Friday, 17 September, 2021
Witching and Rebalancing Is in the Spotlight Today
(Bloomberg) —
Today is triple witching for stocks and it’s estimated $3.4 billion of equity options are set to expire. This coupled with the start of the corporate blackout window could really put dip buyers in stocks to the test.
This all takes place while the S&P 500 index dances above the 50-dma, a level where dip buyers have placed their wagers several times in the last year. If these buyers show up, it might take a while for them to be vindicated.
That’s because stocks are due for a period of seasonal weakness in late September/early October as unofficially companies go into buyback blackout. This period usually lasts from the last two weeks of the quarter and ends about 48 hours after the entity announces quarterly earnings.
(Chart Courtesy of Dan Curtis.)
It’s also worth mentioning the S&P 500 is due to be rebalanced today. Ceridian, Brown & Brown and Match Group will be joining the index, while Unum, NOV and Perrigo will are due to exit. The creator of the index expects that will force $55 billion worth of stock trades, adding to expected volatility today.
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