Will the Bull Market Survive October?

Last week was expected to see limited gains to SPX 7700 thru EOM with possible mid-week weakness and Mon started off with a bang after Trump touted more negotiations with Iran which sent oil tumbling, but the big driver of an SPX 130 pt gain was the 11% gain in META with the release of Muse, its AI assistant keyed into online shopping.  Wed/Thur did see weakness as Iran's deal turned out to be a false flag with an SPX 100 pt drop, before Fri bounce back to 7740.  This weeks SPX OI continues to show a bias toward the 7700 level with PCE inflation on Wed and the Sept Jobs report on Fri.  A quick look for Oct monthly exp on the 16th, however, shows a BE at 7870 due to a huge straddle at 8k, so something like an EW ending diagonal may be possible.

Bearish sentiment declined somewhat with last weeks rally, but the ST Composite remains over a weak Buy and the VIX call indicator remains positive but below a weak Buy.  The INT/LT Composite and ST/INT Composite have moved to weak Sells based on the low ETF P/Cs which also moved the Hedge Spread to a weak Sell.  FOMO calls remain neutral.  A trading range, perhaps 7675-7775 is expected for the week.  Thru mid-Oct exp week an EW scenario consistent with the SPX OI outlook is an ED taken from another site (extend time frame).  But more troubling LT are the NYSE ADLINE which looks a lot like late where a lower ADLINE with an SPX ATH spelled trouble, as well as the TRANS index where 2025-26 seem to be repeating 2021-22.

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 dropped back to a weak Sell.

Update Alt EMA. Bearish sentiment dropped from near neutral to 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 spiked above a strong Buy on previous Fri and remains over a weak Buy.

Update EMA. Bearish sentiment has fallen from the previous weeks strong Buy to a weak Buy.

The ST VIX calls and SPXADP indicator bearish sentiment fell 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 fell from above a weak Sell halfway to a strong Sell.

Update FOMO calls. Bearish sentiment remains just below neutral.

Bonds (TNX).  Bearish sentiment remains at low extremes although TNX rates broke over the 5% area at one time up .25% for the week.  Next weeks PCE inflation and jobs data could be problematic if rates rise toward 5.5%.

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 continued to fall as price hovers around the 800 level.

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 halfway between a weak and strong Sell.

With the sister options Hedge Spread as a ST/INT indicator (outlook 1-3 mns), bearish sentiment retreated sharply to 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 rose sharply from a weak Sell toward 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 back to a weak Sell as ETF P/Cs fell.

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 back to a weak Sell as ETF P/Cs fell.

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 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 7743, options OI for Mon is moderate with a slight negative bias due to ITM calls and a BE at 7710.  Call resistance over 7750.

Wed SPX OI is large with BE also at 7710, could remain in range of 7700-50.

For Fri SPX OI is moderate/large with BE at 7700 and low $P/C, likely close near 7700.

