Our latest weekly market update, and what is really going on.
All three major US benchmarks surged higher into the close, with the S&P 500 and the NASDAQ recording their best weeks since November 2020.
Equity transactions spiked at the open as the expiry of stocks and index options collided with that of index futures in a quarterly event known as triple witching. Roughly $US3.5 trillion of single-stock and index-level options were estimated to expire Friday, so the market is likely distorted by these technical issues. This triple witching — when stock options, stock index futures, and index option contracts expire on the same day — usually triggers wild moves as investors move out of old positions and take new ones.
Growth sectors of the market like tech were also helped by falling interest rates even as Fed officials urged the central bank to do even more.
The rally in the broader market has stoked debate on whether this is the start of a bottoming process, or further downside lies ahead.
Market technicians, however, urge caution on reading too much into the rally as options expiry tends to muddy market movements. Technical indicators including volumes and market breadth have yet to improve significantly to signal that the market is establishing a bottom.
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