Quadruple witching brings some selling pressure to tech, while the Russell 2000 and Silver catch a bid. All eyes will be focused on the FEDs Dot Plot next week as interest rate cut expectations have been reduced.
Transcript
Good afternoon traders. It’s Chris Chavez with blue line futures and it’s your daily, midday market minute. Quadruple witching is bringing some selling pressure to stock indices. But before we get to it, if you’re watching this video, like and subscribe, if you’re at our website, there’s a link to directly to YouTube and you can subscribe that way. We’d love for you to follow us, we would love for you to help us build our following. Yeah, so looking at the equity markets, today, we’re seeing some selling pressure, the NASDAQ leading the way lower followed by the s&p. The Russell, however, is in positive territory. So definitely seeing some interesting price action today. And it is quadruple witching day. So this is quarterly expiration of futures and options contracts. It’s happening today. And I do think that could be one potential reason why we’re seeing some selling pressure. Now when looking at the markets, the 10 year yield is slightly higher. But the big takeaway from yields specifically, is the fact that fed fund futures are now pricing in 64 basis points worth of cuts. Now, this compares to the most recent fed summary of economic projections that we have, that has guided a median estimate of 75 basis points worth of cuts. So the market is now pricing in less than the most recent fed summary of economic projections. But this gets us into next week, where we’re going to get the updated release of those projections. So I think that this is the market kind of playing the middle ground between 50 basis points if the Fed and you know FOMC committee meet all the committee members together collectively, if they decide to guide lower and bring their median estimates from 75 basis points down to 50. Or if they keep it at 75. So this is really the bond market, I think playing that happy medium, really the happy medium would be about 62 and a half basis points. And we’re just about right there two basis points or so away from that. So this is a market I think putting itself in the possibility in the realm of the Fed potentially moving away from 75. And closer to 50. As we have gotten some CPI numbers, PPI numbers that have heated up a little bit. Those are some of the numbers that we got this week. And I do think that’s the interesting takeaway, especially with the Russell 2000 trading higher today. Now we did get some Michigan data that was released one year inflation expectations came in at 3% versus 3.1%. So positive to see their five year inflation expectations came in at 2.9%, which is what was expected and consumer sentiment was slightly weaker than expected as well as consumer expectations. Now, I think that overall, what we’re seeing today is driven by quadruple witching and a little bit of profit taking we’ve seen a massive run in the NASDAQ and the s&p This year, the Russell is really lagged behind. So I think that some of this taking place is also just a rotation trade. And overall, we did get some slightly softer economic data this morning. So even though yields are slightly unchanged, or maybe a positive by a basis point or two, if looking at the 10 year yield, you know, the Russell has underperformed so you know, maybe seeing a little bit of a rotation airy trade taking place is is really what’s happening here. Now, Goldman Sachs did come out and they actually released a hedging reports, basically expecting the VIX to rise in the month of April, historically, in the month of April, the VIX averages a level of about a 19 or so and the VIX is right around 16. So Goldman, you know, kind of releasing this report and expectations that we could actually see the VIX go higher, we could see some volatility. There are some, you know, major events that could lead to that, you know, specifically leading into next week’s fed press release, as well as a summary of economic projections. Some outside markets, you know, other outside market events like China and other things that could potentially bring volatility higher and just overall, higher stock price is one reason why, you know, we could see a higher VIX, so also another reason and something to pay attention to that, you know, could potentially lead to some near term volatility. Now, when looking at some of these support and resistance levels to pay attention to as we’re seeing some selling pressure, the s&p 5180 to 5185, that’s a three star support level, if we break and close below there, we could see a little bit more weakness here in the near term. Looking at the NASDAQ two star support level, not as significant is going to be 18,019. Breaking close below here. The next three star level is going to come in right around the 17 800. So pay attention to that closely crude oil kind of in a realm of its own here today. Three Star overhead resistance at 161 to 8180. If we break and close below there, it looks really great for crude oil, gold three star support, you know, gold is just about unchanged today. Silver’s in positive territory platinum as well. So, again, kind of going back to the Russell I don’t think that risk on sentiment as a whole has been crushed today, just in some areas. He is like tech, So gold is slightly in negative territory silver leading the way higher but a three star support level to pay attention to is 2148 and two tenths to 2150 and a half. If you have any questions reach out to our trade desk we’re here for you. Remember futures trading involves substantial risk of loss and is not suitable for all investors.