Last week was expect to see a contiuation of the sideways trading range for
the SPX for Aug & Sept with a possible upward bias due to the huge bearish
sentiment for the Oct monthly options exp from about 7675 to 7775, but instead
the range was closer to 7625 to 7750. Bonds were weak for most of the week
as pressure from a potential debt crisis brewing in the EU, esp France, saw
rates rise across the globe. Wed and Thru were esp brutal for bonds following
the PCE inflation which fell due revised calculations with the TNX rising to
5.34% and the SPX falling to 7617 before a reversal possibly due to oil falling
to $90/bbl (WTIC). Next weeks SPX options OI is showing much of the same
with a more positive bias (7700-7775) while the Oct 16 monthly AM saw a 20%
decrease in calls and a 20% increase in puts resulting in the $OI P/C going from
2x to 3x and the BE increase to 7895. Trump seems to have a way of
changing his mind when sentiment gets that negative.
Bearish sentiment fell slightly with the ST Composite and VIX call indicator
remaining near weak Buys, but VIX call volume did spike to 1M+ on Fri so ST
volatility is possible. Other INT/LT indicators remain near weak Sells due
to a drop in the ETF P/Cs.
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 remains at a weak Sell.
Update Alt EMA. Bearish sentiment dropped to a weak Sell.
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 declined close to a weak Buy.
Update EMA. Bearish sentiment declined to just below a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment just below a weak Buy.
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 remains midway between a weak Sell and a
strong Sell.
Update FOMO calls. Bearish sentiment dropped further below neutral.
Bonds (TNX). Bearish sentiment remains at low extremes as rates
increased 0.1% for the week.
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 continues to fall as prices fell about 7% for the
week having retraced about half of the summer rally.
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 increased closer to a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment remains 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 moved closer to
neutral.
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 below a weak Sell based on weak ETF P/Cs.
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 fell below a weak Sell based on weak ETF P/Cs.
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 Oct 9. 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 7723, options OI for Mon is moderate with call resistance
from 7700-7750 and BE at 7700. Limited upside (7750) w/negative bias EOD
(7700).
Wed SPX OI is small with a BE at 7715, put support at 7710 and a straddle at
7735 that may give an upward bias.
For Fri SPX OI is moderate with a higher BE at 7720, but more call resistance at
7725 & over that may limit upside. Next Fri may indicate possible news
that could be anticipated.
For Fri monthly exp very strong SPX OI is showing the $OI P/C increased from 2x
last week to 3x this week and increased BE from 7870 to 7895. Would seem
to indicate some resolution of US/Iran conflict as likely.
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) sentiment moved
closer to a weak Buy at +0.85 SD, NQ (NDX) remains close to a strong Sell at -1.75 SD, YM (DJIA)
dropped below a weak Sell at -0.85 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.75 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. The last two months have been equally frustrating for
both bulls and bears as the SPX has failed to either breakout or breakdown, but
instead the SPX continues to follow the late July
2000 analog with a sharp but short ST rally late July followed by a
multi-week consolidation that looks as if it may last into the mid-term
election. A Democrat control over Congess could hogtie much of Trump's
plans to grow out of a debt problem starting with stricter controls over AI (now
SI).
Weekly Trade Alert. Next week may see a slight upward bias, but
the Oct monthly options exp could be interesting given Trumps history of timing
market bottoms. Updates @mrktsignals.
Last week was expected to see limited gains to SPX 7700 thru EOM with
possible mid-week weakness and Mon started off with a bang after Trump touted
more negotiations with Iran which sent oil tumbling, but the big driver of an
SPX 130
pt gain was the 11% gain in META with the release of Muse, its AI assistant keyed
into online shopping. Wed/Thur did see weakness as Iran's deal turned out
to be a false flag with an SPX 100 pt drop, before Fri bounce back to 7740.
This weeks SPX OI continues to show a bias toward the 7700 level with PCE
inflation on Wed and the Sept Jobs report on Fri. A quick look for Oct
monthly exp on the 16th, however, shows a BE at 7870 due to a huge straddle at
8k, so something like an EW ending diagonal may be possible.
Bearish sentiment declined somewhat with last weeks rally, but the ST
Composite remains over a weak Buy and the VIX call indicator remains positive
but below a weak Buy. The INT/LT Composite and ST/INT Composite have moved
to weak Sells based on the low ETF P/Cs which also moved the Hedge Spread to a
weak Sell. FOMO calls remain neutral. A trading range, perhaps 7675-7775 is expected for the week.
Thru mid-Oct exp week an EW scenario consistent with the SPX OI outlook is an
ED taken from another site (extend
time frame). But more troubling LT are the
NYSE ADLINE which looks a lot like
late where a lower ADLINE with an SPX ATH spelled trouble, as well as the
TRANS index where 2025-26 seem to be
repeating 2021-22.
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 dropped back to a weak Sell.
Update Alt EMA. Bearish sentiment dropped from near neutral to near a weak
Sell.
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 spiked above a strong Buy on previous Fri and remains over a
weak Buy.
Update EMA. Bearish sentiment has fallen from the previous weeks strong Buy
to a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment fell below a weak Buy.
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 fell from above a weak Sell halfway to a
strong Sell.
