It's hard to believe that NVDA's CEO Jensen Huang was awarded the National
Medal of Science on Oct 8, 2026 by President Trump and barely a month later
resigns due to an alleged affair with a Chinese spy. Supposedly Trump was
told that the woman was suspected of working for the Chinese gov't, but Trump
indicated that he thought Huang was a "good guy". After all Huang did
donate $25M for the new Presidential ballroom. As a result the NVDA stock
dropped about 30% from about 210 to 150 the last two weeks. Surprisingly
the SPX is relatively unchanged near 7550, dropping to a low at 7350 with
a high CPI report, but supported by a $20 drop in oil (WTIC/bbl) after Trump denied plans
to renew attacks on Iran. The outlook was for some initial weakness and a
rally by mid-week, but Mon started strong with a peak mid-week, so I will call
that a draw.
Sentiment is little changed overall with the INT/LT and LT composite
indicators somewhat negative with the DM/SM falling to a weak Sell but the Hedge
Spread is just below neutral. The ST Composite fell below a weak Buy, but
the VIX call buying has been strong and has reached the weak Buy area although
the SPXADP component is lagging.
SPX options OI charts are still NA and although I may have found an alternate
source for the data, conversion may take a week or two.
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 to just above a weak Sell.
Update Alt EMA. Bearish sentiment fell to 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 dropped to just below a weak Buy.
Update EMA. Bearish sentiment dropped to just below a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment moved above neutral
with VIX calls at a weak Buy while the SPXADP still below neutral (midcap
buying).
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 back toward a weak Sell.
Bonds (TNX). Bearish sentiment remains at low extremes as rates
rose back over 5%.
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. Prices
moved back toward recent lows as gold remains below 4000 from strength in the USD
due to a more hawkish Fed outlook after recent inflation data.
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 back to a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment remains just 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 is relatively
unchanged at just above 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 is also unchanged above 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 is also unchanged above a weak Sell.
III. Options Open Interest
Not available this week.
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
positive at +0.75 SD, NQ (NDX) remains close to a strong Sell at -1.75 SD, YM (DJIA)
is moved closer 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 -1.6 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. The NVDA saga may have broader implications for the
AI sector that could spill over into 2027 and beyond. First, the so called
"circular financing" where NVDA provides funds for cloud and data center firms
to buy NVDA chips for rental is likely to weaken and second, the China
connection supported by J. Huang is likely to face increased scrutiny with
stronger export controls that may reignite the US-China trade war in 2027.
Trump seems to have refocused on ending the Russia-Ukraine and US-Iran wars that
may prop up markets for a while, but could prove problematic if extended into
2027. M. Armstrong has long
argued that a China, Russia, and Iran alliance could possibly be forming where
the US involvement with Iran is a distraction to further the goals of Russia
with Ukraine and China with Taiwan.
Weekly Trade Alert. NVDA EPS Tue A/H could provide a temporary
reprieve for techs, but will probably be short-lived. Updates @mrktsignals.
As with most, I underestimated voters angst with DJT & GOP as I have never
been a big supporter of DJT. The end result was a landslide for the Dems with
wide majorities of 254 to 162 in the House, 54 to 44 in the Senate, and 28 to 20
for the state governors. The governor races may be the most important for
tech and AI datacenters since over 40% of the AI datacenter buildout was
proposed for Texas, New Mexico and Ohio and now face strong headwinds from the
Dems. Last stock outlook was for overhead resistance around SPX 7650 which
worked out well other than the election day rally which was followed by a 4%
drop for the SPX and 6% for the NDX.
Next week Nov 10 is the CPI release which the
Feds Nowcast is predicting as 0.24%
down from 0.6% in Sept. This may provide a temporary reprieve for the
market by lowering expectations of a more hawkish FOMC in Dec. The ST
Composite has also moved to a weak Buy while many of the INT/LT indicators moved
toward neutral, including the SPX 2x ETF and options indicator which moved to a
strong Sell the previous week. The CNN Fear &
Greed Index has also moved to Extreme Fear at 22 which may support a bounce.
A major uncertainty remains with Iran, however, as there seems to be little
progress towards a reconcilation.
SPX options OI charts are being suspended due to Fidelity's option chain format change
that doesn't allow copying text data. I will continue to look for other
options. If anyone has success with another broker please let me know via
comment and I will consider it.
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 a weak Sell halfway to
neutral.