For Fri Oct 16th AM SPX OI is large with another huge straddle at 8K and a BE at 7870.  Smaller straddle for Sept (~100k) with BE at 7675 resulted in a Tue swing low near 7500 and a Fri open near 7650.  Perhaps TACO 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 moved closer to a weak Buy at +0.75 SD, NQ (NDX) close to a strong Sell at -1.75 SD, YM (DJIA) remains a weak Sell at -1.25 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
   04.18 NYSE Adv/Dec Volume remains weak, potential analogs to 2008 and 2018    04.25 NYSE Adv/Dec Volume, in depth look at 2017 meltup and expanding wedge    07.31 SK KOPSI crash analog to NDX 2000 Mar-May crash w/sharp ST recovery    08.07 The LLM Token Expenditures Index for AI profitabiliy indicates future EPS problems    09.12 A look at Fed rates changes vs CPI and PCE since 2020 shows CPI preference
2025
   12.27 A look at the China SSEC stock index vs gold for seven years.    09.27 LT NYSE Adv/Dec volume and Rydex 3x Bull/Bear indicators at levels of prior INT tops.    05.09 NAAIM LT and Rydex 3x Bull/Bear indicators approaching bulish extremes.    05.02 The strong breath Adv/Dec volume may not be all positive, aka late 2015.    04.19 An SPX 2022 bear market analog and an update of the LT NAAIM Index.    04.12 How golbalism has effected foreign purchases of US debt since 1980.    04.05 A comparison to SPX 2020 covid crash and a look at LT NAAIM Index.    03.29 Corporate profits to GDP since 1980 show strong growth from globalism.    03.22 A comparison to Trump 1.0 trade war results for the SPX.    03.15 Update of Technical Indicator Composite & SKEW plus VIX term structure.    01.25 Update of NYSE Adv/Dec volume now at Sell level & SKEW shows warning of INT top (1-3mns).
2024
   12.15 Comparison of NYSE Adv/Dec volume lows to peaks in SKEW shows ST (1 month) warning of INT tops.    12.06 High peaks in SKEW since 2018 have been early warning of INT tops as sign of "max" options bearishness.    09.07 A look at DJIA/SPX analog from the 2000 market top shows possible strength into year-end.    05.25 A possible rounded top aka May 2015, Initial Claims lead Unempl Rate, LT NYADV/Dec warning.    02.17 A potential analog to early 2007 with early Spring and Summer pullbacks before Fall rally.    01.13 A look at LT SPX P&C, very high volume may compress range to 4650-4850 for mns, current Sell.
2023
   12.23 A quick update to the DJIA infl adj comparison presented as a possible analog Dec 2022    12.08 A look at the Feds recession indicator based on the unemployment rate using the Sahm Rule    10.21 A comparison of 5 year periods (1960s, 90s & today) for inflation and int rates (Fed funds & TNX)    09.29 A ST trend for TNX, INT/LT COT bearish for bond futures (TN), LT 20/30 yld curve    09.22 A look at Dow Theory and a DJIA diagonal and possible similarities to late 2015    09.15 Use of Brave browser Shield for enhanced internet access to some sites    07.22 A closer look at the 1966-74 markets indicate marginal new ATHs likely around 2024 Pres election    07.08 TNX since 2020 shows bounce likely temp w/ more back&fill before rounded bottom completes    07.01 Sentiment for BKX is at warning levels, Barcharts ES sentiment is now neutral.    06.24 Another update to VIX call indicator using VIX P/C; how volatility (VIX) effects options pricing    06.17 OTDE Volume & Put/Call Ratio Drilldown - low volatility (VIX) ahead    06.10 Volatility indicators warning of a nearing top    05.20 A review of indicators that performed well in 2015s rounded top    05.13 Comparing the VIX term structure (VIX/VXV) and volatility ratio (VIX/VVIX)    05.06 A review of the current int rates (TNX), unemployment and CPI compared to the 1960s    04.29 Addressing the negative M2 growth misconception, adding Barcharts ES outlook    04.15 Several LT/INT indicators show INT gains likely (SKEW&VIX/VXV,VIX/VVIX,BPSPX&SPXADP)    03.25 Comparison of PCE inflation and TNX rates to late 1990s indicates possible tech meltup    03.18 Strong SPX volume at Mar optn exp supports Spring rally of 10%+    03.11 Low SPX P/C ratio indicates likely trading range    03.04 LT T-bonds (10/20yr) => more Fed tightening, LT NYSE Adv/Dec volume => possible ATH retest    01.28 SPX correlation w/liquidity, Fed bal sheet - Treasury Gen Acct - O/N reverse repo    01.14 Volatility indicators, ST VIX calls indicate pullback SPX 200 pts, INT/LT SKEW & VIX/VXV still bullish    01.07 Gold performance relative to int rates (TNX), and China stock market (SSEC)
2022
   12.24 Late 1960s analog, TNX,Unempl & CPI => Recession 2024-25, DJIA top Feb'66 retest late '69    12.17 A contrarian view to the consensus 2022H2 recession & bear narket low of SPX 3000    12.10 Yield curve inversion (since 1980) not perfect recess indicator compared to inflationary 1960-80    11.26 Sentiment indicators showing a sharp drop late Dec as a setup for a strong Spring rally    11.19 Sentiment indicators showing choppy move higher likely before pullback    11.05 Using the SPXADP with the VIX call only indicator improves effectiveness

