Semiconductors/The Bears Lead the Way: What You Need to Know!

Triple Witching, Oil, Blackout Period, NYSE, Breadth, Commodities, Currencies, Systems, Signals and more!

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Every third Friday in March, June, September, and December is known as the triple witching hour. On these days, futures and options on indices and stocks expire simultaneously. This event has historically impacted the prices of the underlying assets.

Unlike everyone else I could care less about what happens on triple witching day. I really pay attention to where the market moves after.

A "gamma wall" in options trading refers to a specific level of the underlying asset's price where there is a high concentration of options with a high gamma. Gamma measures the rate of change of an option's delta relative to changes in the price of the underlying asset.

When there is a large concentration of options at a certain strike price, it creates a "wall" because the market makers and other options sellers need to hedge their positions. This hedging activity involves buying or selling the underlying asset to maintain a neutral position as the price of the asset approaches the strike price with high gamma exposure.

As a result, the underlying asset's price might experience significant resistance or support at this level, creating a gamma wall. This effect can lead to increased volatility and price movements around the strike price with the high gamma concentration.

At the end of a witching period those walls are down. For this exercise we can call them “defenses”. As the markets defenses are down, the market can move freely one way or another. The chart above shows that significant turning points or breakouts or breakdowns have happened right around triple witching periods.

This weekly report is about the things we should pay attention to. If the market goes higher or lower in the next week, it is something that we need to know!

A couple significant things are happening. Some people get too bearish around blackout periods. This can be a headwind. It also be a big nothing burger. Either way I would pay attention to how the market reacts to this.

Will Nvidia close this month with an inverted candle?

The semiconductors to Dow ratio has not broken down yet but it has certainly given up some ground.

Our NYSE Bull/Bear indicator is still in bullish territory. Look, I just like everyone else, loves a good bear story. We will have a bear story at some point. It just, is not here today.