Tom pointed this out in his daily comments. "Today is an options expiration Friday so the action isn't always predictable - as if it ever is. Pre-expiration week has a positive bias and that has certainly kicked in over the last two days, but the week after expiration Friday tends to have a more bearish bias." We shall see how this October plays out.....
Please note the date of this article below.
This article was written by Sy Harding. I had his service for a couple of years after the 2008/2009 Bear Market.
Sy Harding profile picture. (See below)
Sy Harding
Market Patterns Look Normal
Oct. 24, 2008 1:36 PM ETSPDR Dow Jones Industrial Average ETF (DIA)
As strange as it seems, in all this wild volatility, the weekly patterns are still playing out normally.
For instance, options expirations take place on the third Friday of each month. The week before the expirations week tends to be negative. The week in which the expirations will expire on Friday tends to be positive. And the week after the expirations tends to be negative.i
it’s almost bizarre that the patterns could overwhelm even these economic and market conditions.
I can’t prove what causes the pattern around the monthly expirations, but for many years I have been expressing my suspicions. Those suspicions are that the huge program-trading firms use the power of their huge automated sell-programs to drive the stock market down the week before the options expirations week. They can then buy the highly leveraged options and futures that will expire the following week for pennies on the dollar. They then use the power of their huge buy-programs to drive the market back up the week of the expirations. They can then sell those about-to-expire options they bought for pennies on the dollar the previous week for huge profits. And the next week they unload the stocks they bought to drive the market up the previous week, adding to any negative activity in the week after the expirations.
I know, I know. It couldn’t be, since market manipulation is illegal (except for the Fed when it rushes in with a big rate-cut, or a surprise weekend announcement, when it fears the market will tumble the next day).
Nor could it be huge buy-programs in the final hour of the day that often manipulate an ugly market up to a better close. No, that’s just millions of investors suddenly deciding at the same moment that they need to be in the market.
https://seekingalpha.com/article/101928-market-patterns-look-normal
Sy Harding passed away in April of 2015.
https://jeffhirsch.tumblr.com/post/117799796948/rip-sy-harding
