Last weeks outlook for an up week were correct with continued warning about
techs being foreshadowed by the SK KOSPI. The early SPX move to 7500
easily beat 7450 target with intraday highs of 7520 and 7540 Wed/Thur and a
weekly close of 7483. Much of the early gains can be attributed to GOOGL
which was added to the DJIA and resulted in a new ATH for the DJIA at 53.9K.
The Thur high in the SPX due to weak jobs numbers was preceded by an 8% drop in
the KOSPI the prior evening to the 7650 level and the US techs (NDX) soon
followed suit, dropping almost 3% before a late recovery. Divergences
between the US DJIA and NDX are reminiscent of the early 2000 market behavior
with the KOSPI mimicking the behavior of the NDX bubble of 1999. The KOSPI
did rebound 5% Fri to just above 8K, but a break of 7500 is probably indicative
of a more serious correction.
The ST Composite remains between a weak and strong Buy, and INT/LT indicators
remain around the weak Sell levels similar to late 2021 which may mean more
upside. However, the SK KOPSI remains a strong warning of a possible
bursting of the AI driven tech bubble and needs close monitoring
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 has moved down to close to a weak
Sell.
Update Alt EMA. Bearish sentiment has moved down to close 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 remains near a strong Buy.
Update EMA. Bearish sentiment remains near a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment moved 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 has moved close to a weak Sell.
Update EMA. Bearish sentiment moved up 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 remains between neutral and 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 further below a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment moved to neutral from a weak Buy VST
(grn).
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 continued to move
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 moved from a weak Sell 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 moved up to just 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 July 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 7483, options OI for Mon is moderate with a BE at 7475 due
to ITM calls and call resistance >= 7500 and put support 7450 and below.
Neutral outlook.
Wed SPX has small OI and few ITM calls, moderate put levels at 7475 and 7500 may
push prices to call resistance from 7500-7525. BE is 7495.
For Fri moderate SPX OI shows higher levels of calls than put down to 7450,
pushing the BE to 7455. Some EOW weakness is likely
For Fri July 16 AM exp strong SPX OI shows similar bias to 7450 for the monthly
exp.
IV. Technical / Other
The following uses barcharts.com as a source and discusses S&P futures (ES) as a third
venue of stock sentiment in addition to options and ETFs. The non-commercial/commercial
spread represents a LT bearish sentiment (dumb money/smart money) indicator. As explained in investopedia,
commercial investors (red) are institutions and are smart money, while non-commercials (green) are speculators such as
hedge funds and are dumb money. Here is the current barchart graph
for the S&P 500 (top) and trader positions (1st bot) with positives as net longs and negatives
as net shorts.
Bearish sentiment is represented by the spread and is positive if red > green
(Buy) and negative if green > red (Sell). ES (SPX) sentiment saw a
huge drop from a Buy at + 1.5 SD to neutral at -0.25 SD, NQ (NDX) remains
neutral at +0.15 SD, YM (DJIA) is a weak Sell at -1.0 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. SPX OI for week indicates that a trading range around
the 7450-7500 level is possible into the EPS season. EPS guidance by the
AI hyperscalers may provide a catalyst for next next sizable movement in the
stockmarket, which appears to be down.
Weekly Trade Alert. SPX OI is indicating a somewhat weak start to
the week with a mid-week bounce to 7500+ before a pullback to ~7450. Updates @mrktsignals.
Last week was a miss with no positive effects on stock prices (SPX) even
though oil prices continue to fall under $70/bbl (WTI). A couple of weeks
ago the potential for increased NDX volatility due to the SK KOPSI
and a Tue O/N (US) KOPSI crash of 10% was followed by a nearly 1,000 pt drop in the US
NDX and a 2% drop in the SPX to the low 7300s, just below the 50 day SMA.
In spite of increased volatility, closes for the SPX continued to hover in a 11
pt range from 7354-65 Tue-Fri near the 50 SMA. SPX OI for the June EOQ and
July 4th shortened week indicate that prices are likely to rally back to 7450
for the week. A possible ceasefire between Irael and Lebanon indicates the
potential for LT peace in the ME even though the US and Iran continue to
exchange "friendly fire".
