Last week was expected to see a move to SPX 5900+ due to large SPX put OI at
5900 & 5925 and the Mem Day holiday announcement by Trump to delay the 50%
tariff on EU imports to July 9 was all that was needed for the Tue open which
gapped open from 5800 to 5875. SPX 5925 was reached by midday Tue and
remained the peak other than brief spikes at the Wed and Thur opens with trade
news and NVDA EPS. The trade situation took an interesting turn as the US
Court of Int'l Trade ruled the Trump had only limited authority to issue tariffs
which should be made thru Congress, but the White House indicated that other
avenues were possible.
Overall, bearish sentiment fell somewhat, but not to levels that would
indicate a sharp pullback. The consensus of EW analysts seems to be that
last week completed a large A wave up, with a B wave down to 5700ish to fill the
mentioned gap, then a move to ATHs. However, sentiment seems more
supportive of a range of SPX 5850-5950 at least thru the June 20 optn exp.
Next Fri jobs report for instance shows large put positions at SPX 5925 & 5950,
similar to May 30, while June 20 has another huge straddle at 6000.
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 remains unchanged above a weak Sell.
Update Alt EMA. Bearish sentiment moved closer 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 fell just below a weak Buy.
Update EMA. Bearish sentiment fell from a weak Buy, half way to neutral.
The ST VIX calls and SPXADP indicator bearish sentiment rose early in the
week then fell back to neutral.
The ST/INT Composite indicator (outlook 1 to 3 months) is based on the Hedge Spread (48%)
and includes ST Composite (12%) and three options FOMO indicators using SPX (12%),
ETF (12%), and Equity (12%) calls compared to the NY ADV/DEC issues (inverted). FOMO
is shown when strong call volume is combined with strong NY ADV/DEC. See
Investment Diary
addition for full discussion.
Update EMA. Bearish sentiment remains near a weak Sell.
FOMO calls. Bearish sentiment moved closer to neutral.
Bonds (TNX). Bearish sentiment fell to a low extreme and rates
look poised to move higher.
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 continues to fall, but remains near neutral.
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 retreated somewhat 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 fell slightly
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 rose slightly, but 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 June 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 5912, options OI for Mon is small with ITM calls giving a
negative bias, but a BE at 5900 indicates limited downside.
Wed has very small SPX OI with a slight negative bias below 5900. Fri OI
may influence the close
For Fri SPX OI has strong put support at 5925 and 5950 and much like May EOM
should give a positive bias. With Fri jobs data, possible weakness due to
DOCE layoffs may influence prices.
For Fri mn optn exp wk strong SPX OI shows a negative bias to to deep ITM calls
from Q2 sharp rally, but huge straddle at 6000 is a positive offset, probable
target 5850-5900.
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) bearish
sentiment remains positive at 0.25 SD, NQ (NDX) bearish sentiment
declined below neutral at
-0.75 SD, YM (DJIA) is more negative at -0.5 SD.
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Conclusions. The ruling by the US Court of Int'l Trade has created
even more uncertainty as to whether Trumps tariffs will matter. From what
I have read the 10% across the board tariffs are deemed legal, but the
"reciprocal" tariffs and those oriented toward fentanyl are not.
Otherwise, my primary outlook has not changed and an important INT top is near.
The Bradley turn date did seem to have significance, but the possibility of an
immediate turn seems slim.
Weekly Trade Alert. Next week may start out weak with lows of SPX
5875-900 likely, but for Fri jobs report, options OI is showing a May 30 type setup with a run to
5925-50 or higher. Updates @mrktsignals.
Last weeks extreme low hedge spread sentiment was warning of an increase in
volatility, and Mon/Tue were much as expected within the range of SPX 5875-900
lows and 6000 highs. However, Wed passage of the Trump "Big, Beautiful
Bill" upset the bond market with an expected $4-5T deficit over the next 10
years with the TNX spiking to 4.6% and the 30 yr bond over 5% for the 1st time in 20
years. The SPX reacted in kind with prices quickly dropping to 5825 before
a late rebound. Then Fri before the open Trump showed he has not given up
on tariffs just yet, threatening 25% tariffs on iPhones made overseas and 50% on
EU imports and the SPX fell to 5770 before rebounding to 5800.
