Triple Witching Day: $4 Trillion contracts about to expire today

US stocks dropped yesterday

On Thursday, the US stock markets went down following the warnings on interest rates from the US central bank.

The S&P 500 lost 2.49%, the Nasdaq went down 3.23% and Dow Jones closed at -2.25%.

The downside movement has been driven by interest rate hikes and the fear of recession.

Weak economic data

In the US, retail sales data fell in the month of November.

Retail sales have gone down by 0.6% compared to the October data.

People have spent less than before despite the holiday shopping time.

Investors have reacted negatively to that data because they fear a recession will happen.

Volatility ahead

Today, 16 December the market can be very volatile due to the “Triple Witching”.

There will be the expiration of contracts for stock index futures, equity index options and stock options for a total amount of $4 Trillion.

S&P 500 Technical Analysis – Daily Chart

 

The S&P 500 price dropped significantly yesterday after being rejected the previous day at the 200-day MA (green moving average).

The price broke below the 21-day MA (blue moving average), the 100-day MA (orange moving average) and the horizontal support line at around 3900, moving also out of the yellow rectangle highlighted in the chart.

Today the price has just broken also the 50-day MA (red moving average), confirming also that the previous 3900 support level is acting now as a resistance level.

This price action is clearly bearish.

We can expect prices to drop further, in the upcoming days, until the next target at the 3580 level, which worked as support in the past.

The RSI dropped further to 42, confirming a bearish trend.

Nasdaq 100 Technical Analysis – Daily Chart



The Nasdaq Index is also trading below the key moving averages, like the S&P 500, and it broke below the support line at 11480.

The trend in the short term looks bearish and we can expect the prices to fall more and test the next support at 10680, in the next few days.

Sentiment Indicator – Fear & Greed Index

The market sentiment is at 45 in the “Neutral” mode which is lower than yesterday.

The fear of a recession is affecting investors’ sentiments, which shifted their sentiment from bullish to neutral in a few days.

Portfolio Update

I made some changes to my portfolio the other day, after the latest FED meeting.

I have added new short positions on stocks while keeping my long positions open.

My view is bearish at the moment, based on the current economic situation and based on the latest speech from the FED.

I am expecting more downside in the upcoming days.

If you are already copying my portfolio, please keep the copy open.

If you are thinking of copying me, now could be a good time, if you can invest for the long term (years).

Remember to copy the open trades to optimize the copy.

Remember to set the stop loss on the copy at the minimum level, so you don’t get stopped if there is a correction.

Thank you, everyone. Have a nice day!

Steps to follow to copy my portfolio automatically:

1. Create an eToro account here: https://federicamontella.com/go/etoro/

2. Verify your account and make a deposit of at least 200 USD (you can deposit in any currency, like GBP and EUR)

3. Go to my profile page: https://federicamontella.com/go/etoro-passionforprofit/

4. Start the copy (copy open trades and set the lowest stop loss possible, to allow some movement)

5. Enjoy, it’s all automatic. You will make passive income 24/7

Let me know if you have any questions.

 

Federica Montella

eToro Popular Investor

 

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Author: Federica Montella
eToro Popular Investor, food lover and blogger. Stock trader and Popular Investor at eToro. I am on a mission to find the best restaurants and food to eat.