At least 7 signs—including the Nasdaq Composite’s correction—show how the stock market is breaking down

Jan 20, 2022

Observations & Insight

William J. Brodsky was nominated by a former law school classmate for a job in Washington, D.C., despite having once defeated that classmate for class president of the Syracuse University College of Law. Of course, that classmate was Joe Biden, the current President of the United States of America, and Biden nominated Brodsky yesterday to be a board member of the Securities Investor Protection Corporation. They are life-long friends from their days at Syracuse’s law school.

It has long been rumored, even as far back as the Obama Administration, that Biden wanted Brodsky in a significant financial regulatory role in Washington. However, the timing was not right for Brodsky then as he was preparing to take the CBOE public in 2010. Now Brodsky is the chairman of Options Solutions with his son [[Michael Brodsky]], who is CEO, and pioneering options journalist Steven M. Sears, who is president and COO. ~JJL

Lead Stories

At least 7 signs—including the Nasdaq Composite’s correction—show how the stock market is breaking down
Mark DeCambre – MarketWatch
Strap in! It could be a bumpy ride this year.
Financial markets are off to a woeful start for the bulls in 2022. Blame surging inflation, an out-of-step Federal Reserve or a nagging pandemic. But whatever boogeyman market participants identify, there are clear signs that the market is experiencing signs of wear and tear.

Nasdaq falls into correction territory as US stocks finish lower in volatile trade
Phil Rosen – Markets Insider
The Nasdaq’s slump extended into correction territory Wednesday as US stocks closed lower after an up-and-down session.
The tech-heavy Nasdaq led stocks lower and is now 10% below its previous high, signaling a correction. The 10-year Treasury yield pulled back a bit after hitting a two-year high Tuesday. But it continues to put pressure on tech stocks as investors brace for aggressive monetary policy tightening from the Federal Reserve later this year.

Exotic Forex Derivatives Return in RBI’s Push to Deepen Markets
Subhadip Sircar and Akshay Chinchalkar – Bloomberg
Exotic foreign-exchange derivatives are making a comeback in India, reflecting the central bank’s efforts to deepen the financial markets. After the Reserve Bank of India’s allowed lenders to offer derivative products earlier this month, banks such as ICICI Bank Ltd. and Axis Bank Ltd. sold barrier forex options to customers including Reliance Industries Ltd. and Supreme Petrochem Ltd.


The Small Exchange to Offer Options on Futures for Small Precious Metals Product [SPRE]
Business Wire via Yahoo Finance
The Small Exchange, a revolutionary futures exchange offering smaller, simpler products aimed toward retail customers, today announced the launch of Options on Futures for Small Precious Metals [SPRE], available to investors on January 25.
This is the first product from the Small Exchange to offer options – they have launched ten futures products in their first 18 months. This offering gives traders of any account size access to the commodity space that has long been ripe with opportunity, but in the past, potentially required too much risk for the everyday investor. By trading options on the SPRE futures product, present day traders now have more flexibility and opportunity to diversify investment, speculate on a smaller scale and manage risk on existing positions.

FTX US Derivatives Announces Board of Directors
FTX US Derivatives
FTX US Derivatives (“the Company”), a Commodity Futures Trading Commission (CFTC) regulated digital asset futures & options exchange and clearinghouse, today announced the members of the Company’s Board of Directors. Larry E. Thompson has been named as Chairman of the Board and will be joined by professionals from the traditional finance, crypto and regulatory landscapes. Since launching in 2017, FTX US Derivatives, previously known as LedgerX, has made crypto-related options and swaps contracts available to both retail and institutional investors 24/7. The Company pioneered bitcoin mini contracts in the U.S. and its offerings include physical settlement of all contracts, block trading and algorithmic trading opportunities for institutional investors, and direct access for all traders.

Regulation & Enforcement

SEC Under Pressure to Implement Agenda in 2022, While Democrats Control Congress
Paul Kiernan – WSJ
WASHINGTON—Securities and Exchange Commission Chairman Gary Gensler spent his first nine months on the job sketching out ambitious plans to tighten federal regulation of Wall Street.
Now, the clock is ticking for him to implement his agenda.


The Stock Market Is on a Bumpy Ride. Try These 2 Stocks for Stability.
Steven M. Sears – Barron’s
Stop trying to make sense of what’s happening in the stock market. It’s a fun pastime, and something of a national obsession, but very few people are any good at it.
Instead, look for companies in a secular bull market—ones with products and strategies that seem so strong that their shares might be insulated from the broad market’s increasingly erratic behavior.

This is the next big test for the S&P 500 as a number of indicators flash ‘oversold’
Lawrence G. McMillan – MarketWatch
The S&P 500 index has continued to fall this week and is now nearing the lower end of the trading range (4500 – 4700+).
An S&P SPX, 0.90% close below 4500 would be bearish in that it would be a violation of the lower end of that range. In addition, it would be a breakdown below the December lows – often a very bearish sign, and sometimes the beginning of a bear market. So expect the bulls to strongly try to hold this 4500 support level.


Schwab CEO Sees Brokerage of the Future Looking More Like Uber
Annie Massa – Bloomberg
Financial firms need to take more cues from Silicon Valley, according to Charles Schwab Corp. Chief Executive Officer Walt Bettinger.
Consumers want their banks and brokerages to offer technology with the same level of personalization they get from ride-hailing and food-delivery apps, Bettinger said in a wide-ranging interview after Schwab reported fourth-quarter results this week.

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