The potential trading range for oil as a positive influence for stocks worked
thru Wed, but the necessary range turned out to be somwhat lower than expected,
ie $85-95/bbl vs $90-100/bbl. The early drop to $85 pushed the SPX back to
6800 on news of a coordinated IEA SPR oil release of 400 bbls and rumors of some
Trump TACOs, but continued escalation by Iran's IRGC against neighbors
"friendly" to the US pushed oil back to $100/bbl by EOW. Watching
TradingEconomics quotes the SPX seemed to move up and down about 10 pts for
every $1 move in oil. Currently, IG Weekend quotes is showing oil up $5
and stocks down about 0.5% as Iran continues to block traffic thru the Strait
of Hormuz.
ST sentiment has improved somewhat with the ST Composite moving to a strong
Buy along with the VIX call indicator, while the FOMO call indicator moved to a
weak Buy. Interestingly, the above indicators are at about the same level
as mid-Mar 2025 which was a week-long pause before the final plunge to an April
low due to Trumps "tariff scare". Next week is also the NVDA annual GTC
conference which is expected to introduce the "next gen" optical networking for
AI. This is one reason I was somewhat positive for NDX, but futures
sentiment (NQ) has again reversed to a weak Sell, so a "hold" may be all we see.
Expect oil prices and Iran news to continue to be the main driver of stock
prices ST. GS is now down about 20% from the Jan high at 980 to 780
pushing the DJIA down 8%.
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 above the neutral level.
Update Alt EMA. Bearish sentimentmoved above the
neutral level.
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 higher reaching the strong Buy level.
Update EMA. Bearish sentiment remains just below a strong Buy
The ST VIX calls and SPXADP indicator bearish sentiment jumped from above
neutral to near a strong Buy with heavy VIX call buying on down days.
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 above neutral.
Update FOMO calls. Bearish sentiment continued to rise to a weak Buy.
Bonds (TNX). Bearish sentiment remains at low extremes as rates
rose to recent highs.
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 contined to fall sharply to neutral as DUST volume
has dried up post-split as splits sometimes indicate a top due to extreme price
levels.
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 is little changed, remaining just below neutral.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment spiked higher early in the week but
settled just above 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 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 increased 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 increased halfway to a weak Buy from 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 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 6632, options OI for Mon is moderate with little call
resistance until 6900 and strong put support at 6550 after weak support at 6600.
More downside possible
Wed SPX OI is small and put support drops to 6450, so a washout to 6400s is
possible.
Fri SPX AM OI is well within the negative delta hedging range with little
support below 6700.
Fri SPX PM OI is moderate/strong with put support at 6600 and 6700, but again
negative delta hedging is a risk.
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
remained flat at + 0.75 SD, NQ
(NDX) jumped back to a weak Sell at -1.0 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. Last week Trump announced that the US had "won" the
war with Iran, but that did not stop the fighting. Much like the US
resistance against the superior British forces in the revolutionary war of the
1770s, guerilla warfare can be just as effective in wearing down a superior
force as the so called "shock and awe" techniques used by the US against
inferior forces in the ME. One approach that may be used is capture of the
Khrag Island by ground forces which would give the US control over Irans main
oil exporting port, then financially starve the IRGC resistance, but that could
take months with "boots on the ground". With the mid-term elections in
Nov, Trumps resolve is likely to be tested.
Weekly Trade Alert. No ST targets as stock prices are likely to
remain hostage to oil prices with over $100/bbl a negative. Similarities
to 2025 indicate more downside into Apr/May. Updates @mrktsignals.
Last week ended up being much more volatile than expected as Iran proved to
be a more capable foe against the US attack. As Iran struck back, they
used nuch of the same tactics that Ukraine starting using against Russia with
the help of US intelligence. Neighboring countries that housed US military
bases became targets for both US military facilities and other oil facilities.
