Last week was somewhat more volatile than expected with continued concern
over AI disruptions and escalation of a possible war with Iran. The
expected range of SPX 6860-6960 was extended to the downside on Mon & Tue with
lows intraday of 6830 and 6815, but by Wed the SPX recovered to 6950 before the
NVDA EPS. Admittedly, I was unsure how the markets would react with the
recent Mag7 projected capex spending for 2026 of 50% over 2025, but the result
was the same as Nov when NVDA dropped over 10% Thur & Fri. SPX dropped back to 6930
before a late recovery to 6879. However, Trumps threat to "blacklist"
Anthropic for
DOD work due its "woke" restrictions on unlimited surveilance and autonomous
warfare sent futures tumbling and the weekend attack on Iran could cause more
volatility. My favorite read for the week was on the
"AI wargames" simulation by a UK
professor between Antropics Claude, OpenAIs GPT and Googles Gemini where Claude
was the clear winner. The use of nuclear weapons 95% of the time was,
however, rather unsettling.
Sentiment remains largely unchanged with the ST Composite still close to a
weak Buy, while the VIX call indicator and FOMO calls indicator are close to a
weak Sell. BTC trading has
seen a sharp recovery from a 2% loss this AM to a 1% gain, while the
IG weekend indices (click for
graph) are showing the DJIA & NDX down about 0.5%.
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 but remains just
above a weak Sell.
Update Alt EMA. Bearish sentiment declined slightly but remains just above 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 remains just below a weak Buy.
Update EMA. Bearish sentiment remains just below a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment remains
just above 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 remains midway between neutral and a weak Sell.
Update EMA. Bearish sentiment remains near a weak Sell.
Bonds (TNX). Bearish sentiment remains at low extremes as int
rates dropped below 4% in spite of continued high oil prices and a spike in PPI.
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 reversed higher rising with prices at ATHs even as
gold remains below its ATH.
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 just below a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment fell below 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 remains 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 remains below 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 for SPX fell slightly further below 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 Mar 6. 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 6879, options OI for Mon is small/moderate with strong put
support at 6700 and a slight positive bias to BE at 6905.
Wed SPX options OI is small with little put support at lower prices and strong
call resistance at 7050+, but BE remains at 6905.
Fri (jobs report) SPX options OI is large with strong put support at 6800 and
call resistance at 7000. Be remains at 6905
For Fri Mar 20 AM, SPX options OI is very large with BE at 6925 and call
resistance at 6950.
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
continued to rise to + 0.75 SD, NQ
(NDX) fell to a weak Sell at -1.0 SD, YM (DJIA) remains neutral at
-0.1 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. 2026 has proved to be a frustraing year for both the
bulls and the bears with the SPX starting at the 6850 level and since traded in a
range from 7000 to 6775. Sentiment has not been much help as ST and INT
indicators have mostly been mildly negative and the most bullish indicator as
pointed out a couple of months ago has been the huge monthly straddle in SPX
options at the 7000 level. Still, more downside to SPX 6500-6700 seems
likely before significant upside. The monthly jobs report is due Fri and
is expected to be mildly positive.
Weekly Trade Alert. Given the increased uncertainty of the Iran
conflict, next weeks expected range is SPX 6800-6925 and likely down then up. Updates @mrktsignals.
Last week was another wild week driven by several important news events.
Tue saw a continuaton of the AI displacement scare driving the SPX to a new low
for the month at 6776 which seemed to put the weekly target of SPX 6900-50 in
jeopardy, but a late BTFD rally pushed prices up for a positive close. The
rally continued into Wed afternoon to over SPX 6900 before news of a collapse of
the US led Russia/Ukraine peace talks sent oil up 5% on fears of
more sanctions on Russian oil and stocks gave up half of their gains.
Weakness continued Thur and early Fri on threats of an imminent US attack on Iran until the
SCOTUS made a surprise announcement (expt next week) of the Trump tariff ruling,
rejecting all of the IEEPA tariffs. A relief rally pushed the indices
higher, with the SPX closing just over 6900 at 6910. M.Armstrong had a good summary of the
alt tariffs regs likely to be used
by Trump. Other news Fri which had a muted reaction were the 2025 Q1 GDP
dropping to a 1.4% ann rate due to the govt shutdown and the Jan core PCE inflation
which rose to 0.4%/mn or 3% ann rate. Since the core PCE is the "official" rate
used by the Fed, the outlook for lower rates diminished with the CME
fed fund futures dropping from
a 70%
prob to just over 50% for a June cut of .0.25%
ExecSpec had an interesting
outlook for the AI displacement as a general threat to information processing
industries (where most of the growth has come from the last twenty years), while
industrial and construction are less threatened (at least until AI robots become
common). For the week, however, the techs (NDX) led the rally as supported
by sentiment with about a 2% gain, while the DJIA (banks) were flat and the SPX
gained over 1%. Last weeks RIME prices should have been $1.00 to 6.00, not
$100 to 600.
Modest drops in bearish sentiment were seen last week as the ST Composite
dropped below a weak Buy and the ST VIX call indicator and FOMO Calls dropped to
near/at weak Sells. The INT DM/SM indicator also dropped to a weak Sell.
Interestingly, the SPX options OI this week is showing a BE range of 6900-20,
indicating a tight range is likely (+/-50) or SPX 6860-6960. An attack on
Iran is a wildcard that could cause a move to SPX 6700.
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 above a weak Sell.
Update Alt EMA. Bearish sentiment rose slightly above 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 from a weak Buy.
Update EMA. Bearish sentiment declined from a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment remains just above 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 moved lower between neutral and a weak Sell.