While bearish sentiment for the ST Composite remains near a weak Buy, a sharp
increase in hedging with the Hedge Spread at a weak Buy VST supports higher
prices next week. A more worrisome turn in sentiment is from the
NAAIM survey of investment managers
which saw a jump in the Exposure Index to 98.6, matching the May 27 98.4 before
a 4 day rally of about 100 SPX pts then a 5% decline into mid-June. A huge
negative swing in ES sentiment (COT section) seems to support the negative INT outlook.
Discuss.
I. Sentiment Indicators
The INT/LT Composite indicator (outlook 3 to 6+ months) has three separate
components. Starting Aug 26, 2023 SPX options are removed due to extreme 0DTE volume
distortions. New weights are ETF put-call indicator (30%), SPX 2X ETF INT
ratio (40%), and 3rd a volatility indicator (30%) which combines the options
volatility spread of the ST SPX (VIX) to the ST VIX (VVIX) with the UVXY $ volume.
Update Alt, INT view. Bearish sentiment moved higher toward neutral.
Update Alt EMA. Bearish sentiment moved significantly higher from a weak
Sell to neutral.
The ST Composite as a ST (1-4 week) indicator includes the NYSE volume ratio
indicator (NYDNV/NYUPV & NYDNV/NYDEC) and the UVXY $ Vol/[SPX Trend, SMA only]. Weights
are 80%/20%.
Update. Bearish sentiment remains just below a strong Buy.
Update EMA. Bearish sentiment moved down from a strong to weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment remains below neutral.
The ST/INT Composite indicator (outlook 1 to 3 months) is based on the Hedge Spread (52%)
and includes ST Composite (12%) and three options FOMO indicators using SPX (12%),
ETF (12%), and Equity (12%) calls compared to the NY ADV/DEC issues (inverted). FOMO
is shown when strong call volume is combined with strong NY ADV/DEC. See
Investment Diary
addition for full discussion.
Update EMA. Bearish sentiment rose from a weak Sell to around neutral.
Update FOMO calls. Bearish sentiment moved up toward a weak Sell.
Bonds (TNX). Bearish sentiment remains at low extremes.
For the INT outlook, the gold miners (HUI) bearish
sentiment is presented in a new format using the data mining software to add
the inverse TNX rate to the ETF ratio.
Update. Bearish sentiment remains near a weak Sell. With gold near
$4000/oz, a drop close to $3000 is possible for the LT target for HUI of ~500.
II. Dumb Money/Smart Money Indicators
This is a new hybrid option/ETF Dumb Money/Smart Money Indicator as a INT/LT
term (outlook 2-6 mns) bearish sentiment indicator. The use of ETFs
increases the duration (term).
Update. Bearish sentiment rose to a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment jumped from a weak Sell to a weak Buy
VST (grn) and neutral INT/LT.
A new composite SPX options indicator uses both the volume adj (1/B-A) and P/C
equivalent spread (A-B) to compensate for the discrepancy between the two.
This replaces the old SPX options indicator for the SPX ETFs + options below and the
INT/LT composite. No chart.
For the SPX, I am switching to hybrid 2X ETFs plus SPX options. Taking a look at the
INT term composite (outlook 2 to 4 mns), bearish sentiment rose halfway to
neutral from a weak Sell.
For the NDX combining the hybrid ETF options plus NDX 3X ETF sentiment with the interest rate effect,
(outlook 2 to 4 mns) bearish sentiment shows similar extremes between ETF and
options as in late 2020 which resulted in a choppy market until options
sentiment rose. Note QQQ options are optimal, but are N/A and are included
in ETF options.
Bearish sentiment remains near a weak Sell.
For the SPX combining the hybrid ETF options plus SPX 2X ETF (outlook 2 to 4 mns)
produces an indicator where, in this case, ETF options are a proxy for the SPY options.
Bearish sentiment for SPX remains near a weak Sell.
III. Options Open Interest
Using Thur closing OI, remember that further out time frames are more likely
to change over time, and that closing prices are more likely to be effected.
Delta hedging may occur as reinforcement, negative when put support is broken
or positive when call resistance is exceeded. This week I will look
out thru July 2. A text overlay is used for extreme OI to improve readability,
P/C is not changed. A new addition is added for OI $ amounts with breakeven pts (BE) where
call & put $ amounts cross. Note multiply OI$ by 100 for shares/contract.
With Fri close at SPX 7354, options OI for Mon is moderate with a high $P/C and a
BE at 7435. Straddle at 7400 looks like a possibility.
