Sunday, December 16, 2012

Wall St. holiday ‘on standby’ as clock ticks on fiscal cliff; ‘quadruple witching’ looms


“The last two weeks of December are traditionally quiet for stocks, but traders accustomed to a bit of time off are staying close to their mobile devices, thanks to the ‘fiscal cliff,’” Angela Moon reports for Reuters.



“Last-minute negotiations in Washington on the so-called fiscal cliff – nearly $600 billion of tax increases and spending cuts set to take effect in January that could cause a sharp slowdown in growth or even a recession – are keeping some traders and analysts from taking Christmas holidays because any deal could have a big impact on markets,” Moon reports. “‘A lot of firms are saying to their trading desks, ‘You can take days off for Christmas, but you are on standby to come in if anything happens.’ This is certainly different from previous years, especially around this time of the year when things are supposed to be slowing down,’ said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago. ‘Next week is going to be a Capitol Hill-driven market.’”



“With talks between President Barack Obama and House Speaker John Boehner at an apparent standstill, it was increasingly likely that Washington will not come up with a deal before Jan. 1,” Moon reports. “This coming Friday will mark the last so-called ‘quadruple witching’ day of the year, when contracts for stock options, single stock futures, stock index options and stock index futures all expire. This could make trading more volatile. ‘We could see some heavy selling as there is going to be a lot of re-establishing of positions, reallocation of assets before the year-end,’ Kinahan said.”



Moon reports, “Some market participants said tax-related selling may be behind the weaker trend in the stock price of market leader Apple. Apple’s stock has lost a quarter of its value since it hit a lifetime high of $705.07 on Sept. 21.”



Read more in the full article here.


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