At the end of last week I posted a few observations via some charts on things I felt should be watched for clues, especially during the week of what is known as “Quad Witching.”
The reasoning was simple: the moves that happen can sometimes either mask or, show potential signaling due to the nature of this phenom in the markets. i.e., initial signaling or “moves” can be muted, negated, or sometimes extremely violent as index and stock options expire in such a concentrated time frame.
As I stated then and during my show, Monday is also an important day to watch, because “new money” as its called will be positioning for the next quarter.
So it is in that light I want to post a few more charts for your consideration that I made on Friday after the close with a few notations and one of where we are as I post this. Here’s the first two. To wit:
The above is of the S&P 500™ as of the close Friday. As one can see I have left my original observation that I said should be watched for in how it resolved as the “markets” wound through the day.
What’s interesting with the above via a technical eye is that the original observation, although negated, in-turn formed another larger pattern with the same characteristics for clues, but only in a longer time frame. What you see above is what is known as a “mean reversion channel.” (a crude improvised one I’ve concocted) As one can see, the patterning and “tells” as it’s called, once again, confirm my original hypothesis. Now it’s only a game of “show and tell” that only the “market” can provide. i.e., we’ll get an idea of possible intent of either up or down only after the fact. Remember – there is no “holy grail.”
With the above said, what was quite interesting was that although my original observation was negated (e.g., an ending diagonal pattern) during the cash open hours the futures market constructed its own similar pattern. Here it is at the close of Friday, again, to wit:
As you can see, what I was observing in the cash open (e.g., normal market hours) formed in the futures market and resolved in much the same way as I was originally calling for. What does it all mean? No one knows, but from a n observational stand its screaming something big may be lurking behind the scenes were a possible thrust lower rather than higher could have the best odds. And if it does that could make things very precarious for this once considered “teflon” market.
So, as I said, that was all from Friday, so where are we now? Here we are as of this writing approximately 8:00AM ET. To wit:
What’s interesting to me is that we gapped down lower and still remain below that gap. Whether or not that remains true once the “markets” open is anyones guess. But, (and it’s a very big but) should the markets begin to fall away from this area with any velocity should be the key observation to watch for, in my opinion.
As of today all the observations or notes I made on my original “Watching the wandering sea” hold and those levels I marked still stand as “trip wires” where real concern may be warranted. Whether or not any of this plays out, no one knows, one can only wait and watch, However, you, unlike most, have at least something to consider and a rational idea for why.
© 2018 Mark St.Cyr