As pointed out last week the large SPX call positions on Fri at 6400 and next
Thur at 6500 could represent "smart money" (inside info) and as it turned out
the SPX rallied over 100 pts from below 6300 on Mon to 6396 on news of a trade
ddeal with Japan, just short of the 6400 calls. Next week we have the FOMC
with Trump pushing for a rate cut on Wed and an expected trade deal with the EU,
so positive surprises are possible although normally the SPX OI for next week
would be negative.
Sentiment is mixed with ST sentiment (ST Composite, VIX calls & SPXADP)
becoming more negative while the INT/LT sentiment (SPX 2x ETFs, hedge spread) is
becoming more positive, so a ST top may not be immediately bearish. The
next two weeks are likely to finish the positive news from trade negotiations
and refocus the markets on fundamentals. AI remains strong, but some
cracks are starting to appear such as Ireland limiting new data centers after
electricity reached 20% of total capacity and a rogue AI bot wiping out a
companys database.
I. Sentiment Indicators
The INT/LT Composite indicator (outlook 3 to 6+ months) has three separate
components. Starting Aug 26, 2023 SPX options are removed due to extreme 0DTE volume
distortions. New weights are ETF put-call indicator (30%), SPX 2X ETF INT
ratio (40%), and 3rd a volatility indicator (30%) which combines the options
volatility spread of the ST SPX (VIX) to the ST VIX (VVIX) with the UVXY $ volume.
Update Alt, INT view. Bearish sentiment rose with an uptick in SPX 2x ETF
sentiment based on high volume of SDS buying.
Update Alt EMA. Bearish sentiment VST (grn) rose above neutral.
The ST Composite as a ST (1-4 week) indicator includes the NYSE volume ratio
indicator (NYDNV/NYUPV & NYDNV/NYDEC) and the UVXY $ Vol/[SPX Trend, SMA only]. Weights
are 80%/20%.
Update. Bearish sentiment fell back toward neutral.
Update EMA. Bearish sentiment dipped below neutral mid-week before
rebounding.
The ST VIX calls and SPXADP indicator bearish sentiment fell sharply below
neutral.
The ST/INT Composite indicator (outlook 1 to 3 months) is based on the Hedge Spread (52%)
and includes ST Composite (12%) and three options FOMO indicators using SPX (12%),
ETF (12%), and Equity (12%) calls compared to the NY ADV/DEC issues (inverted). FOMO
is shown when strong call volume is combined with strong NY ADV/DEC. See
Investment Diary
addition for full discussion.
Update EMA. Bearish sentiment rose back above a weak Sell.
Update FOMO calls. Bearish sentiment fell below neutral, half way to a weak
Sell.
Bonds (TNX). Bearish sentiment remains at low extremes.
For the INT outlook, the gold miners (HUI) bearish
sentiment is presented in a new format using the data mining software to add
the inverse TNX rate to the ETF ratio.
Update. Bearish sentiment is unchanged near neutral.
II. Dumb Money/Smart Money Indicators
This is a new hybrid option/ETF Dumb Money/Smart Money Indicator as a INT/LT
term (outlook 2-6 mns) bearish sentiment indicator. The use of ETFs
increases the duration (term).
Update. Bearish sentiment remains below a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment rose back above a weak Sell as hedging
increased.
A new composite SPX options indicator uses both the volume adj (1/B-A) and P/C
equivalent spread (A-B) to compensate for the discrepancy between the two.
This replaces the old SPX options indicator for the SPX ETFs + options below and the
INT/LT composite. No chart.
For the SPX, I am switching to hybrid 2X ETFs plus SPX options. Taking a look at the
INT term composite (outlook 2 to 4 mns), bearish sentiment remains below a
weak Buy.
For the NDX combining the hybrid ETF options plus NDX 3X ETF sentiment with the interest rate effect,
(outlook 2 to 4 mns) bearish sentiment shows similar extremes between ETF and
options as in late 2020 which resulted in a choppy market until options
sentiment rose. Note QQQ options are optimal, but are N/A and are included
in ETF options.
Bearish sentiment remains near a weak Sell.
For the SPX combining the hybrid ETF options plus SPX 2X ETF (outlook 2 to 4 mns)
produces an indicator where, in this case, ETF options are a proxy for the SPY options.