Sentiment did improve last week with the ST Composite improving to a weak
Buy, the VIX call indicator improved from a weak Sell to neutral, and the hedge
spread from a strong Sell to between neutral and a weak Sell. The Bradley
turn appears to be late as next weeks SPX options OI is indicating a positive
outlook with SPX 5900+ possible. As last week showed the 90 day tariff
pause may only be temporary and July fireworks may be in store. This
actually fits into the 2015 "avian
flu panic" which saw a sharp reversal for a couple of months, a consolidation,
then lower lows. This would probably correspond to the TNX rising to
4.8-5.0% with the IHS discussed in the bond sentiment, and if so, the ideal SPX
target would be 4200-4400.
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 saw a slight uptick off the weak
Sell.
Update Alt EMA. Bearish sentiment saw a slight uptick 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 saw a sharp jump from neutral to a weak Buy.
Update EMA. Bearish sentiment saw a sharp jump from neutral to a weak Buy.
The ST VIX calls and SPXADP indicator bearish sentiment moved above neutral.
The ST/INT Composite indicator (outlook 1 to 3 months) is based on the Hedge Spread (48%)
and includes ST Composite (12%) and three options FOMO indicators using SPX (12%),
ETF (12%), and Equity (12%) calls compared to the NY ADV/DEC issues (inverted). FOMO
is shown when strong call volume is combined with strong NY ADV/DEC. See
Investment Diary
addition for full discussion.
Update EMA. Bearish sentiment moved up sharply from a strong Sell to a weak
Sell.
Update FOMO Calls. Bearish sentiment moved up sharply from a weak Sell toward
neutral.
Bonds (TNX). Bearish sentiment saw an uptick with increased
buying of TBT with apparent concern over federal budget. THe TNX
appears to be follwing an IHS with a possible pullback to 4.4% before a run
to 4.8%.
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 sharply toward neutral as prices bounced back
from a 10% correction.
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 improved to slightly above a weak Sell.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment rose sharply now over the weak Sell
level.
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 little changed
above the neutral level.
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 little changed below 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 May 30. 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 5803, options OI for Tue (Mon M-Day) is moderate with a
strong upward bias to the 5850-5900 range.
Wed SPX has small OI where SPX has strong put support at 5800 and some negative
call bias at 5575. Prices can move higher as long as 5800-30 is held.
For Fri EOM strong SPX OI shows a strong positive bias due to puts at 5900 and
5925 and a move to 5900 or higher 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) bearish
sentiment remains positive at 0.35 SD, NQ (NDX) bearish sentiment
improved to neutral at
-0.50 SD, YM (DJIA) is slightly negative at -0.25 SD.
Click dropdown list to select from the following options:
Tech / Other History
2025
2024
2023
2022
Other Indicators
Conclusions. As I warned last week the vagarities of a POTUS who
seems to change policies from week to week will continue to roil the markets,
such as the possible 25% tariff on iPhones and 50% on EU imports. D.
Rosenburg has an interesting take on why tariffs won't work for the US at
Mauldin Economics this week.
The SPX held at its 200DMA at 5700, but I would not be surprised to see a gap
fill just below 5700. Otherwise a trading range which many will consider a
4th wave before retest of ATHs is likely and could be a flat as Oct-Nov 2018 or
a "bear trap" (down TL) as in Nov-Dec 2015, however, both ended with new lows
and a so called failed 5th wave. If May ends positive, some strength is
likely thru EOQ to show a positive quarter.
Weekly Trade Alert. The ST Composite is at a weak Buy with an improved
Hedge spread and the SPX OI is indicating SPX 5900+ is likely by EOM. Updates @mrktsignals.
