Has this image been overused over the past few years?

No, I don’t think so.

We’ve experienced so much nonsense and outright lying from TPTB, if anything the image is underused.

On this quadwitching Friday, options expiration seem significant. As I noted for members Sunday and again Tuesday, there was a very large, $1.1 trillion in total options set to expire, one of the largest in years, with $670 billion in put options. Strike prices include $215B and are struck relatively close to SPX market levels between 1900 and 2050. Naturally, these levels posted a week ago may have changed slightly or significantly. Given Friday’s negative action the puts in place meant some institutions and/or hedge funds were seeking protection. Given current market conditions it seems likely chaos could ensue around these strike price levels Friday. And, voila, we hit those levels today increasing volatility and volume.

So markets delivered a negative blow for investors a la similar to the large collapse in August on heavy volume with the latter the direction result of options expirations.

Economic data Friday, as if these matter anymore, continue to weaken. PMI Services Index Flash, which affect employment, fell to only 53.7 vs prior 56.5; and, Kansas City Fed Mfg. Index dropped to 2015 lows at -8 vs prior +1 reading. 

The sense something is off with recent Fed beliefs economic growth is “solid” prompted Restoration Hardware’s CEO Gary Friedman to quip: “…it makes me think, hey, should we be calling Yellen saying, let us tell you what we are seeing.”

If you’re the CEO of Caterpillar (CAT) or similar, you wouldn’t find anything “solid” about the current economy as noted by the chart below:

Market sectors moving higher included: Volatility (VIX), Gold (GLD), Gold Stocks (GDX), Silver (SLV), Natural Gas (UNG), China (FXI) and Bonds (TLT),

Market sectors moving lower included: Everything else.

The top ETF daily market movers by percentage change in volume whether rising or falling is available daily.

Below is a Finviz picture of the damage to ETF sectors (red) with advances (leveraged short green and some other bullish issues.)

Volume was extraordinarily heavy given options expiration activity while breadth per the WSJ was decidedly negative.

Surprisingly markets aren’t as oversold as I would have expected given two days of heavy selling.

Next week liquidity will taper off as we’ll only be dealing with at most a four-day week. That said, with liquidity declining and anxious portfolio managers looking for bonuses, it will get easier over the next two weeks to manipulate markets.

I hope to slow posting over the next two weeks; but, as usual markets will beckon a few, at least, some snarky comments here and there.

Let’s see what happens