Bearish sentiment for SPX remains between neutral and a weak Sell.
III. Options Open Interest
Using Thur closing OI, remember that further out time frames are more likely
to change over time, and that closing prices are more likely to be effected.
Delta hedging may occur as reinforcement, negative when put support is broken
or positive when call resistance is exceeded. This week I will look
out thru July 16. A text overlay is used for extreme OI to improve readability,
P/C is not changed. Also, this week includes a look at GDX, TLT & IBIT for Mar exp.
A new addition is added for OI $ amounts with breakeven pts (BE) where
call & put $ amounts cross. Note multiply OI$ by 100 for shares/contract.
With Fri close at SPX 6389, options OI for Mon is moderate with put support at
6300 a BE at 6315 and call resistance over 6375 with strong resistance at 6325.
Wed SPX OI is small but most call resistance is between 6300-400 and optimistic
for the FOMC possibly reflecting Trumps optimism. A contrarian view is
disappointment with no rate cut.
For Thur EOM strong SPX OI and low $OI P/C should be bearish toward 6350, but
the huge call position at 6500 may be smart money expecting a trade deal (EU) or
other info. Trump apparently believes insider trading is OK, so there may
be leaks.
For Fri moderate/strong SPX OI again indicates a strong negative bias.
IV. Technical / Other
The following uses barcharts.com as a source and discusses S&P futures (ES) as a third
venue of stock sentiment in addition to options and ETFs. The non-commercial/commercial
spread represents a LT bearish sentiment (dumb money/smart money) indicator. As explained in investopedia,
commercial investors (red) are institutions and are smart money, while non-commercials (green) are speculators such as
hedge funds and are dumb money. Here is the current barchart graph
for the S&P 500 (top) and trader positions (1st bot) with positives as net longs and negatives
as net shorts.
Bearish sentiment is represented by the spread and is positive if red > green
(Buy) and negative if green > red (Sell). ES (SPX) bearish
sentiment is slightly below a weak Buy at < 1.0 SD, NQ (NDX) bearish sentiment
remains over a weak Sell at
-1.75 SD, YM (DJIA) is close to neutral at -0.25 SD.
Click dropdown list to select from the following options:
Tech / Other History
2025
2024
2023
2022
Other Indicators
Conclusions. It's hard to say much about a stock market that always goes
up other than enjoy the ride as long as it lasts. BofA's Mike Hartnett has
had several articles recently, such as
this one, and his conclusion is pretty the same as mine in that the biggest
risk is the bond market blowing up when Trump lowers ST rates to 1.0% to
refinance the US deficit. However, you have to wonder who would buy a bond
yielding 1.0% when inflation is 2.5-3.0%. Trump seems to forget that the
bond market is an auction market.
Weekly Trade Alert. We could see a push up toward the SPX 6450 area
with either a FOMC rate cut (unlikely) or trade deal with EU. Updates @mrktsignals.
For the second week in a row the SPX tested the target zone of 6150-200 with
an early week decline only to reverse sharply with lows last week of 6202 and
the previous week of 6201. Tues CPI report came in stronger than expected
at a 0.3% monthly rate and a 2.7% annual rate with core even higher at 2.9%, but
stocks rallied at the open as the 0.1% decrease in wages seemed more important
but fell for the rest of the day. Wed PPI release came in at 0%, and Trump
supposedly threatened to fire Powell if he did not immediately cut int rates,
causing a ST meltdown to SPX 6202, but Trump denied any statement and a sharp
reversal followed with a temporary break of the 6300 level. The next two
weeks could be interesting with the FOMC July 29-30 and the appeals court on
Trumps tariffs set to decide on the 31st. Although I don't expect any
major moves there are some very large speculative SPX call positions (which tend
to be smart money) with Fri 25th showing 23k calls at SPX 6400 and Thur 31st 42k
calls at 6500.
Sentiment seems to be moving at a snails pace similar to stock prices with
the biggest changes in the ST Composite (near a weak Buy), VIX call & SPXADP
(near neutral) and hedge spread (closer to a strong Sell). An NDX
indicator listed on X/Twitter last week, the 2x ETF QLD/QID $volume, did show a
Sell recently, but the $ amount at 1/10th.of the 3x ETFs raises questions of
reliability.
