4 dni temu

Weekly Bias — 20 July

The picture is more balanced when we take a step back from alone, when we look at intermarket leadership, volatility, dispersion & breadth

Bullish (65%)
Short-term trend is corrective
This a correction rather than a new bear leg (~65–70%)
Deeper correction below QQQ $686 (~30–35%)

Normally, if yields are falling while is correcting, I'd expect the correction to become more technical/positioning-driven than macro-driven

VIX at 18.8 deserves respect, but not fear

Below the March spike
Still below the 20–22 level where corrections often accelerate
Front-month futures remain orderly
Volatility is elevated, but we're not seeing panic

COR1M has risen sharply over the last week

Means options traders increasingly expect stocks to move together rather than idiosyncratically
Usually associated with macro hedging, ETF hedging & index selling
It's a yellow flag, not necessarily a red one

DSPX is still trending higher

Higher dispersion means stock selection is still mattering
If dispersion were collapsing while correlation exploded, I'd worry much more about broad index liquidation
Instead, dispersion suggests there's still differentiation underneath the surface

VXN/VIX ratio remains elevated

The options market is demanding relatively more protection for NDX than for the SPX

QQQ weakest, SPY stronger & IWM relatively resilient
It's another sign this is concentrated in growth rather than broad market panic

The NDX/NDXE ratio is rolling over

Mega-cap component of NDX has been underperforming the equal-weight version

This is healthy in one sense because it suggests leadership is broadening rather than narrowing
It's also one reason why SPY & IWM have been holding up better than QQQ

The NDFI panel has weakened materially

One of the more bearish breadth signals since it tells me fewer stocks are participating in the rally
It's not a collapse, but it's another indication that internal momentum has cooled

is still outperforming over the larger trend, although that leadership has moderated

As long as semis remain relatively strong, it's difficult to make a strong structural bear case for NDX

Software (IGV) has been underperforming for months
NDX/SPX has been falling
Again, money rotating away from mega-cap growth

remains remarkably healthy

Even after Friday, well above major support around $738–$740
Doesn't look like an index beginning a major bear trend

continues to strengthen the "correction, not collapse" argument

It's holding $294–$295, above its major support near $290 rather than new relative lows
If institutions were aggressively de-risking, I'd expect IWM to be underperforming

remains the weakest

I still think Friday produced a legitimate sell-side liquidity sweep
However, the lack of a strong close back above $700 means it hasn't been validated as a successful bear trap

Intermarket analysis suggest IV is elevated & RV is likely to stay above average, but unless loses $686, I still expect RV over the next several sessions to fall short of the extreme front-end premium that was priced before expiration

Bullish

QQQ holds $693–$695
SPY stays above $740
IWM holds $293–$294
VIX fails to break 20
QQQ reclaims $700, then $706
Would make Friday look increasingly like a successful liquidity sweep within a larger continuation pattern

Bearish

QQQ closes below $693
SPY loses $738
IWM loses $290
VIX pushes above 20–21
COR1M continues to spike while breadth deteriorates further
Combination would materially increase the probability of a move toward $686 & if that level fails, the next technical support would likely be the 100d EMA near $665

by itself looks cautious, but the intermarket evidence is notably less bearish

Falling yields are supportive
SPY & IWM continue to show relative resilience
Semis are still outperforming the broader market the larger trend
Volatility is elevated, but not exhibiting panic characteristics
The main concern is breadth, which has weakened & NDX leadership, which has narrowed

I believe the market is closer to the end of a correction rather than the beginning of a sustained bear trend given the broader evidence doesn't support a high-conviction bearish outlook, but the bulls need to prove it this week & reclaim $700–$706 on

pakoumal

Market structure, daily & intraday levels, pakoumal.substack.com — all signal, no noise or hype.

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pakoumal

Market structure, daily & intraday levels, pakoumal.substack.com — all signal, no noise or hype.

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