Friday's Market Minute: Volatility Brewing Into Quad Witching

S&P 500 futures traders saw heavy volume yesterday and are likely in for more of the same today as markets gear up for Quadruple Witching Friday. Despite large intraday swings, the /ES is trending sideways since the pre-Labor Day washout from the all-time highs of 3580, although prices have been making higher lows in the aftermath. Rangebound trading and low volatility often can be a precursor to a breakout and higher volatility, which could be further enhanced by today’s various expirations and subsequent rollover trades.

Recently, the index’s prices often found resistance near the 21-day Exponential Moving Average, now near 3380, as well as support at the 50-day Simple Moving Average, now near 3330. Watch for breakouts if prices move beyond these levels and follow through into a strong close either above 3400 or below 3300. The area near 3285 also is worth noting, as it represents both the 64-day Exponential Moving Average and the recent lows from Sept. 9, so shorter-term traders should stay light on their feet if this level is breached.

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