For Tue (June EOM) strong SPX OI has a modest positive bias toward BE at 7400.
Wed has small SPX OI with few ITM calls and a positive bias toward the put
straddle at 7450.
For Thur (Fri holiday), SPX OI is moderate with ITM puts indicating a bias
toward the 7450+ area.
IV. Technical / Other
The following uses barcharts.com as a source and discusses S&P futures (ES) as a third
venue of stock sentiment in addition to options and ETFs. The non-commercial/commercial
spread represents a LT bearish sentiment (dumb money/smart money) indicator. As explained in investopedia,
commercial investors (red) are institutions and are smart money, while non-commercials (green) are speculators such as
hedge funds and are dumb money. Here is the current barchart graph
for the S&P 500 (top) and trader positions (1st bot) with positives as net longs and negatives
as net shorts.
Bearish sentiment is represented by the spread and is positive if red > green
(Buy) and negative if green > red (Sell). ES (SPX) sentiment saw a
huge drop from a Buy at + 1.5 SD to neutral at -0.25 SD, NQ (NDX)
remains neutral at +0.15 SD, YM (DJIA) nearer to a weak Sell at -0.75 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. Much of the weakness in techs seemed to be a result
of increasing cost pressures such as AAPL's decision to raise product prices to cover
the soaring cost of memory and increased cost competition of the lower cost
Chinese AI models using DeepSeek which offer a 90% or more cost advantage with a
performance lose of 20% or less. The AI race is starting to look like
modern warfare where one side uses $2.5M Tomahawk missiles and the other side
uses $3000 drones.
Weekly Trade Alert. Sentiment similarities to late May indicate a
possible SPX 100 pt upside into July 4th holiday (SPX 7450) followed by a
possible 5% decline into mid July (~SPX 7100). Updates @mrktsignals.
Last week started out strong as expectations of a US/Iran peace
proposal were high, pushing the SPX up about 2% from 7430 to 7580 for a high on
Mon. Doubts began to surface mid-week as Israel refused to stop its
attacks on neighboring Lebanon with a sharp decline Wed after a hawkish FOMC to fill the Mon gap at
SPX 7400 before a weekly closing at 7501. US and Iran diplomats are
expected to meet in Switzerland on Sunday even though Iran has declared the
Strait of Hormuz closed over Israel's failed ceasefire agreement with Lebanon.
Early indications are that the "peace process" may be a drawn out process,
thereby dragging out the topping process thru the next earnings season starting
mid-July.
Sentiment measures overall are little changed. However, the ST
Composite did see a spike higher with the VST (grn) reaching a strong Buy, while
the SPX and NDX ETF and options bearish sentiment levels continue to fall below
a weak Sell. One of the external indicators, the
Rydex 3x Bear/Bull ratio
has reached an all time low at 1% of bearish funds.
Discuss.
I. Sentiment Indicators
The INT/LT Composite indicator (outlook 3 to 6+ months) has three separate
components. Starting Aug 26, 2023 SPX options are removed due to extreme 0DTE volume
distortions. New weights are ETF put-call indicator (30%), SPX 2X ETF INT
ratio (40%), and 3rd a volatility indicator (30%) which combines the options
volatility spread of the ST SPX (VIX) to the ST VIX (VVIX) with the UVXY $ volume.
Update Alt, INT view. Bearish sentiment fell slightly to around the weak
Sell.
Update Alt EMA. Bearish sentiment fell slightly to around the weak Sell.
The ST Composite as a ST (1-4 week) indicator includes the NYSE volume ratio
indicator (NYDNV/NYUPV & NYDNV/NYDEC) and the UVXY $ Vol/[SPX Trend, SMA only]. Weights
are 80%/20%.
Update. Bearish sentiment rose above a weak Buy.
Update EMA. Bearish sentiment rose above a weak Buy to a strong Buy VST
(grn).
The ST VIX calls and SPXADP indicator bearish sentiment remains below
neutral.
The ST/INT Composite indicator (outlook 1 to 3 months) is based on the Hedge Spread (52%)
and includes ST Composite (12%) and three options FOMO indicators using SPX (12%),
ETF (12%), and Equity (12%) calls compared to the NY ADV/DEC issues (inverted). FOMO
is shown when strong call volume is combined with strong NY ADV/DEC. See
Investment Diary
addition for full discussion.
