Market Update & Signals 9/25/26
Market Update & Signals 9/25/26
Good morning and happy Friday.
“Hammers everywhere, all you need is ONE nail.”
Bonds blew out (again), and social media is all over it.
But wait, something else just quietly happened...
Leading today’s note with a mind-blowing chart:
It’s time... we’re finally getting a clear read and hard DATA on investor sentiment.
I’ve been in this game a while — and one of the best “self-awareness indicators” is when a chart makes my stomach turn.
Every time this happens, there is only one thing to do:
The HARD trade.
Looking through the tape:
1. Stocks.
The best investors I know are always challenging their own assumptions:
Rates are blowing out, energy prices are a big problem, headwinds everywhere, and the stock market is chopping sideways… holding.
At some point something has to break?
Seems like a sensible bet.
With that in mind…
I want to show you this chart:
Two of my favorite investing quotes:
“Every day, I assume every position I have is wrong.”
— Paul Tudor Jones
“The key to making money in stocks is not to get scared out of them.”
— Peter Lynch
Looking at this extreme investor “risk-off” behavior, I’m thinking:
With all the pressures building, one has to be a bit carefree to expect stocks to go through all these headwinds unscathed.
*Personally, I continue to think there’s more chop ahead — ideally more retesting both sides of the range.
But let’s think like PTJ, and assume every position is wrong…
Can the market collapse with a mountain of capital rushing to cash AGAIN?
Or is the left-tail-risk lower than consensus expectations?
Near-term, it’s entirely normal for the market to drop sharply a few days, especially if some “shock news” hits the tape.
But models are near oversold already — so a drop would just bring forward the ideal bottoming sequence.
On the other hand:
Maybe the oversold groups begin to stabilize, while the leaders continue to consolidate after a big run?
No one knows what happens next…
But we CAN gauge the probabilities, and look for the best outcomes.
They call it the hard trade for a reason.
It’s not supposed to be easy.
SPY. The range is dead, long live the range… “If SPY opens with a gap down, it will have an upside gap target of 768.” Yesterday’s opening gap was filled on the same day. Support remains at 760. If that range gets tested I still think it’s likely to hold. At this point, a worst case scenario would be a “shock drop” to ~$750, where Buy signals would likely fire. (This is not my base case however, but we’ll see).
QQQ also closed its morning gap. Key support remains at $721, if tested would be an interesting Buy/Add level:
MAGS and SMH continue to act well:
*Lastly ARKK led yesterday, and is $1 away from a new high.
The tape yesterday was fairly constructive:
Looking at the oversold groups…
“Hammers everywhere, all you need is ONE nail.”
IWM daily hammer and potential bear trap:
IJR hammer near key support:
KBE hammer at key support:
KRE red-to-green after a perfect hit of major support:
*Remember yesterday’s charts showing all of these ETFs at extreme oversold levels.
This may be an initial turn confirmation.
Let’s see if they can build out from here.
2. Rates and Credit.
Rates volatility is back to March highs, where Stocks last bottomed:
Next, what’s stunning about this move, is that High Yield remains well below March levels (CDX HY at ~300 now vs. March at 400+). Maybe it’s complacency? Or does it reflect strength? Holding below ~320 looks pretty important here — otherwise a push higher could open up short-term targets in the 340 range — *roughly equivalent to a 25 VIX… it’s not my base case, and I continue to think markets stay choppy, but it will depend on how the Rates picture comes together here:
Meanwhile…
Bond sentiment closed again at 10% Bulls.
*Remember the average time-to-bottom after similar extremes was one week.
Related:
Twitter is 24/7 bearish now, flooded with intraday tick charts (you know the ones I’m talking about) — a textbook sentiment climax.
We quietly wait for a turn.
3. Precious Metals.
Gold and Silver held in again yesterday.
GDX from yesterday’s note “could have more work around the $91 area to set up a proper base — this would be a solid range to look for new Buys/Adds and a roll-up”. GDX tested the 200d and closed with a hammer. The case is building for a turn here:
Hammers everywhere, all you need is ONE nail…
DXY hit resistance to the cent yesterday, and is showing an initial downside move today — with RSI also ticking down from overbought:
EURUSD has a possible bear trap:
✅ DXY daily sentiment hit 86% Bulls yesterday, the highest since January 2 2025.
✅ EUR daily sentiment closed at 10% Bulls again yesterday.
Watching for a turn…
Last but not least:
Yen positioning isn’t perfect, but if USDJPY tests 159-160 range, given what’s happening with Rates and the Dollar, I’m looking for a Sell with tight stop. Only the asymmetry matters — at that range, the R/R looks extremely interesting for an initial position:
*Will update soon.
4. Oil & Energy.
Monitoring for Short — no major change yet.
5. Airlines.
Buying initial position in JETS. Big support is just ~5% lower ($27), if that gets tested I’m ok with it. If yesterday was the higher low that finishes building the turn, I’d like to have initial size and then build size from there. Upside could be 25-35% over the next few months, so this has my full attention:
Onwards… will update as this develops.
Have a great weekend,
-MC