Don’s Notebook June 15, 2018

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Economic data have been picking up strength but this was not anticipated in today’s Federal Reserve Industrial Production report.

  • A big drop in autos pulled industrial production lower in May, slipping 0.1 percent.
  • Manufacturing volumes fell 0.7 percent, pulled down by a 6.5 percent monthly drop in motor vehicles that reflected the effects of a fire early in the month at a supplier in Michigan.

Today is a Quadruple Witching expiration.  Quadruple witching days only occur four times a year. The last hour of these trading days, from 3:00 to 4:00 p.m. EST, is referred to as the quadruple witching hour.

  • On quadruple witching days, and especially during quadruple witching hours, many investors attempt to unwind their futures and options positions before the contracts expire.
  • On these days, market index futures, market index options, stock options and stock futures expire. This can result in increased volatility.

U.S. stocks opened lower this morning as the U.S.-China trade dispute intensified.

  • President Trump announced tariffs on $50 billion worth of Chinese imports prompting Beijing to vow immediate retaliation.

World Markets overnight and this morning:

  • The MSCI Asia Pacific Index lost 0.2 percent.
  • Japan’s Topix index closed higher in the wake of the Bank of Japan decision to maintain stimulus.
  • In Europe, the Stoxx 600 Index was 0.73 percent lower and the FTSE 100 was 1.07 percent lower.
  • Moody’s reviews the U.K.’s credit rating.
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Dr. Don Pratl is Director of Trader Development and Education for TradeStation. He joined TradeStation in 2016 after holding similar roles with other online brokerages. Don’s long career in the financial services industry reflects expertise in administering trading and investment strategy programs for retail investors as well as financial services professionals. Since the 1980s, he has held various positions in areas including CBOE trading floor order execution, marketing, sales, personnel management, training and customer service. Don holds series 3, 4, 7 and 63 FINRA licenses, earned his Ph.D. in Organization and Management, and his M.A. and B.A. in Political Science. He has been an occasional adjunct college instructor since 2004 at a range of institutions, teaching undergraduate, graduate and doctoral students using in-class and online formats.