Last weeks price action for SPX went pretty much as expected as an early
drop of 1%+ was expected prior to Trumps Mon deadline for Iran except that Trump
delayed the deadline to Tue which resulted in a Mon rally of about 30 pts to
6610ish. However, Tue AM did see a decline to about 6530 before a late
recovery and an announcement shortly after the close of a rwo week ceasefire
sent oil prices tumbling almost 15% and stock futures up 3%, exceeding the
target area for next weeks opt exp of SPX 6700-6800 at a 6816 close. Much
of next weeks progress will likely depend on oil prices (WTI), with $95-100/bbl
an SPX range of 6750-6850 and oil $90-95 likely SPX 6800-900. An
interesting twist shows up in the Apr EOM options OI with large call positions
at the SPX 6600 & 6700 levels which indicates that a failure of the two week US
/ Iran peace talks is likely to send the SPX back to the 6600-700 area or lower
by EOM.
There are some interesting divergences setting up between the ETF and SPX
options which at first glance are similar to the Jan 2025 period where the ETF
option P/C are very high and the SPX option P/C is very low. I will try to
take a closer look during the week and perhaps do a Tech/Other section next
week. The result in sentiment for this week shows a mixed bag where the ST
Composite remains at a weak Buy, while the ST/INT Composite is near a weak Sell.
The VIX call indicator is also near a weak Sell and FOMO call indicator is near
a strong Sell. The hedge spread is near neutral, while both SPX and NDX
ETFs and ETF option indicators are at strong buys. Possible setup for a giant
whipsaw?
I. Sentiment Indicators
The INT/LT Composite indicator (outlook 3 to 6+ months) has three separate
components. Starting Aug 26, 2023 SPX options are removed due to extreme 0DTE volume
distortions. New weights are ETF put-call indicator (30%), SPX 2X ETF INT
ratio (40%), and 3rd a volatility indicator (30%) which combines the options
volatility spread of the ST SPX (VIX) to the ST VIX (VVIX) with the UVXY $ volume.
Update Alt, INT view. Bearish sentiment rose slightly.
Update Alt EMA. Bearish sentiment rose slightly.
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 fell back to a weak Buy.
Update EMA. Bearish sentiment remains near a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment continued to fall
toward 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 fell slightly halfway to a weak Sell.
Update FOMO calls. Bearish sentiment fell sharply from near a weak Sell to
near a strong Sell.
Bonds (TNX). Bearish sentiment picked up slightly on the higher
inflation news.
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.
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 continued to fall to close to a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment moved towards 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 fell then
recovered to unchanged.
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 strong Buy.
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 also moved toward a strong Buy.
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 16. 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 6817, SPX options OI is small/moderate with call
resistance from 6800 to 6850 and a pullback to 6800 is expected.
Wed, SPX options OI is small and SPX could trade in a range of 6750 to 6850.
For Fri AM, SPX options OI is large with an upside bias to BE at 6850.
For Fri PM, SPX options OI is moderate and is showing some weaknes in SPX by
close if 6850 is reached toward the moderate straddle at 6800 or lower.
For Thur EOM, SPX options OI is moderate/large with a BE at SPX 6685 due to
large call positions at 6700 and 6800, indicating too much optimism for the Iran
talks and a pullback to 6700 or lower 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 is
neutral at + 0.0 SD, NQ (NDX) moved above a weak Sell at -0.5 SD, YM (DJIA)
is a mildly positive at
0.5 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. Anglo-Saxons and Muslims have been fighting over the
Holy Lands since the crusades in the late 1000s AD and it is hard to believe
that the feud will be settled this time.
Weekly Trade Alert. SPX is likely to trade around the 6800-75 level
unless there is significant news regarding the US / Iran peace talks. Updates @mrktsignals.
After three weeks of relief rallies to begin the week and EOW declines based
on Iran war trepidations, the SPX reversed course sharply for the shortened
holiday week after a premarket decline Mon. The large SPX put OI for the
Tue EOM at 6475 indicated that about a 2% rally was expected thru the EOM from
the 6350 area with an actual advance of about 2.5% to 6530 that continued higher
Wed for over a 3% rally for the week. This was surprising since the
conflicting reports from Trump of positive peace talks with Iran and then
threats of total obliteration pushed oil/WTC as high as $110/bbl. Mon is
Trumps deadline for the opening of the Strait of Hormuz or face attacks on Iran's
energy infrastructure (a possible war crime).
