The S&P 500 made three new all-time highs last week before stalling into Friday’s close. This week, sentiment briefly buckled — QQQ skew hit a 3-year high, Bloomberg ran crash protection headlines, and short positioning ticked higher — but the market refused to break. It was textbook: bearish setup, panic headline, no follow-through. Now we head into Powell’s Jackson Hole speech with the index holding key support, earnings still accelerating, and $7T+ of dry powder still parked in money markets. All eyes on Friday.
Technical Setup:
The bears had the structure: stacked TD 13s, a fresh TD 9 sell, and a bearish price flip — all into rising vol. But price held. The S&P 500 printed a hammer reversal, reclaimed the 20-day, and bounced cleanly off the TD Reference Close Down at 6,362.90 — now your near-term pivot.
- On Day 2 of a new TD Setup Buy
- Bounce held the AVWAP from the August 1st gap and a major volume node
- Resistance: TD Risk Level at 6,519
- Support: 6,262 (TD Prop Exhaust Down), then 6,173 (deeper downside)
Breadth remains soft, RSI divergences persist, but price action overrules opinion. The short setup failed. We’re still in a grind-higher tape until proven otherwise.
Macro Context:
- Retail sales +0.5% in July (inline, resilient)
- S&P 500 earnings tracking +10.6% YoY (vs. +3.5% expected)
- Weekly returns: SPX +0.94%, RUT +3.07%, Dow +1.74%, Nasdaq +0.81%
- $7.15T in money market funds — dry powder still parked
Powell’s Setup:
Friday at Jackson Hole is binary. Markets are pricing in 85% odds of a September rate cut. Even a neutral tone may be enough to re-ignite flows into SMIDs and cyclicals. Any hawkish surprise would spark more chop — but that’s not consensus.
Sentiment Snapshot:
- AAII Bulls at just 29.9%, Bears at 46.2%
- GS Sentiment Index still negative despite ATHs
- More bears than bulls — at record highs
Seasonals:
September is historically the worst month for SPX (–0.83% average return, 45% win rate). A 5–8% drawdown would be routine — not a reason to panic. We’re prepared — but not positioned for breakdown.
Bottom Line:
Failed sell setup. Hammer off key support. Sentiment and positioning still offside. Unless 6,262 breaks, we stay long — stops tight — with eyes on 6,519 and Powell.“It never was my thinking that made the big money for me. It always was my sitting.”
— Jesse Livermore
SPX Index
