A Something Burger, When Doves Fly & Understanding Investor Psychology

When Doves Fly, The Proverbial Soft Landing & Quadruple Witching

The Money Wise guys are back in the studio, kicking off this episode with a rapid-fire recap of last week’s quadruple witching market movements. If last week was a big Nothing Burger, this week was a big Something Burger. The Dow was up 2.9%, the S&P 500 was up 2.5%, and the NASDAQ was up 2.8%. YTD the Dow is up 12.5%, the S&P 500 is up 22.9%, and the NASDAQ is up 41.5%. It was no run-of-the-mill week last week, folks, and it was all due to the Fed’s doveish remarks. Jerome Powell came right out and said the Fed is done raising rates, we’re holding steady, and now we’re having conversations about a first cut. The market immediately started going up and the S&P had the highest volume in two years. Did the Fed thread the needle and truly create the proverbial soft landing? Maybe, but things can change. Still, data appears to be shaping up that way, and there was no coal in the stocking for equity investors last week. The Money Wise guys discuss our continuing over-bought condition, further evidence of market breadth widening, last week’s quadruple witching, and what we can expect to see in the remaining nine trading days of the year.

Understanding Quadruple Witching

The Money Wise guys mention that last week was a quadruple witching week, but what does that mean? Often called quad witching for short, quadruple witching happens when there is a simultaneous expiration of stock options, index futures, index futures derivatives options contracts, and single stock futures – the last of which hasn’t traded in the U.S. since 2020. For this reason, quadruple witching is not often called triple witching instead. Quadruple witching occurs on the third Friday of March, June, September, and December. Equity trading volumes generally rise on quadruple witching days.

In the second hour, the Money Wise guys talk about the importance of understanding Investor Psychology. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.