Last week was expected to rally to about 6900 if oil prices fell to $90-95/bbl (WTI)
or fall to 6750 if oil prices rose to $95-100, and extremes were seen at each
end. Sun started with news of a collapse of the Iran peace talks sending
oil futures up $12 to about $108 and ES futures indicated an SPX level of about
6750. But by Mon open, oil had stabalized and SPX opened down only to 6790, but
as oil prices fell thru the day back to $96 the SPX rallied to 6886. As
the week progressed Trump continued to tweet (or is it now X) that a deal was
very close, and as oil continued to drop the SPX rose, making an ATH Wed (>7k).
With Fri news that Iran opened passage thru the Strait of Hormuz, oil dropped an
additional $10 to about $82 pushing the SPX to a high around 7150. Today
we now have news of an Iranian gunboat attack on one of the tankers, so the
Strait is closed again. I think that the big problem now negotiating with
Iran may be that all of the strongest leaders were killed by US & Israel, and
the remaining militia is fractured into independent factions with no central
control to negotiate with.
The recent meltup has pushed many of the sentiment indicators to ST Sell
extremes. I had been looking for a move to SPX 6900-7100 by mid-June to
support the SpaceX IPO of about $75B ($1.5T value) and we are already there in 3
weeks. Now two of the major players OpenAI and Anthropic are expecting an IPO in
the Fall so there may be aditional upward pressure later in the year. In
the Tech/Other sector, I will look at two possible analogs for the rest of the
year, the 2007 rounded top and the 2018 Trump trade war with China, both support
a retest of recent lows (July-Aug) and another high in the Fall (Oct).
The INT/LT Composite has moved to a very ST Sell on EMA (grn), while the ST
Composite is back to neutral. The VIX call indicator has moved to a weak
Sell, while the ST/INT Composite (hedge spread, NYDNVol and FOMO calls) has
moved to an extreme strong Sell with FOMO call buying at decade highs. The dumb
money and hedge spread indicators have dropped to weak/strong Sells VST and the
SPX and NDX ETF and ETF option indicators have dropped from a strong Buy to
neutral. Even with all that I don't expect much more than a pullback before
June then a move to about SPX 7200. July-Aug could see another 10% decline to SPX
6500-600 possible with ground troops in Iran. Fall may see SPX 7400.
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 back to neutral.
Update Alt EMA. Bearish sentiment moved to neutral LT (blu) and weak Sell
VST (grn).
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 dropped to neutral.
Update EMA. Bearish sentiment dropped to neutral.
The ST VIX calls and SPXADP indicator bearish sentiment has dropped from a
strong Buy three weeks ago to a weak Sell.
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 an extreme low, strong Sell, due to
high FOMO call buying.
Update FOMO calls. Bearish sentiment fell to extreme lows beyond a strong
Sell.
Bonds (TNX). Bearish sentiment remains at extreme lows.
We may be entering a new inflation cycle.
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.
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 to a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment dropped sharply VST similar to the lift
off from the Apr 2025 lows, likely short covering.
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 near
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 dropped sharply from a strong Buy to neutral.
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 dropped sharply from a strong Buy 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 Apr 20. 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 7126, options OI for Mon is moderate with strong call
resistance at 7050 and 7100. Below 7050 and 7100 could fall to 7000, but
above positive delta hedging may support prices.
Wed SPX OI is small with resistance below down to 6920 and above at 7150.
For Fri SPX OI is strong with call resistance down to 7050 and should see a
weekly close of 7050 or lower.
For Thur Apr 30, SPX OI is strong and similar to Fri call resistance down to
7000 should push prices to that level or lower. The calls at 6650 shown
last week were purchased Mar 31 and Apr 1 around $100/contract (3500+8500
contracts) and sold Apr 15 (6000 @ $390) and Apr 17 close (4000 @ 486) for
a nice profit of about $300M, looks like insider trading.
IV. Technical / Other
This week I mentioned the divergence between the SPX and ETF P/Cs, but after closer examination the
divergence appears to be more from increased call buying, especially 0DTE that is causing a lower trend.
The most interesting thing about this rally is the lack of volume support, where
many of the past correction lows started with 10 to 1 Adv to Dec volume, this
time 2 to 1 is more likely. The most similar year was 2017, Trumps 1st
year, so this is probably buying by the same people who bought Trump meme coins.
PhilsStockWorld thinks it is short covering.
