Will Market Pessimism Persist?
Fear is gripping the market. Put-call ratios on the S&P 500 indicate a risk-off sentiment, though the Nasdaq has yet to show the same level of panic. On the daily chart, $18,400 is a critical support level to watch, with $17,300 as the next key zone if selling accelerates.

At some point, fear will subside, leading to either a bounce or a broader reversal. Instead of attempting to time the bottom perfectly, a more strategic approach may be to identify key levels for accumulating positions.

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In times like these, fundamental indicators no longer carry the same weight. With the market in freefall, traditional data points such as CPI, PPI, and consumer sentiment lose their relevance. We are in the midst of peak fear, and sentiment has hit rock bottom. We're back near December 2023 levels—before the AI boom in early 2024—and have even surpassed the lows of August 2024. All the volatility of the summer has been wiped away.

I don’t mention this to alarm you, but to highlight that we are now in a rare market opportunity. This is a time to consider generational entries.
-Frank

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Major market crashes are infrequent, but when they do occur, they are memorable. While there’s certainly more risk on the horizon, the focus isn’t on finding the exact bottom. Market crashes are painful, but they also present investors with three choices: stop out, hold, or buy. If you’re still holding speculative positions in profit, it might be time to lock in those gains and look for more stable stocks at a significant discount.
-Frank

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Looking at market sentiment, there may be some optimism returning slowly. Last Friday we saw the three major indices bought by smart money and took the top three net long change positions. Meanwhile, gold became the top seller in the same category. This won't guarantee upside, but it shows that institutions are accumulating positions down here. Further confirmation will come in future weeks of more COT data.

Meanwhile the put/call ratio is hitting an extreme levels for the S&P indicating that fear may be bottoming for now. Again this is no indication of a reversal long term, but it suggests that current bearishness is getting exhausted and the selling may be less aggressive. The only way to tell if we're recovering will come with more time, so all we can do is speculate that stocks are nearing and end to the sell off.
-Frank

SPX500
When we take a step back and consider the situation with oil, it’s evident that something fundamental is breaking within the US economy. Initially, we thought this might just be a market correction, but with oil prices dropping too low to sustain US production, it’s becoming more clear that this could signal deeper issues.

Although the drop in oil prices might help reduce energy costs and bring inflation down in the short term, it comes at a steep price—the potential collapse of key sectors in the economy. If oil continues to fall at this pace, we could see it approaching the COVID lows in the $30s, which could put further pressure on the indices as well.

-Frank

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