Last Friday, the U.S. stock market ushered in the dramatic end of "Triple Witching". Wall Street witnessed the expiration of nearly $5.5 trillion in options, coupled with the large-scale rebalancing of ETFs caused by the end-of-quarter index adjustments, and market transactions showed unprecedented volatility. The specific highlights are as follows:

• Index performance: The S&P 500 rose for three consecutive weeks, the Nasdaq fell to the level of a week ago, and the Dow Jones Industrial Average stood at a four-week high.
• Trading volume surge: U.S. exchanges welcomed 18 billion shares on this day, a surge of 55% over the average level of the past three months, and the S&P 500 index's late trading volume surged 30% over the daily average.
• Technology stocks cool down: Chip stocks have retreated for two consecutive days, and the industry index fell 1% for the whole week. Analysts pointed out that recent technical aspects and capital flows show that technology stocks may have been overbought, and a short-term pullback is not surprising.
• U.S. Treasury yields rose: fell to a daily low before the release of favorable U.S. PMI data, and then rebounded to rise. The yield on two-year Treasury bonds rose by more than 2 basis points for the week, and the yield on 10-year Treasury bonds rose by nearly 4 basis points for the week.
• Precious metals turned down: The market expects that the cooling of US economic data will support interest rate cuts, which is good for precious metals. However, gold fell sharply on Friday after hitting a two-week high, and fell by about 0.6% for the whole week. Spot silver fell by 0.2% for the whole week. Palladium once rose by 11%, briefly breaking the integer of $1,000.

What exactly is the mysterious triple witching day?

Triple witching day refers to the simultaneous expiration of stock index futures contracts, stock index options, and individual stock options. This situation occurs once a quarter, often causing a significant increase in stock market volatility, especially in the US stock market. The US triple witching expiration date is the third Friday of March, June, September and December. The arrival of triple witching day may lead to higher volatility and more trading volume, providing speculators with opportunities for quick arbitrage.

During this time, many investment institutions and traders will reorganize their trading investments, which will cause many transactions that should not have appeared in the market to appear in the market, and will also cause the market fluctuations to be very strange, and there is no reasonable logic at all. Before 2002, because the trading fluctuations of other markets were particularly fast, the changes in the market in the last hour of this day were like a witch casting a spell. The name of Triple Witching Day comes from the three witches in Shakespeare's Macbeth.

The market on Triple Witching Day can be said to be up and down, so there will be speculators who will take action at this time to seek large returns. However, according to previous data, the investment winning rate is average during the week of Quadruple Witching Day, only about 42%. This means that the probability of making a huge profit on this day is low. Therefore, individual investors should invest cautiously on this day.

Nvidia's market value evaporated by $220 billion! Is it just the beginning?

On the day of "Triple Witching Day", the S&P 500 index fell slightly to 5,465 points, and the closing trading volume was 30% higher than the daily average. Nvidia fell about 5% during the session, and fell again in the late trading after rebounding, and finally closed down 3%. The market value has evaporated by more than $220 billion in the past two trading days.

Source: uSMART SG

Bank of America strategist Michael Hartnett pointed out that the AI ​​craze made Nvidia the world's largest company by market value this week, and also promoted record funds to flow into technology ETFs. According to EPFR global data, about $8.7 billion flowed into technology ETFs in the week ending June 19. Behind the huge amount of funds pouring into AI technology stocks, many investors have also raised such questions: Is AI really worth investing in?

Keith Lerner of Truist Advisory Services said that since the technology industry has significantly outperformed the S&P 500 index under their "overweight" recommendation since November, the company has downgraded the technology industry rating to "neutral." Lerner said: "While we remain optimistic about the long-term prospects of technology stocks, in the short term, the industry valuation seems to have exceeded the reasonable range, and we will not chase the industry. That being said, technology stocks are still some distance away from the 'bubble', and we believe that the long-term positive factors around AI will continue to exist." Therefore, the violent volatility of the Triple Witching Day is likely to be just the beginning, and investors need to prepare for the second half of 2024 and the next move of the Federal Reserve. Solita Marcelli of UBS Global Wealth Management pointed out that "the second half of 2024 is a period of transformation and volatility, and investors should be prepared for dramatic changes." It is a wise decision to adjust the investment portfolio in time to deal with uncertain risks in the future in the current unpredictable environment.

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