FYI | Mar 14 2007
By Rudi Filapek-Vandyck
Elliott Wave market commentator Steven Hochberg pointed out on Tuesday this Friday is Triple Witching Hour in the US.
This means that contracts for stock index futures, stock index options and options on US shares all expire on the same day. There are quite some legendary tales that come with the event which only occurs four times each year: the third Friday of March, June, September and December.
Trade can be very volatile on these Fridays, especially in the final hour. Another name often used for the event is “Freaky Friday”, which probably says it all.
As pointed out by Hochberg, US shares tend to rally as Triple Witching Hour draws nearer, though on Tuesday he was quick on his feet to add this is not 100% guaranteed to happen.
Assuming the US market would bottom on Wednesday, Hochberg believed it may well be that US shares will rebound until Triple Witching Hour, which would mean a happy ending for this week after all.
However, Hochberg said, the rest of this week could equally see a strong decline into the weekend if such a bottom would not occur.
Question is then of course, does the overnight fall in US equities by 2% qualify as such a bottom even as it occurred on Tuesday?
Robert Prechter, once of guru status, and founder of ElliotWave.com, holds a bearish view on US equities. This bearish bias is repeated by Hochberg who admits the technical picture for US equities is still very fluid but in the absence of some positive developments he believes the US stock market carries “huge downside potential”.
The team at ElliotWave is therefore likely to remain with the bearish case “unless we see near-term developments that suggest otherwise”.
Last night’s fall won’t have turned them into sunshine prophets, we reckon.