Update FOMO calls. Bearish sentiment remains just below neutral.
Bonds (TNX). Bearish sentiment remains at low extremes although
TNX rates broke over the 5% area at one time up .25% for the week.
Next weeks PCE inflation and jobs data could be problematic if rates rise toward
5.5%.
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 continued to fall as price hovers around the 800
level.
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 halfway between a weak and strong Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment retreated sharply to 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 sharply from
a weak Sell toward neutral.
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 back to a weak Sell as ETF P/Cs fell.
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 to a weak Sell as ETF P/Cs fell.
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 Oct 2. 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 7743, options OI for Mon is moderate with a slight
negative bias due to ITM calls and a BE at 7710. Call resistance over
7750.
Wed SPX OI is large with BE also at 7710, could remain in range of 7700-50.
For Fri SPX OI is moderate/large with BE at 7700 and low $P/C, likely close near
7700.
For Fri Oct 16th AM SPX OI is large with another huge straddle at 8K and a BE
at 7870. Smaller straddle for Sept (~100k) with BE at 7675 resulted in a
Tue swing low near 7500 and a Fri open near 7650. Perhaps TACO week.
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) sentiment moved
closer to a weak Buy at +0.75 SD, NQ (NDX) close to a strong Sell at -1.75 SD, YM (DJIA) remains a weak Sell at -1.25 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.75 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. The biggest surprise in this weeks sentiment by far
was the Oct monthly exp OI. The last two weeks I had been pounding the
table about rising int rates and was planning on pointing out the Mon Oct 19 was
the 39th anniversery of 1987's Black Monday where rates had also risen sharply,
but the SPX OI seems to indicate a bearish consensus. Perhaps Trump still
has a few TACOs left.
Weekly Trade Alert. Next week is expected to see limited weakness
into Fri with an SPX range of 7675-7775. Updates @mrktsignals.
SPX prices were again somewhat lower than expected, especially mid-week as
oil prices rose Mon/Tue to the $106/bbl WTIC, and on Wed the Fed showed that is
prepared to take inflation seriously by raising the fed fund rate to 4.0-4.25%.
A late selloff, possibly due to higher projected rates thru 2027, pushed the SPX
down to the 7510 area. As oil reversed, stocks climbed back and the SPX
closed the week down 6 at 7650 with higher techs and lower bank stocks.
SPX OI is pointing to limited gains thru the EOM, possibly to the 7700 area.
Last weeks conclusion discussed similarities to the 1987 int rate environment
where the TNX rose from a low of 7% (not 5%) to 10%, and the past week Nomura's
C.McElligott, indicated that high diesel prices may cause a spike in inflation
and int rates with similar results to 1987 (paywall,
AI).
The lower prices last week pushed sentiment measures higher. Outside
measures such as the CNN Fear/Greed
index was pushed close to the extreme fear level, while the
AAII Survey moved to 53% bearish,
close to a 1 year high. Of the in-house measures the ST Composite and VIX
call indicators remain on weak Buys, with most INT/LT measures moving to neutral
except the DM/SM and SPX options and ETF indicators which remain at a weak 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 sharply from a weak Sell toward
neutral.
Update Alt EMA. Bearish sentiment rose sharply from a weak Sell
toward 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 continued to rise above a weak Buy.
Update EMA. Bearish sentiment continued to rise to a weak Buy VST (grn).
The ST VIX calls and SPXADP indicator bearish sentiment remains at a weak Buy.
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 continued to rise above a weak Sell.
Update FOMO calls. Bearish sentiment rose to neutral as call volume dropped
sharply.
Bonds (TNX). Bearish sentiment remains at low extremes as the
TNX continues to test 5%.
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 at a weak Sell as prices consolidate
around 800.
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 rose to mid-way between a weak and strong Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment remains mid-way between neutral and 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
above a weak Sell with 2x SPX ETF sentiment rising.
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 rose to mid-way between neutral and 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 to mid-way 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 Sept 25. 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 7650, options OI for Mon is small with minor put
support/call resistance between 7625 and 7675. BE at 7665 and straddle at
7700 indicate slight upside bias.
Wed has very small SPX OI with no put support until 7550 and call resistance at
7750+. Possible weakness with BE at 7635.
For Fri moderate SPX OI has $ P/C over 2/1 and BE at 7680, so a move to 7675+ is
likely .
For Wed EOM strong SPX is similar to Fri w/2 to 1 $ P/C and a BE at 7695, so
modest upside is likely.
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) sentiment jumped
halfway to a weak Buy at +0.5 SD, NQ (NDX)
moved to halfway between
a weak & strong Sell at -1.50 SD, YM (DJIA) remains a weak Sell at -1.35 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.75 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. With the rapid expansion of the use of AI throughout
the economy, more and more incidents similar to the OpenAI breach of Hugging
Faces security are prompting the comparisons to human
adolescent behavior
which raises the question of proper monitoring and control. One unsettling
example which surfaced last week was the false
AI identification of a Chinese vessel
expected of transferring nuclear weapon components to Iran that almost resulted
in a military confrontation.
Weekly Trade Alert. SPX prices are expected to be mildly positive
thru the EOM (~7700) with some possible weakness mid-week. Updates @mrktsignals.
