Coming Week: Volatile Trading Ahead

If traders were bored with the stock market's meandering over the last week, the next five sessions promise to deliver more excitement and volatility thanks to quadruple witching.

Friday represents not only options expiration, which usually indicates more volatility than usual, but it is also the second quadruple witching day this year. Quadruple witching occurs when contracts for stock index futures, stock index options, stock options and single stock futures all expire. This can lead to dramatic moves in the equity markets.

Paul Mendelsohn, chief investment strategist with Windham Financial, said the quadruple witching is "the most important thing happening" next week because of the volatility expected.

"This is a major options expiration after a major move in the market we've had," Mendelsohn said. "The market is overbought here, so it'll be interesting to see if the expiration leans to the side of more buying or selling. This will make next week very, very interesting and equally busy."

In addition to quadruple witching, investors will have their hands full with a flurry of economic reports, some key earnings reports, and speeches from several Federal Reserve officials. On top of that, traders will have to continue to monitor rising interest rates and commodity prices, as well as moves in the U.S. dollar and other currencies.

Last week, an auction of 10-year Treasury notes saw a high bid of 3.99%, which pushed the 10-year bond yield briefly above 4% before it pulled back. In addition, crude oil topped $73 a barrel for the first time in seven months. Some market analysts have worried that rising rates and commodity prices would stall any recovery effort.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting