S&P500 Daily Action Areas & Price Targets 18/8/26

***QUOTING ES1! FOR CASH US500 EQUIVALENT LEVELS, SUBTRACT POINT DIFFERENCE***

SPX PUT/CALL RATIO 1.28 (The numbers reflect options traded during the current session.) A put-call ratio below 0.7 is generally considered bullish, and a put-call ratio above 1.0 is generally considered bearish.

GS Flow Desk: large S&P 31Aug 7000/7950 strangle in roughly $20mm vega / $115mm premium …My Read – classic “big convexity versus carry” trade: either someone paid a lot to own a wide August move, or someone got paid a lot to bet that the S&P stays comfortably inside the 7000–7950 corridor

JHEQX Q3 Collar Short Call Cap: ~7,750 – 7,900 - Long Put Strike: ~7,050 – 7,100 (approx. 5% downside protection) Short Put Strike: ~5,950

DEC2025 OPEX to DEC2026 OPEX is 945 points giving us a range of [5889,7779]

WEEKLY BULL BEAR ZONE 7660/50

WEEKLY RANGE RES 7890 SUP 7720

MONTHLY RANGE RES 7838 SUP 7258

DAILY VWAP BEARISH 7791

WEEKLY VWAP BULLISH 7618

MONTHLY VWAP BULLISH 7503

DAILY STRUCTURE - BALANCE - 7838.5/7724.25

WEEKLY STRUCTURE - OTFH - 7738

MONTHLY STRUCTURE - OTFH - 7345.75

Balance: This refers to a market condition where prices move within a defined range, reflecting uncertainty as participants await further market-generated information. Our approach to balance includes favouring fade trades at the range extremes (highs/lows) while preparing for potential breakout scenarios if the balance shifts.

One-Time Framing Higher (OTFH): This represents a market trend where each successive bar forms a higher low, signalling a strong and consistent upward movement.

One-Time Framing Lower (OTFL): This describes a market trend where each successive bar forms a lower high, indicating a pronounced and steady downward movement.

DAILY BULL BEAR ZONE 7765/75

GAMMA FLIP 7786

DELTA FLIP 7851

DAILY RANGE RES 7834 SUP 7696

2 SIGMA RES 7901 SUP 7629

VIX BULL BEAR ZONE 17.9  (VVIX / VIX) 6.18

TRADES & TARGETS 

LONG ON REJECT/RECLAIM WEEKLY BULL BEAR ZONE TARGET DAILY BULL BEAR ZONE

***ADDITIONAL SETUPS & TARGETS HIGHLIGHTED ON THE CHARTS***

(I FADE TESTS OF 2 SIGMA LEVELS ESPECIALLY INTO THE FINAL HOUR OF THE NY CASH SESSION AS 90% OF THE TIME WHEN TESTED THE MARKET WILL CLOSE ABOVE OR BELOW THESE LEVELS)

US Close — Risk Premium Returns: Oil + Long-End Yields Pressure Breadth, But AI Momentum Holds

The session was weaker beneath the surface than the headline index moves suggested. The S&P fell 0.5%, NDX slipped 0.2%, and Russell 2000 declined 0.4%, but 71% of S&P stocks were lower. The tape was dragged by a renewed US/Iran risk premium, higher oil, and another rise in long-end yields. At the same time, AI-linked momentum — especially memory, photonics, semis, and infrastructure — outperformed, keeping the broader tactical bullish framework intact.

The clean read:

This was not a broad de-risking event. It was a rotation back into AI / semis / momentum and away from software, retail, Mag 7 laggards, and rate-sensitive baskets as oil and yields rose.

1. Market Snapshot

Rates sold off across the curve:

This was a classic long-end-led bear steepening impulse, tied to oil/geopolitical risk and ongoing concerns around duration supply.

2. Underlying Tape Was Weaker Than Headlines

Headline indices were only modestly lower:

• SPX -0.5%

• NDX -0.2%

• RTY -0.4%

But breadth was poor:

• 71% of SPX stocks declined

The weakness was concentrated in:

• software

• Mag 7

• retail

• housing

• airlines

• other rate-sensitive baskets

Outperformers:

• AI baskets

• memory

• photonics

• semis

• infrastructure

• momentum longs

So the market was not uniformly risk-off. It was a factor rotation.

The day’s factor map:

Long AI / Semis / Momentumvs.Short Software / Retail / Rates-SensitiveLong AI / Semis / Momentumvs.Short Software / Retail / Rates-Sensitive

3. US/Iran Risk Premium Rebuilds

Markets priced a higher probability of escalation rather than a near-term diplomatic off-ramp.