As a result, oil quickly reached the Israel/Iran conflict highs by Thur at
$78/bbl after news that war insurance was refused for oil tankers going thru the
Strait of Hormuz. Iran had declared the Strait closed and subsequently
attacked several ships. The
Street gives a good summary with a prediction that oil could reach $150
over the next few weeks. So far the winner of the war seems to be Russia as
China and India are forced to buy more oil from Russia at much higher prices,
thereby feeding the war machine against Ukraine.
Stocks whipsawed most of the week thru Thur, opening sharply lower with the
overnight bombings and rising oil prices with Mon drop to SPX 6800 and recovery
to 6900 matching the outlook (6800-6925). Tue saw much of the same with an
AM low for the week at 6710 and sharp recovery toward 6900. As oil prices
continued to rise with a blowoff Fri over $90/bbl for a 36% advance for the week, stocks
remained resilient as BTFD was seen in techs and the SPX did not close below
6800 until Fri. Oil remains the key and if oil prices level off below
$100/bbl, SPX 6900+ is still possible by Mar 20, but much lower prices are
possible if $100 is exceeded. The huge SPX straddle at 7000 for Mar 20 AM
has a BE at +/-/$256 or SPX 6744, and much below that level could cause negative
delta hedging (dealers sell futures to limit losses) which could lead to a
snowball effect. One EW analyst
sees SPX 6350s as a possible by late Mar.
The biggest change in bearish sentiment was in the NDX futures (NQ) which
rose from between weak and strong Sells to neutral. Two weeks ago, I noted
a drop in sentiment for NQ and the NDX has outperformed since with the DJIA
(banks) taking the biggest hit. This may support some strength into Mar
20, if oil levels off, led by the NDX. Otherwise there was some
improvement in sentiment with the ST Composite rising to near a strong Buy, and
the VIX call and FOMO calls indicators both rising from weak Sells to halfway to
a weak Buy. Little change was seen, however, for the INT DM/SM and hedge
spread indicators which remain below neutral.
Currently, the IG Weekend
pricing is showing oil up about $3.to $93 with US stocks down about 0.2%.
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 from near a week Sell midway to
neutral.
Update Alt EMA. Bearish sentiment rose from near a week Sell midway 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 rose from just below a weak Buy to near a strong
Buy.
Update EMA. Bearish sentiment rose from just below a weak Buy to near a
strong Buy.
The ST VIX calls and SPXADP indicator bearish sentiment rose sharply to above
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 below neutral to neutral.
Update FOMO calls. Bearish sentiment rose from near a weak Sell to above
neutral.
Bonds (TNX). Bearish sentiment remains at low extremes as rates
rose back over 4%.
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 saw a sharp drop back to a strong Buy which may
have been caused by a 10 to 1 reverse stock split for DUST from $4.4 to $44.
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 near a weak Sell toward neutral.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment rose slightly 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 rose 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 remains near 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 is more bullish than for NDX.
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 13. 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 6740, options OI for Mon is moderate with strong put
support at 6630 and a BE at 6850.
Wed SPX options OI is small with put support at 6700 then 6550, but BE is 6875.
For Fri moderate/strong SPX OI shows put support up to 6800 and call resistance
starting at 6850. BE is 6875.
For Fri Mar 20 PM small/moderate SPX OI shows stronger support at 6600 and minor
support up to 6850 with BE at 6895.
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
remained flat at + 0.75 SD, NQ
(NDX) fell sharply to neutral at -0.1 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. Looking back at the jump in oil prices last week, you
would expect the major stock indexes to be down 10-15%, but instead the SPX was
down only 3% with the DJIA down 4% and the NDX only 2%. Everyone may be
expecting a repeat of Venezuela, but Iran is proving to be more like a pitt
bull. There is little doubt as to who will win, the only question is at
what cost. The "rounded top" has played out well for the last two months,
but we are at a point where an outside shock (oil prices) could cause the bottom
to fall out.
Weekly Trade Alert. SPX could fall as low as 6500 if oil prices
rise over $100/bbl. Updates @mrktsignals.
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.