Update Alt EMA. Bearish sentiment moved up from a weak Sell toward 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 above neutral to a weak Buy.
Update EMA. Bearish sentiment rose from just above neutral to a
weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment rose 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 rose from a weak Sell to neutral VST (grn).
Update FOMO calls. Bearish sentiment rose from a weak Sell halfway to
neutral.
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 continued to fall below a weak Sell as prices rose
above 700 and gold over $4000.
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 jumped from a weak Sell to neutral VST (grn).
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment briefly spiked from just below to just
above neutral after the election then fell back to just 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 correctly warned
of last weeks selloff with a strong Sell, but has now moved slightly over 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 slightly toward 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 moved up halfway to neutral.
III. Options Open Interest
SPX options OI are not available currently from Fidelity due to website changes.
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
near a weak Buy at +0.85 SD, NQ (NDX) remains close to a strong Sell at -1.75 SD, YM (DJIA)
is moved closer to a weak Sell at -0.65 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.6 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. Since mid-Oct I have been discussing the AI bubble
bursting, but I did not expect a voter revolt in the election as the catalyst.
The only remaining potential for a retest of the highs at this point is a quick
resolution of the war with Iran, but Trump has shown no sign of backing down nor
has Iran. Skirmishes this weekend may lead to early weakness, but positive
inflation data could help the short term.
Weekly Trade Alert. LT is still negative, but a bounce looks likely
by mid-week. No SPX OI guidelines. Updates @mrktsignals.
Last weeks outlook for a trading range for SPX from 7625 to to 7725 worked
out well thru Wed with a move up to 7750, but a strong negative reaction Thur &
Fri to the AI hyperscalers GOOG and AMZN earnings results that showed negative
cash flows from capex spending sent the NDX down 6% and the SPX down 3% to 7520.
Surprisingly, the cumulative 10% decline in the NDX for Oct in 3 weeks was
almost identical to the 10% decline into the July EPS season which took about 6
weeks. In addition to earnings, short term uncertainty due to the mid-term
election next week with a possible Dem sweep and Trumps increased threats
against Iran likely accelerated the correction. It's possible a resolution to
the Iran conflict could be the key for a final rally.
Overall sentiment remains neutral ST and on/near a weak Sell INT/LT.
COT remains negative for gold and NQ.
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 up to a weak Sell.
Update Alt EMA. Bearish sentiment moved up 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 moved up slightly between neutral and a weak Buy.
Update EMA. Bearish sentiment moved up slightly between neutral and a weak
Buy.
The ST VIX calls and SPXADP indicator bearish sentiment moved midway between neutral
and 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 slightly above a weak Sell.
Update FOMO calls. Bearish sentiment remains at 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 fell back to a weak Sell even as prices dropped
sharply to 650 as gold fell below $4000/oz. After posting the strong
correlation between Chinas SSEC index
and gold in the Dec 2025 Tech/Other section, the correlation has been even
stronger in 2026 and indicates a $3200-3500 likely target for gold.
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 near a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment remains midway between neutral and 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 bounced after
reaching a strong Sell midweek.
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 up sharply from a weak Sell based on 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 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 Nov 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 7580, options OI for Mon is small/moderate with a high %
of ITM puts and should see a move over 7600, but gains will likely be limited
before the election unless positive Iran news breaks.
Wed SPX OI is small with most of the put support at 7510 and 7520 that should
limit loses.
For Fri SPX OI is moderate with strong put support at 7600 and 7650. A
move to put support is likely with positive developments with Iran, but not with
increased conflict.
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
near a weak Buy at +1.0 SD, NQ (NDX) remains close to a strong Sell at -1.75 SD, YM (DJIA)
is between neutral and a weak Sell at -0.5 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.6 SD.
Click dropdown list to select from the following options:
Tech / Other History
2026
2025
2024
2023
2022
Other Indicators
Conclusions. The SPX broke down from its month long range of
7600-7800+ to the low 7500s which coincidently tested the lows from the mid-Sept
FOMC rate hike. What happens from here will depend on the markets reaction
to the mid-term election results and potential changes in the standoff with
Iran. Dems are expected to win the House and possibly the Senate, but
results could be delayed or challenged by Trump's allegations of election fraud.
Weekly Trade Alert. SPX options OI are indicating an upward bias,
but 7650 is unlikely to breached unless the two major news items from above show
a positive surprise. Updates @mrktsignals.
