Triple Witch

  • June 21, 2002
  • Kevin Haggerty

After
a quick 10:00 a.m. drop, the
major indices went sideways in Slim Jims until Triple Witch program action
accelerated the downside in the last hour. They took the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
down about 10 points in the last hour, while the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) had a 100
point air pocket drop. The SPX closed at 1006.29, -1.3% on the day. The Dow was
-1.4%, closing at 9432, and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -2.1% to close at
1465. 

NYSE volume was 1.369
billion, volume ratio of 26, and breadth -282. The Nasdaq volume was just below
average at 1.7 billion and another extreme volume ratio at just 13. The major
indices remain below their 20, 60 and 260 EMAs on the five-minute charts.

The semis continued to
reel from the chip news, declining 4.8% yesterday, and the
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) is
now -13% over the past three days. The
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) also ended -4.8%, while
contrary gold was +4.6%, and the
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) has now gone +3.6%, -4.3%,
+3.7%, -1.3%, and +4.6% over the past five days reacting to Middle East events
and is also being gamed in concert with the SPX futures by some large hedge
funds.

The constant stream of
Middle East news is a windfall for the Program Gang to front-run their own
programs, which means operating in the futures market first knowing you will
complete the trade in the cash market or vice versa. Sometimes they use three
markets to leg the trade: options, futures and stocks. Extremely
profitable business when you can knowingly influence a trade in one market in
the direction you want it to go, enabling you to get better prices on the other
side of the trade. 

The NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) carnage continues going into the six-month report card for the
Generals. There are now 28 stocks in the NDX 100 below $10, while the index is
-33% year-to-date vs. the SPX at -12% and the Dow at -6%. 

It’s Triple Witch Friday,
so make it a scrolling day on the intraday charts, or if the sun is out where
you live, shut your computer down, go out and enjoy yourself and get ready to go
on Monday. Regardless of what decision you make, turn off the empty suits on
TV. 

Have a good trading day
and have a great weekend.

Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Thursday’s NYSE TICKS