Last week was a miss with no positive effects on stock prices (SPX) even
though oil prices continue to fall under $70/bbl (WTI). A couple of weeks
ago the potential for increased NDX volatility due to the SK KOPSI
and a Tue O/N (US) KOPSI crash of 10% was followed by a nearly 1,000 pt drop in the US
NDX and a 2% drop in the SPX to the low 7300s, just below the 50 day SMA.
In spite of increased volatility, closes for the SPX continued to hover in a 11
pt range from 7354-65 Tue-Fri near the 50 SMA. SPX OI for the June EOQ and
July 4th shortened week indicate that prices are likely to rally back to 7450
for the week. A possible ceasefire between Irael and Lebanon indicates the
potential for LT peace in the ME even though the US and Iran continue to
exchange "friendly fire".
While bearish sentiment for the ST Composite remains near a weak Buy, a sharp
increase in hedging with the Hedge Spread at a weak Buy VST supports higher
prices next week. A more worrisome turn in sentiment is from the
NAAIM survey of investment managers
which saw a jump in the Exposure Index to 98.6, matching the May 27 98.4 before
a 4 day rally of about 100 SPX pts then a 5% decline into mid-June. A huge
negative swing in ES sentiment (COT section) seems to support the negative INT outlook.
Discuss.
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 moved higher toward neutral.
Update Alt EMA. Bearish sentiment moved significantly higher from a weak
Sell 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 just below a strong Buy.
Update EMA. Bearish sentiment moved down from a strong to weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment remains 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 from a weak Sell to around neutral.
Update FOMO calls. Bearish sentiment moved up toward 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 a weak Sell. With gold near
$4000/oz, a drop close to $3000 is possible for the LT target for HUI of ~500.
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 a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment jumped from a weak Sell to a weak Buy
VST (grn) and neutral INT/LT.
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 halfway to
neutral from a weak Sell.
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 near 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 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 7354, options OI for Mon is moderate with a high $P/C and a
BE at 7435. Straddle at 7400 looks like a possibility.
For Tue (June EOM) strong SPX OI has a modest positive bias toward BE at 7400.
Wed has small SPX OI with few ITM calls and a positive bias toward the put
straddle at 7450.
For Thur (Fri holiday), SPX OI is moderate with ITM puts indicating a bias
toward the 7450+ area.
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 saw a
huge drop from a Buy at + 1.5 SD to neutral at -0.25 SD, NQ (NDX)
remains neutral at +0.15 SD, YM (DJIA) nearer to a weak Sell at -0.75 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. Much of the weakness in techs seemed to be a result
of increasing cost pressures such as AAPL's decision to raise product prices to cover
the soaring cost of memory and increased cost competition of the lower cost
Chinese AI models using DeepSeek which offer a 90% or more cost advantage with a
performance lose of 20% or less. The AI race is starting to look like
modern warfare where one side uses $2.5M Tomahawk missiles and the other side
uses $3000 drones.
Weekly Trade Alert. Sentiment similarities to late May indicate a
possible SPX 100 pt upside into July 4th holiday (SPX 7450) followed by a
possible 5% decline into mid July (~SPX 7100). Updates @mrktsignals.
Last week started out strong as expectations of a US/Iran peace
proposal were high, pushing the SPX up about 2% from 7430 to 7580 for a high on
Mon. Doubts began to surface mid-week as Israel refused to stop its
attacks on neighboring Lebanon with a sharp decline Wed after a hawkish FOMC to fill the Mon gap at
SPX 7400 before a weekly closing at 7501. US and Iran diplomats are
expected to meet in Switzerland on Sunday even though Iran has declared the
Strait of Hormuz closed over Israel's failed ceasefire agreement with Lebanon.
Early indications are that the "peace process" may be a drawn out process,
thereby dragging out the topping process thru the next earnings season starting
mid-July.
Sentiment measures overall are little changed. However, the ST
Composite did see a spike higher with the VST (grn) reaching a strong Buy, while
the SPX and NDX ETF and options bearish sentiment levels continue to fall below
a weak Sell. One of the external indicators, the
Rydex 3x Bear/Bull ratio
has reached an all time low at 1% of bearish funds.
Discuss.
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 fell slightly to around the weak
Sell.
Update Alt EMA. Bearish sentiment fell slightly to around the 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 rose above a weak Buy.
Update EMA. Bearish sentiment rose above a weak Buy to a strong Buy VST
(grn).
The ST VIX calls and SPXADP indicator bearish sentiment remains 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 from a strong Sell toward a weak Sell.
Update FOMO calls. Bearish sentiment fell then rebounded between weak and
strong Sells.
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 rose slightly.