Key headline:

• Trump said he is in “no hurry” to end the war with Iran

• rhetoric around Oman escalated

Market reaction:

• WTI +2.8% to US$84.71

• crude now close to month-to-date highs

• long-end yields moved higher

• gold rallied

• equities softened

The cross-asset reaction was coherent:

Geopolitical Risk→Oil Up+Gold Up+Yields Up+Equities SofterGeopolitical Risk→Oil Up+Gold Up+Yields Up+Equities Softer

The key inflation channel is oil / refined products, especially as the market has repriced September hike odds lower.

4. Fed Pricing Nudges Hawkish

The probability of a September hike rose from:

• 31% to 35%

That is not a dramatic move, but directionally important.

The market has recently moved from roughly 70% at the start of August to closer to 30–35%, so any renewed oil / inflation pressure matters.

The risk is asymmetric:

Market Priced Fed Hold+Oil Up+Long-End Yields Up=Hawkish Repricing RiskMarket Priced Fed Hold+Oil Up+Long-End Yields Up=Hawkish Repricing Risk

For now, the Fed hike probability is still below a coin flip, but the margin for error is thin.

5. Long-End Rates Remain the Primary Equity Risk

The 30Y moved +6bps, more than the front end, reinforcing that the issue is not simply Fed policy.

The larger concern is:

• fiscal deficits

• Treasury supply

• AI-related corporate financing

• hyperscaler debt issuance

• term premium

• oil inflation risk

• real-yield pressure

This fits the broader market risk framework:

Even if the Fed stays on hold, long-end yields can remain a valuation headwind if growth is firm, oil rises, and AI financing supply keeps coming.

That is why breadth struggled even though AI infrastructure held up.

6. Momentum Rally: AI Semis Back in Control

The JPM Momentum L/S pair rose:

• +2.8%

• a 1.4z move

Leadership came from both legs:

• longs performed well

• shorts underperformed

AI sentiment improved across:

• memory

• photonics

• semis

• AI infrastructure

This suggests the market has returned to the pre-global-semi-selloff playbook:

Own AI Picks/Shovels+Avoid AI-Vulnerable / Rate-SensitiveOwn AI Picks/Shovels+Avoid AI-Vulnerable / Rate-Sensitive

7. Semis > Software, and Also > Mag 7

The tech-flow commentary is important:

We are back to a world where semis and software cannot both coexist as winners.

Semis outperformed software and Mag 7.

Drivers:

1. No Definitive Silver Lake / WDAY Deal

The absence of a definitive WDAY takeout deal reversed part of the software squeeze.

This hurt enterprise application software names, where long-only investors used the recent rip to take profits.

2. Anthropic Valuation / ARR Forecasts Support AI Buildout

Anthropic targeting very large forward ARR numbers — referenced around US$200bn in 2028 — reinforces the ROIC argument for data-center buildouts.

That supports:

• semis

• memory

• photonics

• networking

• AI infrastructure

• data-center supply chain

3. Lutnick / CXMT DRAM Comment Helps Memory

Lutnick discouraging Apple from using CXMT DRAM supports non-China memory suppliers.

Beneficiaries:

• Korea memory

• Taiwan / Japan supply chain

• US-aligned semiconductor ecosystem

Pressure points:

• memory buyers / OEMs such as DELL, HPQ, SMCI

This is why memory outperformed while some AI hardware buyers lagged.

8. Software Weakness: Profit-Taking and AI Vulnerability

Software was weak after a sharp squeeze.

Reasons:

• no definitive WDAY transaction

• long-only profit-taking after the software rip

• enterprise app software had become a quick monetization source

• AI vulnerability narrative remains unresolved

• higher yields pressure software duration

• semis are reclaiming AI leadership

The market is distinguishing between:

AI Infrastructure BeneficiariesAI Infrastructure Beneficiaries

and:

AI-Vulnerable Software / Seat-Based ModelsAI-Vulnerable Software / Seat-Based Models

Software topline may be resilient, but stock performance still lags when rates rise and AI infrastructure is back in favor.

9. META Weakness

META was hit, and the desk points to several reasons.

1. It Rallied on WDAY Takeout Spec

META had rallied with the broader software / Tech squeeze, suggesting it remains shorted by broader tech books.

If the WDAY M&A squeeze fades, META gives some of that back.

2. Social Addiction Trials

Legal overhang is coming back into focus.

The SNAP / France news was directionally positive in the sense that France was not allowed to ban under-15s from using social media platforms, but it also reminded investors of broader legal and regulatory risks.