I. Sentiment Indicators
The INT/LT Composite indicator (outlook 3 to 6+ months) has three separate
components. Starting Aug 26, 2023 SPX options are removed due to extreme 0DTE volume
distortions. New weights are ETF put-call indicator (30%), SPX 2X ETF INT
ratio (40%), and 3rd a volatility indicator (30%) which combines the options
volatility spread of the ST SPX (VIX) to the ST VIX (VVIX) with the UVXY $ volume.
Update Alt, INT view. Bearish sentiment declined slightly.
Update Alt EMA. Bearish sentiment declined slightly to below
neutral.
The ST Composite as a ST (1-4 week) indicator includes the NYSE volume ratio
indicator (NYDNV/NYUPV & NYDNV/NYDEC) and the UVXY $ Vol/[SPX Trend, SMA only]. Weights
are 80%/20%.
Update. Bearish sentiment remains near a weak Buy.
Update EMA. Bearish sentiment remains just below a weak Buy
The ST VIX calls and SPXADP indicator bearish sentiment rose to neutral.
The ST/INT Composite indicator (outlook 1 to 3 months) is based on the Hedge Spread (48%)
and includes ST Composite (12%) and three options FOMO indicators using SPX (12%),
ETF (12%), and Equity (12%) calls compared to the NY ADV/DEC issues (inverted). FOMO
is shown when strong call volume is combined with strong NY ADV/DEC. See
Investment Diary
addition for full discussion.
Update EMA. Bearish sentiment fell further below a weak Sell with a drop in
hedging.
Update FOMO calls. Bearish sentiment rose to neutral from a weak Sell.
Bonds (TNX). Bearish sentiment remains at low extremes.
For the INT outlook, the gold miners (HUI) bearish
sentiment is presented in a new format using the data mining software to add
the inverse TNX rate to the ETF ratio.
Update. Bearish sentiment remains near neutral.
II. Dumb Money/Smart Money Indicators
This is a new hybrid option/ETF Dumb Money/Smart Money Indicator as a INT/LT
term (outlook 2-6 mns) bearish sentiment indicator. The use of ETFs
increases the duration (term).
Update. Bearish sentiment dropped below a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment continued to drop below a weak Sell.
A new composite SPX options indicator uses both the volume adj (1/B-A) and P/C
equivalent spread (A-B) to compensate for the discrepancy between the two.
This replaces the old SPX options indicator for the SPX ETFs + options below and the
INT/LT composite. No chart.
For the SPX, I am switching to hybrid 2X ETFs plus SPX options. Taking a look at the
INT term composite (outlook 2 to 4 mns), bearish sentiment fell from near a
weak Buy.
For the NDX combining the hybrid ETF options plus NDX 3X ETF sentiment with the interest rate effect,
(outlook 2 to 4 mns) bearish sentiment shows similar extremes between ETF and
options as in late 2020 which resulted in a choppy market until options
sentiment rose. Note QQQ options are optimal, but are N/A and are included
in ETF options.
Bearish sentiment fell further below a weak Sell.
Another NDX chart of the 2x ETFs QID/QLD $ volume ratio was shown on the X/Twitter
update last week that showed extreme low short/longs and may indicate the tech run
could be near an end. But going back to early 2018 there were a couple false signals
such a Sell late 2020 where markets continued higher for a year.
For the SPX combining the hybrid ETF options plus SPX 2X ETF (outlook 2 to 4 mns)
produces an indicator where, in this case, ETF options are a proxy for the SPY options.
Bearish sentiment for SPX fell back toward a weak Sell.
III. Options Open Interest
Using Thur closing OI, remember that further out time frames are more likely
to change over time, and that closing prices are more likely to be effected.
Delta hedging may occur as reinforcement, negative when put support is broken
or positive when call resistance is exceeded. This week I will look
out thru July 25 & EOM. A text overlay is used for extreme OI to improve readability,
P/C is not changed. A new addition is added for OI $ amounts with breakeven pts (BE) where
call & put $ amounts cross. Note multiply OI$ by 100 for shares/contract.
With Fri close at SPX 6397, options OI for Mon is moderate/strong with a
negative bias from large call positions at 6225 and 6350. A pullback to
6275 or lower is possible
Wed has ssmall SPX OI where put support is 6250 and call resistance is 6275 .
