Market-Wide Options Expiry, Decreasing Gamma Threaten Stocks at Overbought Levels

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Nasdaq 100 Nyheter

S&P 500,Micron Technology Inc,Western Digital Corporation

Stocks Analysis by Michael Kramer covering: Nasdaq 100, S&P 500, Micron Technology Inc, Western Digital Corporation. Read Michael Kramer's latest article on Investing.com

down around 20 bps, but with 297 stocks up and just 204 down on the day. Tomorrow is the big quadruple witching day, with a large amount of gamma due to roll-off in the options market.

The market-wide options expiration date and decreasing amount of gamma could allow the market to turn lower and the recent rally to finally break from a timing perspective. It isn’t unusual to see the market change trends around OPEX dates.Additionally, as discussed over the weekend, the NASDAQ 100 has a rising wedge pattern in the potential throw-over phase, a 100% extension, and a 61.8% extension from two different points over the past 18 months. It seems like a good place to turn.

Now, it could be entirely by chance; however, a 61.8% retracement in the NASDAQ 100 of the entire rally off of the October 2022 low would bring the NDX back to the lows seen in October 2023, wiping out all of the gains witnessed since then.You can look at the setups, and considering how over-bought the markets are, it is possible to see something of that size. Fundamentally, PE ratios are high, and fundamentals won’t support this market.

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