webinar

Source: Thomson Reuters

Fed Rate Decision Poses Key Risk

The latest announcement from the Trump administration that $200bln worth of tariffs on Chinese goods will be imposed had a surprisingly muted impact on equity markets. Partially this could be due to the fact that the levy rate for the $200bln worth of tariffs will be at 10% as opposed to the previously touted 25%. Consequently, this has been shrugged off by the market with the key risk in the upcoming week being the FOMC rate decision. Markets have fully priced a 25% hike, as such, the focus will be on the accompanying statement and dot plot projection.

S&P 500

Yesterday saw the S&P 500 push to fresh record highs of 2942 as risk on sentiment continues to buoy equity markets. Given that the index continues to hover above the 2889-2899 bullish value area, the outlook remains to the upside. However, RSI indicators have begun to turn, suggesting a potential topping in the term, which in turns provides us with a cautiously bullish view.

Quadruple Witching to Spur Volume Surge, Eyes on Fed Risk | Webinar

Dow Jones Industrial Average

Similarly, with the S&P 500, the Dow Jones posted fresh record highs after breaking above the initial upside target at 26335. Eyes are for a consolidation above 26048-26335 in order to confirm that the outlook remains bullish. However, gains may be modest at best with the Relative Strength Index firmly in the overbought territory.

Quadruple Witching to Spur Volume Surge, Eyes on Fed Risk | Webinar

NASDAQ 100

Focus are on the all-time high (7697) posted in August following the recovery made in the index after support at the 7390-7450 pivot area held firm. Slight resistance touted at 7640 had been rejection, sending the index back down to the low 7600, however a break above could see the index make a run in on 7700.

Quadruple Witching to Spur Volume Surge, Eyes on Fed Risk | Webinar

KEY TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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