I have not checked the CME fed fund
watch for a while but last week showed a dramatic change with the outlook
for cut / no change / hike for June now 3% / 97% / 0%, for Sept 5% / 90% /
5%, and Dec 5% / 85% / 10%. That's quite a change from a 70% prob of
a .25% cut in June a few weeks ago.
Overall, ST sentiment retreated last with the ST Composite just below a weak
Buy, the VIX call indicator dropped back to neutral, and the FOMO calls have
dropped to near a weak Sell, but the INT hedge spread indicated a positive
effect from hedging. SPX options OI indicates that the early weakness then
strength for the week may continue thru monthly exp Apr 17 with large straddles
at 6700 and 6800. The biggest positive is the tech (NDX) sentiment is
nearing a strong Buy and that may pull prices higher. Of course, Trump vs
Iran and the backlash in oil prices will remain center stage.
I. Sentiment Indicators
The INT/LT Composite indicator (outlook 3 to 6+ months) has three separate
components. Starting Aug 26, 2023 SPX options are removed due to extreme 0DTE volume
distortions. New weights are ETF put-call indicator (30%), SPX 2X ETF INT
ratio (40%), and 3rd a volatility indicator (30%) which combines the options
volatility spread of the ST SPX (VIX) to the ST VIX (VVIX) with the UVXY $ volume.
Update Alt, INT view. Bearish sentiment rose slightly as the expected
EOM rally fizzled out with Trumps latest deadline looming Mon, halfway between
neutral and a weak Buy.
Update Alt EMA. Bearish sentiment rose slightly as the expected
EOM rally fizzled out with Trumps latest deadline looming Mon.
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 pulled back below a weak Buy.
Update EMA. Bearish sentiment pulled back below a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment dropped to just 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 continued to fall below neutral.
Update FOMO calls. Bearish sentiment fell sharply back to just above a weak
Sell as call buying was strong.
Bonds (TNX). Bearish sentiment rose slightly from extreme lows
as rates fell from the 4.4% level then reversed with the strong job numbers Fri.
For the INT outlook, the gold miners (HUI) bearish
sentiment is presented in a new format using the data mining software to add
the inverse TNX rate to the ETF ratio.
Update. Bearish sentiment 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 moved toward neutral.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment rose slightly to just below a weak Buy
as ETF put buying remains strong.
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 fell 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 continued to rise from a weak Buy to near a strong Buy
helped by both 3X ETFs and ETF options.
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 dropped back to a weak Buy on strong SDS volume.
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 Apr 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 6583, options OI for Mon is moderate with apparent FOMO as
most seem to be expecting Iral to capitulate to Trumps deadline. SPX OI is
saying "not likely" with a drop to at least BE at 6530 (1st resistance) with put
support at 6500.
Wed has very small SPX OI, but the high BE may indicate a move back to the mid
6500s.
For Fri moderate SPX OI shows strong put support at 6500 and below and a
straddle at 6600 may pull prices back to last weeks highs near 6600.
For Fri Apr 17 PM small/moderate SPX OI shows strong support at 6500 and
large straddles at 6700 and 6800 may attract prices, BE is 6695 .
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
is neutral at + 0.0 SD, NQ (NDX) moved back to a weak Sell at -1.0 SD, YM (DJIA)
is a slight positive at
0.25 SD.
A quick look at gold (GC), bearish sentiment is in-between a weak and strong Sell at -1.5 SD.
Click dropdown list to select from the following options:
Tech / Other History
2025
2024
2023
2022
Other Indicators
Conclusions. It's doubtful if there are any major resolutions tio
the US vs Iran conflict next week but only time will tell. This is
beginning to remind me of Trump vs China in the tariff war of early 2025, from
what I remember at one time Trump threatened as much as a 150% tariff on
imported goods and after numerous extensions the number ended up around 25% or
less after China put export controls on rare earth minerals. The result
was record exports from China overall with many going to Vietnam and other
countries then re-shipped to the US. Oil shipments thru the Strait of
Hormuz is Iran's rare earth proxy.
