As it turned out last weeks warning of lower revenue from OpenAI was only a
prelude as this weeks credit problems from CoreWeave, a neocloud AI service
provider, sent its stock down 20%+ and resulted in an almost 6% drop in the NDX.
As a result the SPX also fell about 2%, missing the upside potential to the
upper 7800s. I had been warning about the AI tech bubble due to falling
token-based revenue for several months, and the timing seems to have been
earlier than expected.
Sentiment remains inconclusive with the ST Composite declining toward neutral
while the VIX Call indicator and FOMO call indicators are both at a weak Sell.
Although not mentioned, the NDX futures (NQ) are also near a strong Sell.
Most INT/LT indicators remain near weak Sells.
Anthropic was expected to announce a record IPO in mid Nov between $1.5-2B
and a delay could add to downside pressure, but otherwise WS would be expected
to support a positive environment.
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 rose closer 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 continued to drop closer to neutral.
Update EMA. Bearish sentiment rose mid-way to a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment dropped from neutral
to a weak Sell on a high SPXADP (selling in only a few stocks).
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 slightly.
Update FOMO calls. Bearish sentiment dropped to midway between weak and
strong Sells.
Bonds (TNX). Bearish sentiment rose slightly with a pickup in
TBT volume as rates fell from 5.3% to 5.1% on safe haven demand.
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 as the HUI bounced back from 700.
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.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment rose slightly.
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 a weak
Sell on the increase of call (and put) volume.
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 Oct 23 & 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 7659, options OI for Mon is small/moderate with good put
support frpm 7625-35 that should limit downside, while upside is possible to
7700. BE is 7755.
Wed has small/moderate SPX OI where stronger support is at 7700, but less
support below 7650. Again BE is 7755 and positive if over 7675.
For Fri SPX has small/moderate OI with stronger put support up to 7700 and no
call resistance until 7775. BE is 7770, could see 7750-7800.
For Fri EOM SPX has strong OI with major put support at 7650 and again at 7750.
BE is 7755 and $OI is 4x so 7750 looks 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
close to a weak Buy at +1.0 SD, NQ (NDX) remains close to a strong Sell at -1.85 SD, YM (DJIA)
is between neutral and a weak Sell at -0.65 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.65 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. Last weeks stronger than inflation may have been the
last straw for voters with odds soaring for Dems taking over the House and
possibly the Senate in the midterms. Dems are likely to support stronger
regulations for AI development and add to tech woes. Problems in the ME
seem to be spreading with the Houthis attacking Saudi Arabia and Irans continued
attacking of shipping in the Strait which sent oil (WTIC) up $10/bbl.
Weekly Trade Alert. SPX options are again pointing to put support
up to the mid-7700s, but may fall short if negative news continues. Updates @mrktsignals.
Last weeks stock market was expect to be mildly positive from the SPX 7722
level to about 7775, but an explosive rally Mon/Tue on little news carried the
SPX as high as 7845 before a pullback to close at 7812. Next weeks SPX
options OI now shows a $P/C of a little less than 2x with the BE near 7890, so
more rally is expected into the Fri exp. Thur may have been a warning shot
for the AI sectors EPS outlook as OpenAI revised its annualized revenue
projections from $70B a month ago to $50B.
Phils Stockworld has a lengthy
discussion of possible implications.
Overall bearish sentiment continued to drop with ST sentiment dropping to
neutral (ST Composite & VIX calls), while INT/LT sentiment remains at/near 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 remains at a weak Sell.
Update Alt EMA. Bearish sentiment dropped to a slightly lower 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 dropped below a weak Buy.
Update EMA. Bearish sentiment dropped closer to neutral.
The ST VIX calls and SPXADP indicator bearish sentiment dropped
to 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 remains midway between a weak Sell and a
strong Sell.
Update FOMO calls. Bearish sentiment dropped to just above 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 at a weak Sell as prices hold in the low 700s.
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 back toward a 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 dropped back
toward 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 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 Oct 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 7812, options OI for Mon is moderate with the strongest
call resistance at 7820 (above is pos delta hedging) and BE at 7755 put support
is 7800. Likely range 7825-75. Fri AM B/E at 7890 likely to support
prices for week.
Wed SPX OI is small with little near put support and call resistance is 7870-85.
May reach 7875+.
For Fri AM SPX OI is large with about a 2.3M drop in put thru Thur. $P/C
still high enough to push prices to BE at 7890 or higher
For Fri PM SPX OI is moderate/large and could see some pullback with BE at 7750.
For Fri EOM SPX OI is moderate/large with significant call resistance around
7800 and 7900. Likely range 7800-7900 with BE at 7750.
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 +1.0 SD, NQ (NDX) is close to a strong Sell at -1.85 SD, YM (DJIA)
remains near 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. If you are like me you are wondering when, if ever,
this sideways chop with an upward bias will ever end. With the OpenAI and
Anthropic IPOs scheduled for Nov as well as the potential for a Democrat upset
in congress for the midterm elections, the answer may be soon. Two weeks
ago, I pointed the very high open interest P/C for SPX in next weeks expiration
as a likely reason for new ATHs and we now have that. Also the ongoing saga with
the war with Iran continues to weight if not solved before the election.
Weekly Trade Alert. A continued upside bias is expected with SPX OI
targeting the upper 7800s. Updates @mrktsignals.
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.
