Shayne Heffernan Wall St Outlook
Over the last week we have seen the continued slide in Equity values in the USA which has weighed down world markets to some extent.
This week will see quadruple witching Friday, when the options for stock-index futures, single-stock futures, equity options and stock-index options for June expire, we have fallen almost 1,000 points on the Dow of late so expect most of the closing action will in fact be buying to close short positions.
Expect increased volume and the possibility of big moves in the market. Expiration also has the potential for increased volatility, especially intra-day volatility next week.
One encouraging sign is the CBOE Volatility index which remained relatively unchanged, indicating market participants have yet to push the panic button.
As Warren Buffett has said “A public-opinion poll is no substitute for thought.”
Investors should do their own thinking, as we move in to a new week most of the media is reporting on more falls ahead, however we remain buyers of US equities and our own research points to an event driven fall, a delayed impact of the horrifying Japan Earthquake and Tsunami and the following Nuclear threat, much of the slowdown in the data released is the result of the global uncertainty and supply disruptions that occurred in Japan.
It is true Wall St has slipped passed technical support levels, with the S&P 500 falling below the April 18th low of 1294.70, leaving 1250 level as the next area of support.Shorters took center stage last week as the daily volume put/call ratio for equity options on the Chicago Board Options Exchange (NASDAQ:CBOE) hit an 18-month high on Wednesday, indicating that investors are significantly bearish on the stock market.