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Another event that may spook the market is what is called the "triple witching" Friday, which falls on the third Friday of the month at the end of each quarter. It is on this day that falls the quarterly expiration of index futures, index future options, and certain stock options. What this means is simply that on this day the market tends to be more volatile, as prices get manipulated both in the morning and afternoon related to these expirations. Again, simply knowing that this is occurring can help explain some of the swings that may be witnessed in the market on that day and caution investors to be careful with their trading. |
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Program trades (large block trades of shares that are set in motion by computer programs at certain prices and/or times of the day) are common at about 3:30 P.M. EST each day. When they say that the first hour of the market is ruled by amateurs and the last hour is ruled by professionals, one of the ways this is meant is that these block trades are set in motion. These can drastically affect the share price one way or the other on those stocks that are involved, since the blocks being traded are very large. |
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Often, periods leading up to and following certain holidays tend to be associated with specific market performance. For example, the week between Christmas and New Year's has been a positive time for the market, as has January, when certain pension funds begin adding liquidity to the market. As another example, the two or three days leading up to the July 4th holiday has also been viewed as an up time for the market. |
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Technology stocks tend to do well during certain periods when there are a lot of technology shows and conventions where new products are introduced. At the same time, conferences with underwriters and analysts are used to report any good news that may give a boost to the stock price. |
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When the casual investor takes the time to understand how many cycles and patterns are played out in the market on a predictable basis, the striking thing is still, with all these scheduled events and themes, how little anyone is able to truly predict the direction of the market at any particular time. |
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In other words, while these patterns may increase the probability that the market as a whole, or certain sectors, may move in a certain direction, there are always other variables that are unpredictable and that have just as much sway on the movement in stock prices. |
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