Update FOMO calls. Bearish sentiment dropped 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 continues to hold above a strong Buy.
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 to a weak Sell VST (grn).
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment remains near 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 dropped 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 rose slightly above 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 for SPX continued to rise slightly.
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 Feb 27. 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 6910, options OI for Mon is small/moderate with a slightly
lower BE at 6900 due to ITM puts. Call resistance is 7k. Possible
range 6850-6950.
Wed SPX options OI is small with put support from 6890-6915 and call resistance
6950+. Possible range 6900-75
Fri SPX options OI is large with put support up to 6900 and strong call
resistance at 7k. Likely close 6925-50.
Fri Mar 20 PM SPX options OI is small/moderate with put support at 6900 and call
resistance at 7k.
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 rose
above neutral to + 0.5 SD, NQ
(NDX) fell below a weak Sell at -1.25 SD, YM (DJIA) remains 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
2025
2024
2023
2022
Other Indicators
Conclusions. The SPX has remained in a trading range of about 5%
from 6700 to 7000 for 3 months now and reminds me of mid-2015 when the SPX also
traded in a 5% range for several months (2030-2130) following a dynamic rally
after a "bird flu" scare. In that case the "rounded top" lasted almost as
long as the rally did, so it still could be several months before the bears get
any satisfaction. I have been watching NVDA, but it is stuck in the middle
of the 170-196 range and new highs in SPX are unlikely unless a breakout toward
the 212 ATH is seen. NVDA EPS Wed.
Weekly Trade Alert. More trading range expected, mid 6800 to mid
6900. Updates @mrktsignals.
Last week was interesting, to say the least. The target range of SPX
6900-75 worked well thru Wed as Mon started weak with a drop to 6904 then
rallied over 6980 and Tue stayed over 6950, then the Wed job numbers were a
positive surprise at +130K and SPX initially rallied over 6990 before falling to
6910 midday and closed near 6950. Thur saw another AI scare as Algorhythm
Holdings (RIME), a former karaoke manufacturer, released a report claiming its
SemiCab AI software could reduce empty truck hauls by 70% from current one third
of the time. The most amazing thing was that almost everything fell with
gold, silver and oil down 2% or more, S&P trucking fell 7%, banking (BKX) 2%,
NDX 2% and SPX 1.5%. RIME was a notable exception going from $100 to $600
in one day. A couple of recommended reads explaining the
SAAS (software as a service) problems
and Phils Stockworld's the threat of AI
written mostly by seven AGI agents. Personally I don't read PSW much after
the AGI's took over as they are too wordy and repetitious.
March is looking like it could be an important month. Previously I
showed the huge SPX options OI straddle at 7k which I thought would continue to
support prices for a while and recently found out that the next Bradley turn
date is March 20. However, two prominent EW analysts disagree whether
March willl be a top or bottom. Trader Joe looks at the last several months
as an expanded flat with a low likely in March near SPX 6500, while Dr. ter
Schrue's recent post (no J/S)
thinks the NDX will top in March then decline into Oct. To me the SPX is
starting to look more like a H&S with move back to the upper 6900's possible in
March then a decline to the 6500's in May, but a summer rally is likely if the
Fed cuts int rates in June as the CME
fed funds outlook is up to a 70% prob of a June cut with 15% > 0.25% cut.
Major sentiment indicators are little changed with the ST Composite remaining
on a weak Buy while the Hedge spread moved to neutral and INT/.LT indicators
remain mildly negative. The biggest change in sentiment is for the NDX
where futures (NQ) fell to a weak Sell and the options (ETF) and 3x ETFs
indicator moved to neutral, perhaps NDX rallies into a March top as indicated by
Dr. ter Schure.
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 near a weak Sell.
Update Alt EMA. Bearish sentiment remains 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 is just above a weak Buy.
Update EMA. Bearish sentiment is just above a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment continues to decine
closer 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 increased but remains midway between neutral
and a weak Sell.
Update FOMO calls. Bearish sentiment fell toward a weak Sell.
Bonds (TNX). Bearish sentiment remains at low extremes as rates
fell with the good inflation news 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 continues to fall but remains above a strong Buy.
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 midway between neutral and a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment continued to rise to 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 remains at 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 moved 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 for SPX continued to rise toward 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 Feb 20. 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 6836 and Mon Pres Day, options OI for Tue is moderate/large
with strong put support at 6780 and a BE at 6930. A move toward 6900 is
likely.
Wed SPX options OI is small/moderate with put support at 6800 up to 6900, call
resistance is at 6950 and over 7000. 6900-50 is likely
Fri AM SPX options OI is large with put support up to 6900. 6900-50 is
likely.
Fri PM SPX options OI is moderate/large with put support up to 6900 abd call
resistance at 7000. Call resistance at 6975 may allow prices to rise to
6950-75.
Fri Mar 20 AM SPX options OI is large with another huge straddle at 7000
and large straddle at 6900 that lowered the BE to 6945.
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 neutral + .2 SD, NQ
(NDX) dropped to a weak Sell at -1.0 SD, YM (DJIA) remains below neutral 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. Sentiment had been warning of weakness in tech for a
while. but until last Nov the mere mention of a company using AI would send its
stock up 10%. Now the focus seems to be shifting to the potential
disruptive effects, not only the displacement of workers, but possibly entire
industries. Similar to the housing crisis after the fall of Lehman Bros,
the overreaction Thur may be a warning of bigger problems ahead as everyone
begins to wonder who is next.
Weekly Trade Alert. The BTFDers took a long weekend Thur/Fri, if
they return next week SPX 6900-50+ is possible. Updates @mrktsignals.
