The Witch of the Stock Market is a term often used to describe an individual who possesses an uncanny ability to predict and manipulate the stock market. This phrase first gained popularity in the 1920s when it was attributed to a woman named Jessie Livermore, who was widely regarded as one of the most successful stock market speculators of her time. Livermore's remarkable skills and success earned her the nickname "The Witch of Wall Street." Her ability to predict market trends and make profitable trades seemed almost magical to her contemporaries. Livermore was known to analyze market patterns and make informed decisions based on her observations. A key aspect of "witchcraft" attributed to Livermore was her understanding of investor psychology.
Quadruple witching is a market day when single stock options, stock index options, single stock futures, and stock index futures all expire. Quadruple witching days typically see above-average trading volume, although this volume isn’t necessarily accompanied by above-average volatility.
Stock index options are similar to single stock options, except that they represent an entire stock index such as the S P 500 instead of an individual stock. The derivatives involved in quadruple witching are often used for hedging and represent small holdings relative to the stock positions that many institutional investors maintain.
A key aspect of "witchcraft" attributed to Livermore was her understanding of investor psychology. She was able to gauge market sentiment and use that knowledge to her advantage. By sensing shifts in public opinion and emotions, she was able to anticipate market movements and make shrewd investments.
What is Triple Witching Day - and Should You Worry About It?
Friday was triple witching day, meaning that stock options, stock index options and stock futures contracts were all due to expire. This happens four times a year and can lead to increased volume, as money is moved around resulting in sometimes unusual (or spooky) price action.
The S&P 500 (SPY), Nasdaq 100 (QQQ) and Dow Jones (DIA) all closed under their previous day's close, while the Russell 2000 (IWM) held over its previous day close. The odd behavior of these 3 indices on a triple witching day leads me to believe they might be the witches of today's market.
This reminds me of a great satirical movie called Monty Python and the Holy Grail, which in one scene depicted the 13th century townsfolk using common logic to figure out if someone is a witch. They decide that, because it's common practice to burn witches, witches must burn because they are made of wood.
Wood floats on water. Ducks also float on water. Therefore, if a person weighs the same as a duck, they are a witch! (Here is a link to the clip. )
With that said, we should listen to what the indices have to say and decide for ourselves whether it's meaningful or if they are speaking in tongues.
The QQQs broke to new highs last Wednesday when it cleared 308.60. Though it dipped to 307.61 Friday, QQQs closed over the 308.60 support area.
SPY was also able to hold an important support level from the 10-day moving average at 368.50. Below that is support from the previous week's low at 363.26.
The DIA is also holding over its 10-DMA at 301.50, which means it's safe for now. Also seemingly safe, the IWM sits not far from the highs and is currently above the 10-DMA.
It looks as though the indices have passed their witch trial. for now. A break of their key support levels would make them questionable and give us reasons (as in Monty Python) to weigh them against a duck.
Of course as the market obviously weighs considerably more than a duck, we do believe that the Friday sell-off could be nothing more than a one day event.
Mish covers "Fast and Fast Casual" food in this week's episode of StockCharts TV's Mish's Market Minute. Taking a deeper look into stocks that are disrupting the food market by using technology to enhance the consumers experience. These stocks are investing in things such as: app ordering, prediction of order based on license plate scanning, automated ordering, different payments methods, and much more.
- S&P 500 (SPY): Support 363.26 if can't hold the 10-DMA at 368.50
- Russell 2000 (IWM): Support 192.03 the 10-DMA
- Dow (DIA): 298.68 support. 303.80 to clear
- Nasdaq (QQQ): Holding over 308.60, with more support the 10-DMA at 306.26
- KRE (Regional Banks): Resistance 200-week moving average 52.70 to clear. Support 48.48
- SMH (Semiconductors): 221.79 high to clear. Support 210.41. If cant hold, 10-DMA at 216.82
- IYT (Transportation): Looking for a close over the 10-DMA 222.90
- IBB (Biotechnology): 152.13 level to hold. 156.40 high to clear.
- XRT (Retail): 62.16 support
Mish Schneider
Director of Trading Research and Education
Forrest Crist-Ruiz
Assistant Director of Trading Research and Education
About the author: Mish Schneider serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
Suzanne is a content marketer, writer, and fact-checker. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies for financial brands.
Despite her success, there were also instances where Livermore faced significant losses. Her ability to predict market trends was not infallible, and she experienced several ups and downs throughout her career. Livermore's story serves as a reminder that even those with seemingly supernatural abilities in the stock market are not immune to failure. The concept of a "Witch of the Stock Market" has continued to captivate the public's imagination and has been associated with other successful investors and speculators over the years. While it is unlikely that anyone possesses truly supernatural powers in predicting market movements, there are individuals who have honed their skills through extensive research, analysis, and experience. In today's digital age, with advanced technology and access to vast amounts of market data, investors have more tools at their disposal than ever before. While the title of "Witch of the Stock Market" may be a romanticized notion, there are certainly individuals who have achieved remarkable success through their knowledge and understanding of the markets. Ultimately, the term "Witch of the Stock Market" serves as a testament to the remarkable abilities and intuition some investors possess. While there may be no magic involved, there is certainly a level of skill and expertise required to navigate the unpredictable world of the stock market..
Reviews for "The Witch's Guide to Predicting Stock Market Trends"
1. John Doe - 2 stars - I found "Witch of the Stock Market" to be quite disappointing. The premise sounded intriguing, but the execution fell flat for me. The characters lacked depth and were poorly developed, making it hard to connect with them. The plot felt disjointed and rushed, with several abrupt shifts in the story that left me confused. Overall, I was rather let down by this novel and wouldn't recommend it to others.
2. Emily Smith - 1 star - "Witch of the Stock Market" was a complete waste of time. The writing was amateurish and full of cliches, making it cringe-worthy to read. The protagonist, who was supposed to be a powerful and intelligent witch, came across as weak and whiny. The dialogue was stilted and unnatural, and the pacing was all over the place. I struggled to finish this book and regretted even starting it. Save yourself the trouble and avoid this one.
3. Sarah Johnson - 2 stars - I had high hopes for "Witch of the Stock Market," but unfortunately, it fell short of my expectations. The story lacked originality and followed predictable tropes. The author seemed more interested in describing the character's appearance and wardrobe choices than in developing an engaging plot. The dialogue felt forced and unrealistic, often bordering on cringe-worthy. Overall, I found this book to be lacking in substance and would not recommend it to others.
4. David Thompson - 3 stars - While "Witch of the Stock Market" had its moments, I ultimately found it to be a mediocre read. The concept had potential, but the execution left much to be desired. The pacing was slow, and the plot lacked depth, making it hard to stay engaged. Additionally, the writing style felt overly simplistic and lacked sophistication. While it may appeal to some readers looking for a light and easy read, I personally felt underwhelmed by this book.