For Fri moderate/strong the large call position at 6400 may be an indication
of some expected news announcement. FOMC is 29-30th with a rate cut possible.
For July 31, EOM strong SPX OI shows an even larger call position at 6500 with a
possible appeals court ruling on Trumps tariffs. A negative ruling could
block most of the tariffs..
IV. Technical / Other
The following uses barcharts.com as a source and discusses S&P futures (ES) as a third
venue of stock sentiment in addition to options and ETFs. The non-commercial/commercial
spread represents a LT bearish sentiment (dumb money/smart money) indicator. As explained in investopedia,
commercial investors (red) are institutions and are smart money, while non-commercials (green) are speculators such as
hedge funds and are dumb money. Here is the current barchart graph
for the S&P 500 (top) and trader positions (1st bot) with positives as net longs and negatives
as net shorts.
Bearish sentiment is represented by the spread and is positive if red > green
(Buy) and negative if green > red (Sell). ES (SPX) bearish
sentiment is slightly positive at 0.75 SD, NQ (NDX) bearish sentiment
remains over a weak Sell at
-1.75 SD, YM (DJIA) is between a weak Sell and neutral at -0.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2025
2024
2023
2022
Other Indicators
Conclusions. It is interesting to see that bearish sentiment
remains steady given what seems to be a stock market that refuses to go down.
To get a more extreme drop in bearish sentiment we could see a steady advance
into the Fall (a repeat of 2018?) or a blowoff event such as the courts
reversing Trumps tariffs. Both are beyond my predictive capability, but
SPX options OI seems to show that someone is expecting the latter.
Weekly Trade Alert. Some pullback seems likely, but the prudent approach is
to wait and see what Aug brings for the tariff outlook. The Aug 13 Bradley
turn date is looking more important. Updates @mrktsignals.
Weekly outcomes continue to be swayed by the seemingly
unpredictable tariff pollicies by DJT. The previous Fri announcement of
aditional tariffs sent foreign markets skidding while US markets were closed.
The expected drop last week to SPX 6200 or below was short circuited by Mon
change in deadline from July 9 to Aug 1 which helped put a stop to the US
markets decline although Mon SPX low was 6201. This does seem to make the
Bradley turn date of Aug 13 possibly more important. However, todays (Sat)
call for 30%+ tariffs on Mexico and Canada looks like a repeat of last week, so
who knows what will happen by Mon. SPX options OI continue to show a
likely weak monthly exp targeting SPX 6150-200 or lower. Sentiment is
mostly unchanged to slightly more bearish ST. The NDX futures (NQ) did
show a moderate decline in bearish sentiment toward a strong Sell.
I. Sentiment Indicators
The INT/LT Composite indicator (outlook 3 to 6+ months) has three separate
components. Starting Aug 26, 2023 SPX options are removed due to extreme 0DTE volume
distortions. New weights are ETF put-call indicator (30%), SPX 2X ETF INT
ratio (40%), and 3rd a volatility indicator (30%) which combines the options
volatility spread of the ST SPX (VIX) to the ST VIX (VVIX) with the UVXY $ volume.
Update Alt, INT view. Bearish sentiment rose from near a weak Sell halfway
to neutral.
Update Alt EMA. Bearish sentiment rose to neutral.
The ST Composite as a ST (1-4 week) indicator includes the NYSE volume ratio
indicator (NYDNV/NYUPV & NYDNV/NYDEC) and the UVXY $ Vol/[SPX Trend, SMA only]. Weights
are 80%/20%.
Update. Bearish sentiment remains positive between neutral and a weak Buy.
Update EMA. Bearish sentiment rose from neutral last week to near a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment rose back to a weak
Sell.
The ST/INT Composite indicator (outlook 1 to 3 months) is based on the Hedge Spread (48%)
and includes ST Composite (12%) and three options FOMO indicators using SPX (12%),
ETF (12%), and Equity (12%) calls compared to the NY ADV/DEC issues (inverted). FOMO
is shown when strong call volume is combined with strong NY ADV/DEC. See
Investment Diary
addition for full discussion.
Update EMA. Bearish sentiment rose but remains at a weak Sell.
Update FOMO calls. Bearish sentiment is relatively unchanged at a weak Sell.
