12/16/22 Rug Pull, Triple Witching, & A Free Lunch


The bulls waved a white flag on Thursday. Buyers abandoned the market, and a broad selloff ensued.

All four indexes settled deep in the red…

  • Dow Jones -2.2%
  • Nasdaq -3.2%
  • S&P 500 -2.5%
  • Russell 2000 -2.5%

Headlines blame The Fed, recession fears, and some weaker-than-expected retail sales.

Photo by Naim Benjelloun from Pexels

The U.S. Census reported a 0.6% decline in retail sales in November.

Also in the report…

  • Business inventories rose 0.3%
  • New business formation fell 3.1%

The report showed some signs of cooling demand.

Sector Round Up

All 11 sectors ended the day lower.

At the bottom…

  • Communication (XLC) -3.9%
  • Technology (XLK) -3.7%
  • Materials (XLB) -3.0%

The smallest losers…

  • Energy (XLE) -0.6%
  • Real Estate (XLRE) -1.2%
  • Utilities (XLU) -1.2%


So far, the selling is intense but controlled. The VIX, which typically rises when the bears advance, has given up little ground.

VIX Daily Candles – Chart via thinkorswim

The level we’re watching is 25. If we remain below, the selling is likely a short-term rebalance … Above—look out below.

Futures are pointing lower again this morning. We see no clear signs of a bottom yet.

  • RSI levels are all neutral and nearing oversold
  • The Put-to-Call Ratio is oversold, just as it has been for 6 of the past 8 trading days.


Today is the final triple witching of the year.

A triple witching occurs once a quarter when stock options, stock index options, and stock index futures expire on the same day.

During the witching day, traders must close, roll out, or offset their positions before the close. Simply put, there’s a lot more buying and selling than normal.

  • The increased activity can bring increased volatility
  • So far, this selloff is rather subdued.
  • There may be a buying opportunity soon. But this is a time to manage risk.

On that note, we are working on this year’s free lunch trade today. We’ll provide you with our picks on Monday. Your sneak peek…

  • Tesla (TSLA^) will certainly be among them.


*Low Float
^Open Position*BIVI on watch
*SISI on watch
*ACERsupport at $3
GAME resistance at $1.50
CABA support at $6
WNW on watch
SMMT resistance at $4
ICVX support at $10
PBYI support at $4.60, resistance at $5
FLNC support at $20
^CROX support at $95
^RYAM support at $8.50
^PRQR support at $1.50
WVE support at $5
TOUR support at $1.5
MOMO resistance at $9
GOTU support at $2
WDH support at $2.10
MRNA resistance at $200

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