Triple Witching Could Have Been The Flush.

1.) OPTIONS – This past Friday was a “triple-witching,” which is when stock options, index options, and futures all expire at the same time. It happens four times a year, and it's one of the biggest positioning resets in the market, where hedging flows that have been holding the market in place can start to disappear. So now what?! The market is finally free to make a real decision, and the futures market is deciding bullish with S&P 500 futures up about +1.8% this morning. We’ll see if it can hold, but remember what I said after Thursday’s market “flush” and our current bullish stance. Take a peek at Friday’s note if you missed it. Volume is usually big on a triple witching day, but Friday was enormous with the S&P 500 logging 6.46B shares. That's the largest volume spike we've seen since April 9, 2025...right about when the market bottomed after that correction. The US Dollar is currently falling back from that $100 level. That’s also good. A break of $97.62 would put it back into a downward trend/bias. Markets are getting whipped around right now due to the whole “war risk premium.” But as this morning’s news shows, that risk premium can come out as fast as it went in. The S&P 500 breaking back above…and holding…6789 would put it back into a bullish/upward bias.

2.) BONDS – Bonds are not always the “safe haven” people think, which is why understanding bond volatility and various bond yields is valuable. The MOVE Index was +28.24% to 108 on Friday…that is A LOT of fear for the bond market. Bond investors trying to find safety in 2022 found out the hard way that they are not always safe. Sadly, it’s happening again to bond investors as the specter of stagflation caused by the Iran war has wiped out more than $2.5 trillion from the value of global bonds in March. Bonds are getting hit due to the surge in oil prices increasing inflation, which erodes the value of the fixed payments from debt. We’ve discussed rates a lot here, most recently discussing the breakout in yields to a bullish trend – upward bias – making bond prices bearish. Our systems picked up the shift in yields and cut our bond exposure in half to just 4% on 3/19. The US 10YR yield would need to drop below 4.14% to return to a bearish trend, moving bond prices up. While discussing yields, it’s also important to note that credit still seems okay. Leveraged loan yields on software are still elevated at 12%, but yields on loans more generally have actually been going down. This suggests that broad-based macro deterioration in credit conditions are NOT present. So far so good on that front.

3.) SPRING – Since spring is officially here, I should probably comment on market averages over the long term during the spring season. Since 1985, the S&P 500 has delivered an average spring price return of 3.5%—the strongest of any season—and has finished higher 76% of the time. Not bad. Does that mean that all is now well and prices will move back to all-time highs just because it’s spring? Maybe…maybe not. We don’t use “seasonality” in the algorithmic calculations, but history does tend to rhyme. So, it’s at least good to know what history has said.