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 fell slightly remaining between a weak and strong
Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment rose slightly above 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 continues to fall
in SPX options, pushing sentiment below a weak Sell.
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.
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 continued to fall halfway between a weak and strong
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 June 26. 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 7501, options OI for Mon is moderate with a BE at 7500 due
to a put/straddle at 7500. Prices should close near 7500.
Wed has small SPX OI where BE is higher at 7525 due to a moderate straddle at
7600 and could see a retest of recent highs with good Iran news (SPX 7575).
For Fri moderate SPX OI shows BE dropping back below 7500 to 7480 due to low put
support over 7400.
For Tue EOM strong SPX OI shows a bias to BE at 7405, but about half the OI$
call value is the 18k calls at 7k. Could see 7450.
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 remains a weak Buy at + 1.5 SD, NQ (NDX)
moved to neutral at 0.0
SD, YM (DJIA) moved to neutral at 0.0 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. Markets have largely ignored the swift drop in oil
prices back to the mid-70's (WTI/bbl) although the last time oil prices were at
this level in early March the SPX was 6850 or almost 10% lower (war premium?).
A dragged out peace process could keep prices in a trading range (SPX 7400-7600)
with ATH's more likely now with July-Aug EPS.
Weekly Trade Alert. Positive Iran news by Wed may target SPX 7550+
with EOW/EOM fade toward 7450 or lower. Updates @mrktsignals.
Last weeks outlook for increased volatility in the stock market "pressuring"
Trump.to conclude a deal with Iran ("the TACO") was correct, but the timeline was
much accelerated. The SPX was expected to rally to 7500-50 this week
before dropping to 7200-50 next week, but most of the action happened on Tue with
a rally to 7483 followed by a sharp drop to 7238 led by techs. This was
soon followed by an order of TACOs on Thur which sent the SPX back to 7400.
Headlines this weekend are that a US-Iran MOU agreement is expected next week
with Trumps tweets indicating as soon as Sunday is possible. If a MOU is
agreed on, the original target of SPX 7650-7740 is possible before a larger
decline as a "sell the news" event. A likely downside target would be SPX
7000 or lower as that was the start of the rally based on Trumps repeated
assertions that a deal is imminent, while negative reprecussions of the
war will likely take months to resolve.
Bearish sentiment fell for the most part with the ST Composite near a weak
Buy, the INT/LT Composite moving toward a weak Sell, and the ST/INT Composite
moving toward a strong Sell (FOMO callsl. SPX ETFs and options are showing
a significant drop in bearish sentiment.
Springheel Jack has an interesting
take on the current market where he sees a retest of ATHs before significant
downside, comparing the current market to the summer of 2008. However in
2008, there was only a 10% correction in the summer before slightly higher highs
in the Fall when the real fun began.
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 moved close to a weak Sell.
Update Alt EMA. Bearish sentiment fell to a weak Sell last week despite the
lower prices and increased volatility.
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 toward a weak Buy.
Update EMA. Bearish sentiment fell closer to neutral.
The ST VIX calls and SPXADP indicator bearish sentiment remains 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 fell to a strong Sell.
Update FOMO calls. Bearish sentiment remains between a weak and strong 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 close to a weak Sell.
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 from a near stong Sell to a near weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment remains just 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 dropped sharply
from neutral to a weak Sell.
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 above 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 fell to 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
June 18. 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 7431, options OI for Mon is moderate with BE near current
levels. Call resistance starts at 7500 and put support at 7300
Wed SPX OI is small/moderate and has similar sentiment to Mon, but a slightly lower
BE.
For Thur June 18 AM MnExp, very strong SPX OI shows a much lower BE at 7205, but
is unlikely to effect prices unless the SPX is < 7400 with the possible Iran
deal
For Thur June 18 PM MnExp, SPX has strong OI where much of the call $OI is at
the 7k strike so good put support at 7350 and 7400 will likely hold prices.
Also there is little call resistance over 7500.
For Tue June 30 EOM, strong SPX OI has sumilar sentiment to Thur, but there is
little put support until 7300.
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 remains a weak Buy at + 1.5 SD, NQ (NDX)
moved to neutral at 0.0
SD, YM (DJIA) moved to neutral at 0.0 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. To say that Trump is like the boy who cried "wolf" is
an understatement as this is at least the fortieth time that I have heard that a
deal with Iran is imminent, but with oil near $80/bbl (WTI) the
probability looks pretty good this time. For the stock market which has
been climbing the "slope of hope" for.the last couple of months,"a deal" is much
more lkiely to be viewed as a profit taking opportunity than a reason to
increase long term investments.
Weekly Trade Alert. The next two weeks are likely to retest/best
ATHs before a possible 10% correction. Updates @mrktsignals.