Previously I had mentioned the parallels berween the rounded top in 2025-26 and
2007 and today I want to show the analog for what may happen in 2026. 1st
a Q1 decline the a sharp rally into June-July, a successful retest of the lows
in July-Aug and a high retest in Oct.
In 2018, a similar although with different timing occured during Trumps 1st
trade war with China with an alternation of the current vertical climb and
lengthy decline. The 2007 version seems more likely.
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
to positive at + 0.5 SD, NQ (NDX) remains near a weak Sell at -0.5 SD, YM (DJIA)
is less positive at +
0.25 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
2025
2024
2023
2022
Other Indicators
Conclusions. During Trumps first term I coined the adage
"Stockbroker in Chief" to describe Trumps manipulation of the stock market thru
claims of pie in the sky and a chicken in every pot, but last week was truly an
Oscar performance as he proclaimed that the failure of the Iran peace talks were
only one line away from the deal of the century. Sentiment is pointing to
a severe overbought condition, but it may be too early to discount Trumps
persuasiveness. WS is likely to try to keep markets afloat thru the Fall
when the combined IPOs of OpenAI and Anthropic are expected to rival that of
SpaceX The strong rallies last week in MSFT (+15%) and ORCL (+30%) seemed
to be the result of news
of expected data centers buildout problems due to lack of power. This
could be a big problem for the AI sector later this year..
Weekly Trade Alert. A pullback over the next two to three weeks is
expected, but the SPX may hold its lows near 6900. Updates @mrktsignals.
Last weeks price action for SPX went pretty much as expected as an early
drop of 1%+ was expected prior to Trumps Mon deadline for Iran except that Trump
delayed the deadline to Tue which resulted in a Mon rally of about 30 pts to
6610ish. However, Tue AM did see a decline to about 6530 before a late
recovery and an announcement shortly after the close of a rwo week ceasefire
sent oil prices tumbling almost 15% and stock futures up 3%, exceeding the
target area for next weeks opt exp of SPX 6700-6800 at a 6816 close. Much
of next weeks progress will likely depend on oil prices (WTI), with $95-100/bbl
an SPX range of 6750-6850 and oil $90-95 likely SPX 6800-900. An
interesting twist shows up in the Apr EOM options OI with large call positions
at the SPX 6600 & 6700 levels which indicates that a failure of the two week US
/ Iran peace talks is likely to send the SPX back to the 6600-700 area or lower
by EOM.
There are some interesting divergences setting up between the ETF and SPX
options which at first glance are similar to the Jan 2025 period where the ETF
option P/C are very high and the SPX option P/C is very low. I will try to
take a closer look during the week and perhaps do a Tech/Other section next
week. The result in sentiment for this week shows a mixed bag where the ST
Composite remains at a weak Buy, while the ST/INT Composite is near a weak Sell.
The VIX call indicator is also near a weak Sell and FOMO call indicator is near
a strong Sell. The hedge spread is near neutral, while both SPX and NDX
ETFs and ETF option indicators are at strong buys. Possible setup for a giant
whipsaw?
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 slightly.
Update Alt EMA. Bearish sentiment rose slightly.
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 to a weak Buy.
Update EMA. Bearish sentiment remains near a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment continued to fall
toward a weak Sell.
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 slightly halfway to a weak Sell.
Update FOMO calls. Bearish sentiment fell sharply from near a weak Sell to
near a strong Sell.
Bonds (TNX). Bearish sentiment picked up slightly on the higher
inflation news.
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.
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 continued to fall to close to a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment moved towards neutral.
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 then
recovered to unchanged.
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 strong Buy.
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 also moved toward a strong Buy.
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.
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 6817, SPX options OI is small/moderate with call
resistance from 6800 to 6850 and a pullback to 6800 is expected.
Wed, SPX options OI is small and SPX could trade in a range of 6750 to 6850.
For Fri AM, SPX options OI is large with an upside bias to BE at 6850.
For Fri PM, SPX options OI is moderate and is showing some weaknes in SPX by
close if 6850 is reached toward the moderate straddle at 6800 or lower.
For Thur EOM, SPX options OI is moderate/large with a BE at SPX 6685 due to
large call positions at 6700 and 6800, indicating too much optimism for the Iran
talks and a pullback to 6700 or lower 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 is
neutral at + 0.0 SD, NQ (NDX) moved above a weak Sell at -0.5 SD, YM (DJIA)
is a mildly positive at
0.5 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
2025
2024
2023
2022
Other Indicators
Conclusions. Anglo-Saxons and Muslims have been fighting over the
Holy Lands since the crusades in the late 1000s AD and it is hard to believe
that the feud will be settled this time.
