By Paul Cherney
This is the week of the Triple Witch -- when stock options, stock index options and stock index futures expire on the same day. That will happen on Friday. There are multitudes of hedges and cross hedges in place. More volatility on Thursday is likely. A one day rebound in prices could occur at anytime, but right now, on balance, my end of day systems are neutral with a negative bias.
It is very possible that we could see a dip in prices in Thursday's market that sparks a rebound intraday because as of 3:30 pm EST on Wednesday the CBOE Total Put/Call ratio was 0.91 (high, often indicating some relief from the selling is close at hand). The CBOE's Equity Only Put/Call ratio was 0.74 (also high).
The Nasdaq has a layer of immediate intraday resistance at 1864-1875. The next layer of resistance is well-defined and it thwarted advances for two days in a row; that resistance is 1887-1899. These are intraday levels. The charts based on end-of-day price bars show a band of resistance in the 1901-1960 area with a focus of 1908-1942.
Immediate support for the Nasdaq is well-organized in the 1853-1832 area.
The S&P 500 has a layer of support from 1161.00-1154 and then 1158-1143, which makes 1158-1154 a focus of support. Price action below the 1154 level appears likely for Thursday's session, but a rebound (intraday) is also likely as some hedges associated with the Triple Witch might get unwound intraday and force a reversal in prices.
The S&P 500 has been caught in a band of intermediate-term resistance which runs from 1150-1177 (daily charts). Immediate intraday resistance is a shelf at 1154-1151.60 (intraday price action). Resistance above that (intraday) is 1159-1169.
Cherney is market analyst for Standard & Poor's