Other Indicators
   U.S. 10 Year Treasury Note (TNX Rate), Futures, Extended Hours    ES (S&P 500), Futures, Extended Hours +    NDX (NASDAQ 100), Futures, Extended Hours    Marketwatch Economic Release Calendar    INT/LT Rydex 3x Bear/Bull Fund Ratio    INT/LT NYSE Up/Down Volume 100 & 200 DMAs    S&P 500 Historical Charts with Inflation Adjustment    DJIA 100 Year Historical Charts with Inflation Adjustment

Conclusions.  The biggest surprise in this weeks sentiment by far was the Oct monthly exp OI.  The last two weeks I had been pounding the table about rising int rates and was planning on pointing out the Mon Oct 19 was the 39th anniversery of 1987's Black Monday where rates had also risen sharply, but the SPX OI seems to indicate a bearish consensus.  Perhaps Trump still has a few TACOs left.

Weekly Trade Alert.  Next week is expected to see limited weakness into Fri with an SPX range of 7675-7775.  Updates @mrktsignals.

Investment Diary,  Indicator Primer, Tech/Other Refs,
 update 2021.07.xx  Data Mining Indicators - Update, Summer 2021,
 update 2020.02.07 Data Mining Indicators,
 update 2019.04.27 Stock Buybacks,
 update 2018.03.28 Dumb Money/Smart Money Indicators

Article Index 2019 by Topic, completed thru EOY 2020.02.04
Article Index 2018 by Topic
Article Index 2017 by Topic
Article Index 2016 by Topic

Long term forecasts

© 2026 SentimentSignals.blogspot.com

Bearish Sentiment on the Rise

SPX prices were again somewhat lower than expected, especially mid-week as oil prices rose Mon/Tue to the $106/bbl WTIC, and on Wed the Fed showed that is prepared to take inflation seriously by raising the fed fund rate to 4.0-4.25%.  A late selloff, possibly due to higher projected rates thru 2027, pushed the SPX down to the 7510 area.  As oil reversed, stocks climbed back and the SPX closed the week down 6 at 7650 with higher techs and lower bank stocks.  SPX OI is pointing to limited gains thru the EOM, possibly to the 7700 area.  Last weeks conclusion discussed similarities to the 1987 int rate environment where the TNX rose from a low of 7% (not 5%) to 10%, and the past week Nomura's C.McElligott, indicated that high diesel prices may cause a spike in inflation and int rates with similar results to 1987 (paywall, AI).

The lower prices last week pushed sentiment measures higher.  Outside measures such as the CNN Fear/Greed index was pushed close to the extreme fear level, while the AAII Survey moved to 53% bearish, close to a 1 year high.  Of the in-house measures the ST Composite and VIX call indicators remain on weak Buys, with most INT/LT measures moving to neutral except the DM/SM and SPX options and ETF indicators which remain at 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 rose sharply from a weak Sell toward neutral.

Update Alt EMA. Bearish sentiment rose sharply 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 continued to rise above a weak Buy.

Update EMA. Bearish sentiment continued to rise to a weak Buy VST (grn).

The ST VIX calls and SPXADP indicator bearish sentiment remains at 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 continued to rise above a weak Sell.

Update FOMO calls. Bearish sentiment rose to neutral as call volume dropped sharply.

Bonds (TNX).  Bearish sentiment remains at low extremes as the TNX continues to test 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 as prices consolidate around 800.

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 mid-way between a weak and strong Sell.

With the sister options Hedge Spread as a ST/INT indicator (outlook 1-3 mns), bearish sentiment remains mid-way 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 rose slightly above a weak Sell with 2x SPX ETF sentiment rising.

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 to mid-way between neutral and 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 rose to mid-way between neutral and 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 Sept 25. 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 7650, options OI for Mon is small with minor put support/call resistance between 7625 and 7675.  BE at 7665 and straddle at 7700 indicate slight upside bias.

Wed has very small SPX OI with no put support until 7550 and call resistance at 7750+.  Possible weakness with BE at 7635.

For Fri moderate SPX OI has $ P/C over 2/1 and BE at 7680, so a move to 7675+ is likely .