Update EMA. Bearish sentiment rose from a strong Sell toward a weak Sell.
Update FOMO calls. Bearish sentiment fell then rebounded between weak and
strong Sells.
Bonds (TNX). Bearish sentiment remains at low extremes.
For the INT outlook, the gold miners (HUI) bearish
sentiment is presented in a new format using the data mining software to add
the inverse TNX rate to the ETF ratio.
Update. Bearish sentiment rose slightly.
II. Dumb Money/Smart Money Indicators
This is a new hybrid option/ETF Dumb Money/Smart Money Indicator as a INT/LT
term (outlook 2-6 mns) bearish sentiment indicator. The use of ETFs
increases the duration (term).
Update. Bearish sentiment fell slightly remaining between a weak and strong
Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment rose slightly above a weak Sell.
A new composite SPX options indicator uses both the volume adj (1/B-A) and P/C
equivalent spread (A-B) to compensate for the discrepancy between the two.
This replaces the old SPX options indicator for the SPX ETFs + options below and the
INT/LT composite. No chart.
For the SPX, I am switching to hybrid 2X ETFs plus SPX options. Taking a look at the
INT term composite (outlook 2 to 4 mns), bearish sentiment continues to fall
in SPX options, pushing sentiment below a weak Sell.
For the NDX combining the hybrid ETF options plus NDX 3X ETF sentiment with the interest rate effect,
(outlook 2 to 4 mns) bearish sentiment shows similar extremes between ETF and
options as in late 2020 which resulted in a choppy market until options
sentiment rose. Note QQQ options are optimal, but are N/A and are included
in ETF options.
Bearish sentiment fell back to a weak Sell.
For the SPX combining the hybrid ETF options plus SPX 2X ETF (outlook 2 to 4 mns)
produces an indicator where, in this case, ETF options are a proxy for the SPY options.
Bearish sentiment for SPX continued to fall halfway between a weak and strong
Sell.
III. Options Open Interest
Using Thur closing OI, remember that further out time frames are more likely
to change over time, and that closing prices are more likely to be effected.
Delta hedging may occur as reinforcement, negative when put support is broken
or positive when call resistance is exceeded. This week I will look
out thru June 26. A text overlay is used for extreme OI to improve readability,
P/C is not changed. A new addition is added for OI $ amounts with breakeven pts (BE) where
call & put $ amounts cross. Note multiply OI$ by 100 for shares/contract.
With Fri close at SPX 7501, options OI for Mon is moderate with a BE at 7500 due
to a put/straddle at 7500. Prices should close near 7500.
Wed has small SPX OI where BE is higher at 7525 due to a moderate straddle at
7600 and could see a retest of recent highs with good Iran news (SPX 7575).
For Fri moderate SPX OI shows BE dropping back below 7500 to 7480 due to low put
support over 7400.
For Tue EOM strong SPX OI shows a bias to BE at 7405, but about half the OI$
call value is the 18k calls at 7k. Could see 7450.
IV. Technical / Other
The following uses barcharts.com as a source and discusses S&P futures (ES) as a third
venue of stock sentiment in addition to options and ETFs. The non-commercial/commercial
spread represents a LT bearish sentiment (dumb money/smart money) indicator. As explained in investopedia,
commercial investors (red) are institutions and are smart money, while non-commercials (green) are speculators such as
hedge funds and are dumb money. Here is the current barchart graph
for the S&P 500 (top) and trader positions (1st bot) with positives as net longs and negatives
as net shorts.
Bearish sentiment is represented by the spread and is positive if red > green
(Buy) and negative if green > red (Sell). ES (SPX) sentiment remains a weak Buy at + 1.5 SD, NQ (NDX)
moved to neutral at 0.0
SD, YM (DJIA) moved to neutral at 0.0 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. Markets have largely ignored the swift drop in oil
prices back to the mid-70's (WTI/bbl) although the last time oil prices were at
this level in early March the SPX was 6850 or almost 10% lower (war premium?).
A dragged out peace process could keep prices in a trading range (SPX 7400-7600)
with ATH's more likely now with July-Aug EPS.
Weekly Trade Alert. Positive Iran news by Wed may target SPX 7550+
with EOW/EOM fade toward 7450 or lower. Updates @mrktsignals.