Weekly Trade Alert. SPX is likely to trade around the 6800-75 level
unless there is significant news regarding the US / Iran peace talks. Updates @mrktsignals.
After three weeks of relief rallies to begin the week and EOW declines based
on Iran war trepidations, the SPX reversed course sharply for the shortened
holiday week after a premarket decline Mon. The large SPX put OI for the
Tue EOM at 6475 indicated that about a 2% rally was expected thru the EOM from
the 6350 area with an actual advance of about 2.5% to 6530 that continued higher
Wed for over a 3% rally for the week. This was surprising since the
conflicting reports from Trump of positive peace talks with Iran and then
threats of total obliteration pushed oil/WTC as high as $110/bbl. Mon is
Trumps deadline for the opening of the Strait of Hormuz or face attacks on Iran's
energy infrastructure (a possible war crime).
I have not checked the CME fed fund
watch for a while but last week showed a dramatic change with the outlook
for cut / no change / hike for June now 3% / 97% / 0%, for Sept 5% / 90% /
5%, and Dec 5% / 85% / 10%. That's quite a change from a 70% prob of
a .25% cut in June a few weeks ago.
Overall, ST sentiment retreated last with the ST Composite just below a weak
Buy, the VIX call indicator dropped back to neutral, and the FOMO calls have
dropped to near a weak Sell, but the INT hedge spread indicated a positive
effect from hedging. SPX options OI indicates that the early weakness then
strength for the week may continue thru monthly exp Apr 17 with large straddles
at 6700 and 6800. The biggest positive is the tech (NDX) sentiment is
nearing a strong Buy and that may pull prices higher. Of course, Trump vs
Iran and the backlash in oil prices will remain center stage.
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 slightly as the expected
EOM rally fizzled out with Trumps latest deadline looming Mon, halfway between
neutral and a weak Buy.
Update Alt EMA. Bearish sentiment rose slightly as the expected
EOM rally fizzled out with Trumps latest deadline looming Mon.
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 pulled back below a weak Buy.
Update EMA. Bearish sentiment pulled back below a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment dropped to just 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 continued to fall below neutral.
Update FOMO calls. Bearish sentiment fell sharply back to just above a weak
Sell as call buying was strong.
Bonds (TNX). Bearish sentiment rose slightly from extreme lows
as rates fell from the 4.4% level then reversed with the strong job numbers Fri.
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.
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 moved toward neutral.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment rose slightly to just below a weak Buy
as ETF put buying remains strong.
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 below 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 continued to rise from a weak Buy to near a strong Buy
helped by both 3X ETFs and ETF options.
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 dropped back to a weak Buy on strong SDS volume.
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 Apr 10. 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 6583, options OI for Mon is moderate with apparent FOMO as
most seem to be expecting Iral to capitulate to Trumps deadline. SPX OI is
saying "not likely" with a drop to at least BE at 6530 (1st resistance) with put
support at 6500.
Wed has very small SPX OI, but the high BE may indicate a move back to the mid
6500s.
For Fri moderate SPX OI shows strong put support at 6500 and below and a
straddle at 6600 may pull prices back to last weeks highs near 6600.
For Fri Apr 17 PM small/moderate SPX OI shows strong support at 6500 and
large straddles at 6700 and 6800 may attract prices, BE is 6695 .
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
is neutral at + 0.0 SD, NQ (NDX) moved back to a weak Sell at -1.0 SD, YM (DJIA)
is a slight positive at
0.25 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
2025
2024
2023
2022
Other Indicators
Conclusions. It's doubtful if there are any major resolutions tio
the US vs Iran conflict next week but only time will tell. This is
beginning to remind me of Trump vs China in the tariff war of early 2025, from
what I remember at one time Trump threatened as much as a 150% tariff on
imported goods and after numerous extensions the number ended up around 25% or
less after China put export controls on rare earth minerals. The result
was record exports from China overall with many going to Vietnam and other
countries then re-shipped to the US. Oil shipments thru the Strait of
Hormuz is Iran's rare earth proxy.
Weekly Trade Alert. SPX OI is showing weakness Mon to 6500 or lower
if Iran does not give in then a recovery back toward 6600 or higher by EOW. Updates @mrktsignals.