For Wed EOM strong SPX is similar to Fri w/2 to 1 $ P/C and a BE at 7695, so modest upside is 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 jumped halfway to a weak Buy at +0.5 SD, NQ (NDX) moved to halfway between a weak & strong Sell at -1.50 SD, YM (DJIA) remains a weak Sell at -1.35 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
   04.18 NYSE Adv/Dec Volume remains weak, potential analogs to 2008 and 2018    04.25 NYSE Adv/Dec Volume, in depth look at 2017 meltup and expanding wedge    07.31 SK KOPSI crash analog to NDX 2000 Mar-May crash w/sharp ST recovery    08.07 The LLM Token Expenditures Index for AI profitabiliy indicates future EPS problems    09.12 A look at Fed rates changes vs CPI and PCE since 2020 shows CPI preference
2025
   12.27 A look at the China SSEC stock index vs gold for seven years.    09.27 LT NYSE Adv/Dec volume and Rydex 3x Bull/Bear indicators at levels of prior INT tops.    05.09 NAAIM LT and Rydex 3x Bull/Bear indicators approaching bulish extremes.    05.02 The strong breath Adv/Dec volume may not be all positive, aka late 2015.    04.19 An SPX 2022 bear market analog and an update of the LT NAAIM Index.    04.12 How golbalism has effected foreign purchases of US debt since 1980.    04.05 A comparison to SPX 2020 covid crash and a look at LT NAAIM Index.    03.29 Corporate profits to GDP since 1980 show strong growth from globalism.    03.22 A comparison to Trump 1.0 trade war results for the SPX.    03.15 Update of Technical Indicator Composite & SKEW plus VIX term structure.    01.25 Update of NYSE Adv/Dec volume now at Sell level & SKEW shows warning of INT top (1-3mns).
2024
   12.15 Comparison of NYSE Adv/Dec volume lows to peaks in SKEW shows ST (1 month) warning of INT tops.    12.06 High peaks in SKEW since 2018 have been early warning of INT tops as sign of "max" options bearishness.    09.07 A look at DJIA/SPX analog from the 2000 market top shows possible strength into year-end.    05.25 A possible rounded top aka May 2015, Initial Claims lead Unempl Rate, LT NYADV/Dec warning.    02.17 A potential analog to early 2007 with early Spring and Summer pullbacks before Fall rally.    01.13 A look at LT SPX P&C, very high volume may compress range to 4650-4850 for mns, current Sell.
2023
   12.23 A quick update to the DJIA infl adj comparison presented as a possible analog Dec 2022    12.08 A look at the Feds recession indicator based on the unemployment rate using the Sahm Rule    10.21 A comparison of 5 year periods (1960s, 90s & today) for inflation and int rates (Fed funds & TNX)    09.29 A ST trend for TNX, INT/LT COT bearish for bond futures (TN), LT 20/30 yld curve    09.22 A look at Dow Theory and a DJIA diagonal and possible similarities to late 2015    09.15 Use of Brave browser Shield for enhanced internet access to some sites    07.22 A closer look at the 1966-74 markets indicate marginal new ATHs likely around 2024 Pres election    07.08 TNX since 2020 shows bounce likely temp w/ more back&fill before rounded bottom completes    07.01 Sentiment for BKX is at warning levels, Barcharts ES sentiment is now neutral.    06.24 Another update to VIX call indicator using VIX P/C; how volatility (VIX) effects options pricing    06.17 OTDE Volume & Put/Call Ratio Drilldown - low volatility (VIX) ahead    06.10 Volatility indicators warning of a nearing top    05.20 A review of indicators that performed well in 2015s rounded top    05.13 Comparing the VIX term structure (VIX/VXV) and volatility ratio (VIX/VVIX)    05.06 A review of the current int rates (TNX), unemployment and CPI compared to the 1960s    04.29 Addressing the negative M2 growth misconception, adding Barcharts ES outlook    04.15 Several LT/INT indicators show INT gains likely (SKEW&VIX/VXV,VIX/VVIX,BPSPX&SPXADP)    03.25 Comparison of PCE inflation and TNX rates to late 1990s indicates possible tech meltup    03.18 Strong SPX volume at Mar optn exp supports Spring rally of 10%+    03.11 Low SPX P/C ratio indicates likely trading range    03.04 LT T-bonds (10/20yr) => more Fed tightening, LT NYSE Adv/Dec volume => possible ATH retest    01.28 SPX correlation w/liquidity, Fed bal sheet - Treasury Gen Acct - O/N reverse repo    01.14 Volatility indicators, ST VIX calls indicate pullback SPX 200 pts, INT/LT SKEW & VIX/VXV still bullish    01.07 Gold performance relative to int rates (TNX), and China stock market (SSEC)
2022
   12.24 Late 1960s analog, TNX,Unempl & CPI => Recession 2024-25, DJIA top Feb'66 retest late '69    12.17 A contrarian view to the consensus 2022H2 recession & bear narket low of SPX 3000    12.10 Yield curve inversion (since 1980) not perfect recess indicator compared to inflationary 1960-80    11.26 Sentiment indicators showing a sharp drop late Dec as a setup for a strong Spring rally    11.19 Sentiment indicators showing choppy move higher likely before pullback    11.05 Using the SPXADP with the VIX call only indicator improves effectiveness

