Dow Jones Average stays in the green on Quadruple Witching Day

June 16 is Quad Witching Day as quarterly and monthly options and futures expire.
The Dow Jones index should experience higher than average volatility on Quad Witching Day.
Michigan Consumer Sentiment Index, released on June 16, is expected to be positive.
DJIA is trading within the 34,250 to 34,600 resistance band.

Friday, June 16, is the day you’ve all been waiting for: Quad Witching Day. Stock index futures, stock index options, stock options, and single-stock futures derivatives contracts all expire at the closing of Friday’s session, so volatility and higher volumes are to be expected. The Dow Jones Industrial Average (DJIA) rebounded on Thursday to close up 1.26%. This was its largest gain since June 2, the large-cap index has been steadily reducing the distance between it and the 1-year high in recent weeks.

At the time of writing in Friday’s regular trading, Dow futures are up 0.21%, with S&P 500 and NASDAQ futures are marginally green.

Dow Jones Index News: Quad Witching to boost volatility

If you’re a nerd, you’re probably screaming about Quad Witching Day no longer being extant. That is true. What is popularly called Quad Witching (Quadruple Witching) since 2020 has been Triple Witching. This is because single-stock futures ended in the US markets at that time. However, they do still trade outside the US.

However, index options, index futures and stock options still expire once every quarter, and this quarter that day is June 16. As traders and institutional investors close out many of their options and derivatives contracts, or roll them into new contracts, typically these Quad (Triple) Witching days offer higher levels of overall volumes in the market. These high volumes can lead to higher-than-average volatility as well. To be sure, much of this volume is in the options and futures markets, not the normal equity market.

Still, an index like the Dow Jones Industrial Average still often witnesses some gyration in price action. During the last Quad Witching Day on March 17, the Dow dropped 1.19%.

Michigan Consumer Sentiment Index picks up, supports Dow Jones

University of Michigan’s Consumer Sentiment Index came at 63.9 in June, improving from 59.2 from in May and beating market consensus at 60. It is the second consecutive time this indicator beats expectations, continuing the modestly positive trend in consumer behaviour after this index touched bottom at 50 one year ago. The rising consumer confidence provides support to the US stock market indexes, including the Dow Jones Industrials Average, slightly above 34,400.

Dow Jones forecast

The Dow Jones index thrust its way this week into the resistance zone that spans 34,250 to 34,600. Closing at 34,408 on Thursday, means the Dow index could require a few more session to break above the top of the resistance zone. Of course, the index has only traded above the top of this resistance zone one time in the past year. That was December 13, 2022, when a quick surge to 34,712 flopped, and the index promptly sold off all the way to 33,890 by the end of that session.

This history puts the DJIA in a precarious position then at the moment. Bulls want to see a new 1-year high above 34,712 but know this region commonly launches month-long downtrends. If bulls can make it through this thicket to a new 1-year high, then the next challenge will be the 35,200 to 35,750 resistance band that experienced plenty of price action and volume between October 2021 and April 2022.

DJI daily chart