E-mini SP500 Weekly Live Market & Trade Analysis 10/8/26

Welcome traders to another Tickmill trading update with me, Patrick Munnelly. Want to update the S&P 500 view using the E-mini futures contract and put together a trade plan for the uh the week ahead looking at some high probability action areas and some realistic price targets. Uh before we jump into the technical setup, as ever, wants to take a look at another uh another look at uh market narrative, positioning, sentiment, and catalysts. So, in terms of the week last week, obviously very bullish tape, uh but a much more complicated positioning backdrop is developing. So, last week's jobs report was the uh the primary catalyst really. Uh payrolls unexpectedly fell by 23,000 versus expectations for an 80K gain. Market immediately treated that as "Dovish weaker jobs means uh less pressure on the Fed to hike in September." Rate hike odds dropped from roughly 67 to 44% and equities rallied to new all-time highs. But, the report was not as simple as the headline actually suggested. The unemployment rate actually fell from 4.2 to 4.1%, which the Fed may view as evidence that the labor market is still tight. Shrinking labor force from retirements and lower immigration means even weaker job growth can coexist with tight conditions. Uh the one clear relief point was wages, which rose 0.1% on the month. So, uh this week's inflation data will decide whether Friday's buyers were right to step in. Key event obviously this week is Wednesday's CPI 4% uh consensus looking for a modest 0.1% monthly increase. If CPI comes in at or below expectations, the market can continue to price out that September hike. Yields should stay contained, and equities can extend their breakout. But if the CPI runs hot, market may quickly reprice the Fed path back towards last week's more hawkish expectation. There is an important wrinkle in this, and that's that the CPI covers July, when obviously we know Brent crude spiked to near 90 dollars and gasoline hit a four-year high. That recent relief in oil will not fully show up until next month's data. So the inflation risk this week is real. Positioning is also shifted. Institutions are no longer positioned for the old range. Last week's flows showed one clear rotation. Upside call shorts were covered and moved closer to the market. August downside protection was pretty much abandoned. And then on Friday afternoon, we saw the first coordinated downside hedge that we've seen in weeks through September put spreads. In simple terms, institutions are still lying for upside, but they are now hedging downside below the new range rather than the old one. Dealer positioning remains supported, but it is thinning. Net gamma is positive at roughly 457 million, but it has declined. Net delta has also dropped sharply. That means that the market still has some stabilizing structure, but less cushion than before. Volatility remains compressed with the IVR around 27 and implied vol near 12.9. The options market is not showing panic, but it is also offering relatively cheap protection. And as I pointed out to the guys in the strategy group, that we are moving into a period where we could see we could see the VIX um, see some release from the compression that we are witnessing um, in the short term. Um, in terms of sentiment, divided still. Retail uh, surveys still show elevated bearishness with the AAII bears around 38% even as the market trades near record highs. Message board sentiment is pretty much neutral, but the options market is acting bullish. That divergence matters. People are skeptical in what they say, but positioned for gains in what they're actually putting on in the market. Historically, that can fuel rallies if the skeptics ultimately capitulate or trigger sharp reversals obviously if the data disappoints. Calendar catalysts heavy, Monday pretty quiet. Uh, Tuesday brings uh, Qualtrics and Super Micro earnings after the close. Uh, Wednesday CPI and Cisco. Thursday brings PPI, jobless claims, jd.com, and Applied Materials after the close. Friday wraps up with retail sales, consumer sentiment, uh, weekly OPEC, and uh, uh, the buyback window the um, corporate buyback window uh, widens as of the end of this week uh, to one of its uh, to one of its largest levels of uh, of the year. So, bear that in mind. Also, as ever, we want to keep an eye on the wires here in terms of oil, Iran, and the yen. A deal with Iran uh, would pressure crude and support uh, the bullish sentiments. Uh, Strait of Hormuz instrument uh, incident could obviously uh, give us gap risk there. Meanwhile, yen weakness could push the Japanese rates higher and bleed into go global yields. So, the trend remains bullish, but the margin for error in this market is getting thinner and CPI is going to be the pivot. A cool print keeps the breakout alive. A hot print brings rates and hedging pressure back quickly. So, we stay constructive above key structure, but uh, keep protection on while volatility is offered as cheaply as it is. So, let's take a look at the technical picture. The monthly chart remains bullish trading above the volume weighted average price, which comes in around 7,500 now. We are testing a one standard deviation of the yearly anticipated range here at that 7,800 level and as anticipated we are seeing some stickiness. Moving to the weekly time frame, uh we got a weekly buy signal as of Friday's close after 3 weeks of consolidation and we have that breakout. But, as we have noted in prior updates, we are in August and participation is thinner and the potential for fake outs uh increases. So, we are trading uh let's see. We're just at the 1.27 extension of the consolidation. Again, that 7,800 level as noted is likely to be sticky. So, consolidation between the 78 uh trade between 7,800 and our prior all-time highs at 7,640 is the initial area of focus here and if we move to the daily chart, um we can see trading above the um the volume weighted average price. So, again, constructive at the moment and on the weekly we are looking for a move up to test uh 7,877 as uh as the initial upside target and we look for support coming around 7,675 as the uh the weekly expected support area. Uh first areas of interest on the daily time frame. So, let's break this down into some uh some actionable trade areas in terms of the uh execution time frame. We're going to use the 4-hour chart here. So, against that 7,800, if we continue to consolidate there, there are two areas that I'm tracking. First is the daily bull bear zone, so move back into 7,730-7,720. Watch for bullish reversal patterns there to engage on the long side. Then we're going to look to play for the break. We're going to look to target initially monthly projected range resistance 7838, and then on to take a look at weekly expected range resistance coming in at 7880. So, those are the two key upside targets that we have in mind as we head into the week. If we can get a breakout early in the week above 7800 and get get acceptance there, and then pullbacks hold and we move into this high volume area back into 7760s. Again, bullish reversal patterns there. Or if we get bullish acceptance and we don't get a meaningful pullback, again we're going to target the same upside areas, both the monthly and the weekly projected range resistance where again I would certainly look for pullbacks from those areas. I'll be watching for intraday divergences to retest the prior cycle highs here back into that 7820 if if that materializes. If we get a deeper pullback, then we're going to look for a test of the weekly bull bear zone as just talked about is that 7670-7660 area. Watch for bullish reversal patterns there to engage again on the long side with the same upside targets in mind. Uh for this for for me at this stage, until we get a close back below the prior cycle highs at those 7630s, I favor and continue to look for long setups with those upside targets in mind. Bearishness would only really be justified below prior all-time highs. As always traders, plan the trade, trade the plan, most importantly manage your risk. Until next time, thanks very much.