Other Indicators
   U.S. 10 Year Treasury Note (TNX Rate), Futures, Extended Hours    ES (S&P 500), Futures, Extended Hours +    NDX (NASDAQ 100), Futures, Extended Hours    Marketwatch Economic Release Calendar    INT/LT Rydex 3x Bear/Bull Fund Ratio    INT/LT NYSE Up/Down Volume 100 & 200 DMAs    S&P 500 Historical Charts with Inflation Adjustment    DJIA 100 Year Historical Charts with Inflation Adjustment

Conclusions.  With the rapid expansion of the use of AI throughout the economy, more and more incidents similar to the OpenAI breach of Hugging Faces security are prompting the comparisons to human adolescent behavior which raises the question of proper monitoring and control.  One unsettling example which surfaced last week was the false AI identification of a Chinese vessel expected of transferring nuclear weapon components to Iran that almost resulted in a military confrontation.

Weekly Trade Alert.  SPX prices are expected to be mildly positive thru the EOM (~7700) with some possible weakness mid-week.  Updates @mrktsignals.

Investment Diary,  Indicator Primer, Tech/Other Refs,
 update 2021.07.xx  Data Mining Indicators - Update, Summer 2021,
 update 2020.02.07 Data Mining Indicators,
 update 2019.04.27 Stock Buybacks,
 update 2018.03.28 Dumb Money/Smart Money Indicators

Article Index 2019 by Topic, completed thru EOY 2020.02.04
Article Index 2018 by Topic
Article Index 2017 by Topic
Article Index 2016 by Topic

Long term forecasts

© 2026 SentimentSignals.blogspot.com

Middle East War Widens as Trump Offers Voter Payouts

Last week was somewhat weaker than expected as oil prices (WTIC/bbl) rocketed higher from the low $90s to over $104 Thur as Houdi/Iran contingent expanded the blockade of middle east oil into the Red Sea, cutting off access to the Suez Canal.  The US/Saidi alliance was completely caught off guard and now opens a second front for Trump to contend with.  For the SPX this meant new lows thru Thur to the 7580 level before a sharp Fri recovery to 7660 with the CPI release showing a continued decline of the core rate to 2.4%.  This somewhat muddles the Wed FOMC outlook after Waller last week said he would be content with keeping rates constant with a lower core CPI, but the surge in oil prices increases the probability of higher future inflation.  A discussion of the PCE, CPI and Fed rate changes is included in this weeks Tech/Other section.  The probability of a 0.25% FOMC hike is listed as 87% by CME Watch.

ST SPX sentiment moved to a weak Buy with the ST Composite and VIX call indicator moving from neutral to a weak Buy, while INT/LI indicators remain in the weak to Strong Sell area.

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 improved but remains a weak Sell.

Update Alt EMA. Bearish sentiment improved but remains 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 rose above a weak Buy, but pulled back Fri.

Update EMA. Bearish sentiment rose above neutral about halfway to a weak Buy.

The ST VIX calls and SPXADP indicator bearish sentiment moved above a weak Buy from neutral with negative SPXADP and strong 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 improved moving up to near a weak Sell.

Update FOMO calls. Bearish sentiment improved moving from a weak Sell to near neutral.

Bonds (TNX).  Bearish sentiment remains at low extremes as rates closed just below 5% as Bessents bond purchases did little to offset inflation and deficit jitters after oil (WTI) rose above $100/bbl and Trump promised a $1T+ voter payout if the GOP wins the midterms.

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.