Bonds (TNX). Bearish sentiment remains at low extremes.
For the INT outlook, the gold miners (HUI) bearish
sentiment is presented in a new format using the data mining software to add
the inverse TNX rate to the ETF ratio.
Update. Bearish sentiment fell back to its recent lows from neutral with a
1% gain in HUI last week.
II. Dumb Money/Smart Money Indicators
This is a new hybrid option/ETF Dumb Money/Smart Money Indicator as a INT/LT
term (outlook 2-6 mns) bearish sentiment indicator. The use of ETFs
increases the duration (term).
Update. Bearish sentiment remains at a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment remains unchanged at a weak Sell.
A new composite SPX options indicator uses both the volume adj (1/B-A) and P/C
equivalent spread (A-B) to compensate for the discrepancy between the two.
This replaces the old SPX options indicator for the SPX ETFs + options below and the
INT/LT composite. No chart.
For the SPX, I am switching to hybrid 2X ETFs plus SPX options. Taking a look at the
INT term composite (outlook 2 to 4 mns), bearish sentiment rose slightly
toward a weak Buy.
For the NDX combining the hybrid ETF options plus NDX 3X ETF sentiment with the interest rate effect,
(outlook 2 to 4 mns) bearish sentiment shows similar extremes between ETF and
options as in late 2020 which resulted in a choppy market until options
sentiment rose. Note QQQ options are optimal, but are N/A and are included
in ETF options.
Bearish sentiment remains at a weak Sell.
For the SPX combining the hybrid ETF options plus SPX 2X ETF (outlook 2 to 4 mns)
produces an indicator where, in this case, ETF options are a proxy for the SPY options.
Bearish sentiment for SPX rose slightly, now halfway to neutral.
III. Options Open Interest
Using Thur closing OI, remember that further out time frames are more likely
to change over time, and that closing prices are more likely to be effected.
Delta hedging may occur as reinforcement, negative when put support is broken
or positive when call resistance is exceeded. This week I will look
out thru July 16. A text overlay is used for extreme OI to improve readability,
P/C is not changed. Also, this week includes a look at GDX, TLT & IBIT for Mar exp.
A new addition is added for OI $ amounts with breakeven pts (BE) where
call & put $ amounts cross. Note multiply OI$ by 100 for shares/contract.
With Fri close at SPX 6260, options OI for Mon is small/moderate with P/C
support resistance from 6250-75, then 6225 and 6300.
Wed has smaller OI where SPX has wide support resistance of 6100-300 and will
likely be governed by Fri monthly exp.
For Fri AM strong SPX OI still shows a negative bias toward 6150-6200. The
straddle at 6000 is now so far OTM that it may have little effect.
For Fri PM moderate/strong SPX OI is also negatively biased toward 6200.
IV. Technical / Other
The following uses barcharts.com as a source and discusses S&P futures (ES) as a third
venue of stock sentiment in addition to options and ETFs. The non-commercial/commercial
spread represents a LT bearish sentiment (dumb money/smart money) indicator. As explained in investopedia,
commercial investors (red) are institutions and are smart money, while non-commercials (green) are speculators such as
hedge funds and are dumb money. Here is the current barchart graph
for the S&P 500 (top) and trader positions (1st bot) with positives as net longs and negatives
as net shorts.
Bearish sentiment is represented by the spread and is positive if red > green
(Buy) and negative if green > red (Sell). ES (SPX) bearish
sentiment is slightly positive at 0.5 SD, NQ (NDX) bearish sentiment
increased over weak Sell at
-1.75 SD, YM (DJIA) remains near a weak Sell at -0.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2025
2024
2023
2022
Other Indicators
Conclusions. This weeks Phil's Stockworld
sums up most of my thoughts on DJTs tariff policy. Although bigger
picture, I think the purpose is to stop the China juggernaut. Much of the
global growth the last 20 years has come from China, and the US seems to be
willing to slow global growth if it slows China more than the US. Next
weeks CPI/PPI may be the last "good" report for a while. I've noticed that
Kroger and Walmart have raised prices on many items 10% or more. It seems
than rather raise items effected by tariffs by 20-30% or more, they are just
raising the price of everything.
Weekly Trade Alert. Still looking for a pullback to SPX 6150-200
next week. Updates @mrktsignals.