Two weeks ago I pointed out that May 19 SPX options Oi was pointing
to higher levels and that a huge straddle at 6000 could be a point of
attraction and last week that a China resolution could push prices to 5850.
As it turned out a weekend trade meeting resulted with a 90 day pause of most of
the tariffs with hopes of a resolution and that was enough for a Mon open at SPX
5850 and momentum carried thru the week with a close over 5950.
Admittedly, I wasn't expecting so much for so little, but a positive
outcome was expected thru last week.
The huge gains were enough to push many of the sentiment indicators back to
levels seen near the Jan-Feb highs although several weeks may be needed before a
turn. The late May 29 Bradley turn date (+/- week) could be of some
significance. The ST Composite remains near neutral as the NYSE Adv/Dec
volume remains strong, while options call FOMO and hedge spread are pushing the
ST/INT Composite to levels near the Jan-Feb top, so gains are likely to be
limited with an increase in volatility.
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 continued to decline reaching the
weak Sell level.
Update Alt EMA. Bearish sentiment also continued to decline
reaching the weak Sell level.
The ST Composite as a ST (1-4 week) indicator includes the NYSE volume ratio
indicator (NYDNV/NYUPV & NYDNV/NYDEC) and the UVXY $ Vol/[SPX Trend, SMA only]. Weights
are 80%/20%.
Update. Bearish sentiment remains near neutral.
Update EMA. Bearish sentiment remains near neutral.
The ST VIX calls and SPXADP indicator bearish sentiment moved higher, now
above a weak Sell.
The ST/INT Composite indicator (outlook 1 to 3 months) is based on the Hedge Spread (48%)
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 sharply with both hedge spread and fomo
calls declining and is now at a strong Sell with LT (blu) lagging.
Update FOMO-calls. Bearish sentiment retreated back to a weak Sell.
Bonds (TNX). Bearish sentiment fell back to levels seen just
before the last run from 3.5% to 4.8%.
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 below a weak Buy as prices dropped 10%,
likely a negative due to BTFD.
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, nearing the levels of the
Jan-Feb highs.
With the sister options Hedge Spread as a ST/INT indicator
(outlook 1-3 mns), bearish sentiment fell to the weakest levels ST (grn)
since Nov 2021. Another INT top is likely over the next 2-3 weeks.
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 above
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 drop, now below 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 below 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 May 21 & EOM. A text overlay is used for extreme OI to improve readability,
P/C is not changed. Also, this week includes a look at GDX, TLT & IBIT for June exp.
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 5958, options OI for Mon is small with strong call
resistance at 6000 and some resistance to 5900. Negative bias to 5900.
Wed has very small SPX OI with a similar bias to 5900 or lower.
For Fri SPX OI is moderate with strong put support at 5875 and 5900 with
negative bias from ITM calls, overall 5900-25 is likely.
For Fri EOM stronger SPX OI shows strong call resistance at 6000 and put support
at 5900 and 5925. ITM calls are negative with a target overall of 5900-25.
Using the GDX as a gold miner proxy closing at 46.3 and options Oi showing a
negative bias toward 44 from ITM calls.
Currently the TLT is 86.3 with the TNX at 4.44%, TLT OI shows little bias with
ITM puts offsetting larger call positions.
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) bearish
sentiment remains positive at 0.25 SD, NQ (NDX) bearish sentiment remains at a weak Sell at
-1.00 SD, YM (DJIA) is slightly negative at -0.25 SD.
Click dropdown list to select from the following options:
Tech / Other History
2025
2024
2023
2022
Other Indicators
Conclusions. It's unfortunate that much of the stock market's
actions so far this year have been driven by Trumps on-again, off-again policies
which make forecasting impossible. However, extremes in sentiment seem to
find a way of reversing market direction, and we are rapidly approaching an extreme
seen before a reversal downward.
Weekly Trade Alert. Some weakness seems likely early in the weak
with strength later on. Range SPX 5875-900 to 6000 possible. Updates @mrktsignals.