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 above a strong Sell.

With the sister options Hedge Spread as a ST/INT indicator (outlook 1-3 mns), bearish sentiment remains 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 remains at 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 rose to 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 Sept 18. 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 7657, options OI for Mon is small/moderate with put support at 7600 & 7700 and call resistance at 7650 and a BE at 7685.  Upside likely but limited 7675-7700.

Wed FOMC day, SPX OI is small with put support at 7650 and call resist at 7675 although over 7675 could see positive delta hedging.  Should remain near BE at 7675.

For Fri AM very strong SPX OI shows BE improved to 7675.

For Fri PM strong SPX OI shows BE at 7655 with put support at 7600 & 7625 and call resist at 7675 & 7700.  Could see some weakness into PM.

IV. Technical / Other

This week I wanted to take a brief look at the core inflation measures for PCE and CPI and the Fed funds rate for the last 10 years.  The Fed claims to base rates on the core PCE but since 2020 they seem to be following the CPI instead, while the CPI seems to be lagging the PCE by about a year.  As a result instead of raising rates in 2021 when the PCE hit 4%, they waited a year until the CPI hit 4%, allowing the CPI to move higher and then did not cut rates until a year after the CPI topped.  With the Aug core CPI on Fri declining to 2.4%, The same policy could mean no change, but the new chair Warsh is an unknown and the CME futures are showing an 87% prob of a hike to 3.75-4.0% range.  Data is annual change quarterly (DPCCRV1Q225SBEA, CORESTICKM159SFRBATL, BOGZ1FL072052006Q).

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 above neutral at +0.15 SD, NQ (NDX) remains a weak Sell at -1.20 SD, YM (DJIA) remains a weak Sell at -1.35 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
   04.18 NYSE Adv/Dec Volume remains weak, potential analogs to 2008 and 2018    04.25 NYSE Adv/Dec Volume, in depth look at 2017 meltup and expanding wedge    07.31 SK KOPSI crash analog to NDX 2000 Mar-May crash w/sharp ST recovery    08.07 The LLM Token Expenditures Index for AI profitabiliy indicates future EPS problems
2025
   12.27 A look at the China SSEC stock index vs gold for seven years.    09.27 LT NYSE Adv/Dec volume and Rydex 3x Bull/Bear indicators at levels of prior INT tops.    05.09 NAAIM LT and Rydex 3x Bull/Bear indicators approaching bulish extremes.    05.02 The strong breath Adv/Dec volume may not be all positive, aka late 2015.    04.19 An SPX 2022 bear market analog and an update of the LT NAAIM Index.    04.12 How golbalism has effected foreign purchases of US debt since 1980.    04.05 A comparison to SPX 2020 covid crash and a look at LT NAAIM Index.    03.29 Corporate profits to GDP since 1980 show strong growth from globalism.    03.22 A comparison to Trump 1.0 trade war results for the SPX.    03.15 Update of Technical Indicator Composite & SKEW plus VIX term structure.    01.25 Update of NYSE Adv/Dec volume now at Sell level & SKEW shows warning of INT top (1-3mns).
2024
   12.15 Comparison of NYSE Adv/Dec volume lows to peaks in SKEW shows ST (1 month) warning of INT tops.    12.06 High peaks in SKEW since 2018 have been early warning of INT tops as sign of "max" options bearishness.    09.07 A look at DJIA/SPX analog from the 2000 market top shows possible strength into year-end.    05.25 A possible rounded top aka May 2015, Initial Claims lead Unempl Rate, LT NYADV/Dec warning.    02.17 A potential analog to early 2007 with early Spring and Summer pullbacks before Fall rally.    01.13 A look at LT SPX P&C, very high volume may compress range to 4650-4850 for mns, current Sell.
2023
   12.23 A quick update to the DJIA infl adj comparison presented as a possible analog Dec 2022    12.08 A look at the Feds recession indicator based on the unemployment rate using the Sahm Rule    10.21 A comparison of 5 year periods (1960s, 90s & today) for inflation and int rates (Fed funds & TNX)    09.29 A ST trend for TNX, INT/LT COT bearish for bond futures (TN), LT 20/30 yld curve    09.22 A look at Dow Theory and a DJIA diagonal and possible similarities to late 2015    09.15 Use of Brave browser Shield for enhanced internet access to some sites    07.22 A closer look at the 1966-74 markets indicate marginal new ATHs likely around 2024 Pres election    07.08 TNX since 2020 shows bounce likely temp w/ more back&fill before rounded bottom completes    07.01 Sentiment for BKX is at warning levels, Barcharts ES sentiment is now neutral.    06.24 Another update to VIX call indicator using VIX P/C; how volatility (VIX) effects options pricing    06.17 OTDE Volume & Put/Call Ratio Drilldown - low volatility (VIX) ahead    06.10 Volatility indicators warning of a nearing top    05.20 A review of indicators that performed well in 2015s rounded top    05.13 Comparing the VIX term structure (VIX/VXV) and volatility ratio (VIX/VVIX)    05.06 A review of the current int rates (TNX), unemployment and CPI compared to the 1960s    04.29 Addressing the negative M2 growth misconception, adding Barcharts ES outlook    04.15 Several LT/INT indicators show INT gains likely (SKEW&VIX/VXV,VIX/VVIX,BPSPX&SPXADP)    03.25 Comparison of PCE inflation and TNX rates to late 1990s indicates possible tech meltup    03.18 Strong SPX volume at Mar optn exp supports Spring rally of 10%+    03.11 Low SPX P/C ratio indicates likely trading range    03.04 LT T-bonds (10/20yr) => more Fed tightening, LT NYSE Adv/Dec volume => possible ATH retest    01.28 SPX correlation w/liquidity, Fed bal sheet - Treasury Gen Acct - O/N reverse repo    01.14 Volatility indicators, ST VIX calls indicate pullback SPX 200 pts, INT/LT SKEW & VIX/VXV still bullish    01.07 Gold performance relative to int rates (TNX), and China stock market (SSEC)
2022
   12.24 Late 1960s analog, TNX,Unempl & CPI => Recession 2024-25, DJIA top Feb'66 retest late '69    12.17 A contrarian view to the consensus 2022H2 recession & bear narket low of SPX 3000    12.10 Yield curve inversion (since 1980) not perfect recess indicator compared to inflationary 1960-80    11.26 Sentiment indicators showing a sharp drop late Dec as a setup for a strong Spring rally    11.19 Sentiment indicators showing choppy move higher likely before pullback    11.05 Using the SPXADP with the VIX call only indicator improves effectiveness

