US Stocks Weekly Outlook: Volatility seen on triple witching
Updated Fri Mar 13 16:36 ET
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New York--Mar 13--US stocks may go through wild price swings next week,
as Friday's expiration of options- and futures-related issues underscore
market volatility.
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"It's a little too early to determine how they'll play out," said Mace
Blicksilver, managing director of US equities trading at Credit Lyonnais
Securities, adding that the market usually experiences greater volatility
as the expiration gets closer.
The quarterly "triple witching," which refers to the expiration of
options and futures on stock indexes and individual stocks on the third
Friday of March, June, September, and December, is usually marked by
volatility as players square their positions ahead of the event.
The movements in the days leading up to the expiration typically have
little to do with market fundamentals, analysts say, and this time around,
there may be enough momentum in the market to send prices to even more
record highs.
"Typically, March expiration is extraordinarily calm," Michael Oyster,
market strategist for Investment Research Institute of Cincinnati, said.
"The volatility for the week around March is usually lower than any other
month, even lower than some other expiration days. The March expiration
week experiences half the volatility of the November expiration day.
There is not enough to suggest that the market should experience a
substantial pullback anytime soon."
Aside from major economic data due out next week such as consumer price
data for February, players will be keeping a close eye on developments from
the White House.
Recent rumors of President Clinton's alleged sexual misconduct might
cause some ruckus in the market over the short term, some analysts say
unless those accusations are proven true. The television network CBS will
air on its "60 Minutes" news program on Sunday night an interview with
former White House aide Kathleen Willey. Traders are speculating that
Willey will testify that President Clinton made unwanted sexual advances
toward her.
Revelations on Clinton's sexual misconduct "could rattle bonds and
stocks," according to A. Gary Shilling, president of a firm whose namesake
provides economic consultation and offers investment advice.
Investors may also be watching the weekend release of celebrated
entrepreneur Warren Buffett's annual letter to shareholders. Last year, the
market dropped briefly after Buffett called the US market overpriced.
As the current quarter ends in less than 3 weeks, some companies are
likely to make a preannouncement on their financial results, and investors
are seen reacting accordingly. On the earnings front next week,
semiconductor maker Micron Technology and sneaker maker Nike will be
releasing their quarterly reports.
Today, the Dow fell 57 points to 8602. For the week, the Dow rose 0.4%.
End
ON THE EARNINGS CALENDAR:
-------------------------------------------------------------------------
Release Date Company Consensus net/share Estimated time
Mar 17 Micron Technology MU Q2 -$0.17 After close
Mar 18 Nike NKE Q3 $0.25 After close
Mar 19 ConAgra CAG Q3 $0.31 0800 ET
Consensus estimates provided by First Call Corp. Announcement dates and
times provided by company sources. |