Weekly Trade Alert. SPX OI is showing weakness Mon to 6500 or lower
if Iran does not give in then a recovery back toward 6600 or higher by EOW. Updates @mrktsignals.
I have refrained from giving SPX price targets the last two weeks other than
mention that the price of oil seemed to be the main driver of prices.
Last weeks somewhat positive sentiment (ST Composite and VIX call indicator) was
met by a rally from a Mon premarket low of about 6450 (ES) to 6650 after a Trump
tweet that "Iran was ready to deal" and he had proposed a 15 pt plan which drove
oil prices to about $88/bbl WTI. But by the EOW, it was clear that Iran
was not interested and as oil went over $100 Fri, the SPX dropped to new lows at
6356. Interestingly one EW analyst (Pretzel
Logic) had a target of 6356 for an ABC expanded flat, but no upside
projections yet. It's interesting that one of Trumps
Iran advisers, who was dismissed
for disagreeing with Trumps outlook, had published a report (Feb 24) predicting Iran's
current response to an attack and now thinks that the next step is escalation.
If that happens and oil moves to the $120-150/bbl range then the mid-low SPX
5k's are possible. CNN had an
interesting piece on the difficulties Trump is facing finding an off ramp.
Surprisingly bearish sentiment of most indicators declined last week even
after a decline in SPX of 2% as the calming of Trumps "escalate to
de-escalate".(a Putin strategy)
seemed to placate the bears. About the only increase in bearish sentiment was
high ETF put buying.
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 from the spike the
previous week.
Update Alt EMA. Bearish sentiment declined slightly from the spike the
previous week.
The ST Composite as a ST (1-4 week) indicator includes the NYSE volume ratio
indicator (NYDNV/NYUPV & NYDNV/NYDEC) and the UVXY $ Vol/[SPX Trend, SMA only]. Weights
are 80%/20%.
Update. Bearish sentiment is unchanged between weak and strong Buys.
Update EMA. Bearish sentiment is unchanged between weak and strong Buys.
The ST VIX calls and SPXADP indicator bearish sentiment dropped
back to neutral due to strong 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 fell back to neutral.
Update FOMO calls. Bearish sentiment continued its decline to neutral.
Bonds (TNX). Bearish sentiment remains at low extremes as the
TNX is very close to breaking out of a 3 year triangle over 4.5% (now 4.44%).
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 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 is little changed below neutral.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment dropped after last weeks spike back to
in-between neutral and a weak Buy.
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 continued to push higher and is now similar to Feb 2023, so
a counter trend bounce is possible
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 also remains above a weak Buy due to strong ETF put
buying..
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 Apr 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 6389, options OI for Mon is moderate with good put support
up to 6450 and no call resistance until 6700.
Wed has large SPX OI where there appears to be a large put strangle at 6475 and
7000. This should rally SPX to at least 6475.
Thur (Fri is GF holiday) has moderate SPX OI where SPX has good put support at
cirrent levels.
For Fri Apr 17AM strong SPX OI also has about a 150k straddle at 7k similar to
March. With these straddles at SPX 7k apparently going out to June the risk of
negative delta hedging is huge.
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
is less positive at + 0.25 SD, NQ (NDX) dropped below a weak Sell at -0.5 SD, YM (DJIA)
moved to a slight positive at
0.15 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. One of the reasons I was looking for an important top
in June was the expected IPO of Musk's SpaceX which is expected to be in the
$75B range, or over 4X the largest US IPO's, META and VISA at $16B and $17B.
This represents a huge payday for Trumps WS buddies as well as Musk who could
become the 1st US$ trillionaire. Unfortunately Iran's resistance could put
a severe damper on that outlook. Trump seems to be amassing troops in the
ME to gain control of the Strait of Hormuz by occupying adjacent territory
(shore & islands).
Weekly Trade Alert. SPX is likely to remain under pressure as long
as oil remains over $100/bbl WTI. Updates @mrktsignals.