Other Indicators
   U.S. 10 Year Treasury Note (TNX Rate), Futures, Extended Hours    ES (S&P 500), Futures, Extended Hours +    NDX (NASDAQ 100), Futures, Extended Hours    Marketwatch Economic Release Calendar    INT/LT Rydex 3x Bear/Bull Fund Ratio    INT/LT NYSE Up/Down Volume 100 & 200 DMAs    S&P 500 Historical Charts with Inflation Adjustment    DJIA 100 Year Historical Charts with Inflation Adjustment

Conclusions.  Iran seems intent on stepping up the pressure on Trump prior to the election with Trump admitting that a solution is unlikely until after the election.  The bond market apparently does not like Trumps lack of concern over inflation as the 10 year bond rate (TNX) is now just below 5%.  In an interesting aside, in 1987, the TNX (Fred,DGS10) rose from 5% to 10% before the stock market crash and at the time the DJIA div yield was 2.5% and many felt much of the crash was due to an asset allocation switch from stocks to bonds at a 4x yield differential.  Today the DJIA yields about 1.5%, so a 4x yield differential is around TNX 6%.  ST sentiment is showing some upside bias next week, but Iran news and oil prices will remain important.

Weekly Trade Alert.  Some upside is likely with a tight range unless surprise from FOMC, Iran with range 7625-7700 .  Updates @mrktsignals.

Investment Diary,  Indicator Primer, Tech/Other Refs,
 update 2021.07.xx  Data Mining Indicators - Update, Summer 2021,
 update 2020.02.07 Data Mining Indicators,
 update 2019.04.27 Stock Buybacks,
 update 2018.03.28 Dumb Money/Smart Money Indicators

Article Index 2019 by Topic, completed thru EOY 2020.02.04
Article Index 2018 by Topic
Article Index 2017 by Topic
Article Index 2016 by Topic

Long term forecasts

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