The expected outcome may take years, and META likely adapts the platform over time, but it remains a headline risk.

3. Watermelon Model Release

Investors are still waiting for the Watermelon model release.

A credible AI product / model catalyst could re-support sentiment, but until then, the stock may digest.

10. MSFT Weakness: Digestion After Parabolic Run

MSFT weakness is harder to attribute to a specific negative catalyst.

The cleaner explanation:

• stock had a parabolic post-earnings run

• long-only investors scrambled to cover underweights

• now it is digesting gains

This is not necessarily thesis damage.

It is more likely:

Strong Earnings Rally→UW Covering→DigestionStrong Earnings Rally→UW Covering→Digestion

As long as MSFT maintains the AI capex-to-ROIC link, it remains strategically supported.

11. Flows: Net for Sale in Software, Better Buying in Semis

Desk flows:

• net for sale overall

• long-only investors selling software to book profits

• especially enterprise application software

• semis better to buy

• more buying in analog today

• not much chase in AI picks-and-shovels names

This is notable.

The AI trade is outperforming, but the desk is not seeing euphoric chase.

That makes the rally potentially more durable than if it were purely FOMO-driven.

12. Europe / UK: Lower, Spain Lags

European markets closed lower:

Spain lagged.

Main drivers:

• higher oil

• momentum outperformance

• rotation back to pre-semi-selloff playbook

Worst-performing themes:

• Most Short

• Luxury

• Software

Europe has been resilient fundamentally, but higher energy and rates remain important headwinds.

13. Tomorrow’s US Macro Calendar

Key US data:

This is a full macro slate, especially relevant given:

• long-end yields are rising

• housing / rate-sensitive baskets are weak

• oil is pressuring inflation expectations

• Fed pricing has moved slightly hawkish

14. Tomorrow’s Earnings: HD and KEYS

US earnings tomorrow:

• HD

• KEYS

HD is especially important because it kicks off major retail earnings.

Retail sequence:

• HD Tuesday

• LOW Wednesday

• TJX Wednesday

• TGT Wednesday

• WMT Thursday

This week will test:

• consumer resilience

• tariff pass-through

• back-to-school demand

• housing-linked demand

• price investment

• margin durability

• lower-income pressure

• big-box traffic trends

15. Retail Earnings Setup

HD

Positioning: 5/10

• HFs mixed

• slight lean long versus LOW short

• HD expected to outcomp LOW

• LOW expected to miss / cut

• LOs underweight due to housing and rates

• valuation has room to expand if housing confidence improves

Bogeys:

• Q2 US comps +0.5% to +1.0%

• Street around +0.9%

• reiterate FY guide:

  • sales 0% to +2%

  • EPS 0% to +4%

JPM analyst preview is more constructive:

• total comp forecast +2.0%

• US comp forecast +1.5%

LOW

Positioning: 3/10

• HFs short

• miss and cut expected

• LOs underweight

• question is whether a cut de-risks 2H

Bogeys:

• Q2 comps -1%

• Street +0.5%

• reduce FY guide to low end:

  • comps 0% to +2%

  • EPS US$12.25–12.75

TJX

Positioning: 5/10

• lighter positioning than usual

• recently an intra-quarter short

• low bar at Marmaxx

• expected beat at HomeGoods

• focus on exit rate and quarter-to-date trend

Bogeys:

• Marmaxx comps +2%

• HomeGoods comps +6% to +7%

• Q3 guide comps +2% to +3%

• flow-through Q2 beat to FY guide

TGT

Positioning: 7/10, crowded HF long

• multiple near ceiling

• needs beat and raise

• recent outperformance invited some shorts

• setup still demanding

Bogeys:

• Q2 comps around +3.5%

• margins / EPS beat

• raise EPS guide to US$9.00 midpoint

• raise sales guide to 4% to 5%

WMT

Positioning: 4/10

• lighter positioning

• retail-dedicated investors more bearish since mid-July

• LOs prefer to react to print

• some covering into print due to undemanding setup

• focus on price investment and back-to-school

Buyside expectations:

• Q2 comps +3.0% to +3.5%

• Street +3.7%

• JPM +3.2%

• small EPS guide raise from organic 1H performance

• tariff refunds offset by price investments

• sales guide reiterated

16. JPM Market Intel View: Tactical Bullish Maintained

JPM Market Intel maintains a Tactical Bullish view.

The rationale:

• markets continue to climb the wall of worry

• last week’s worries were inflation, growth, auctions, and Fedspeak

• this week brings Fed Minutes and Flash PMIs

• then NVDA and Jackson Hole can shift the narrative

• incremental equity buyers may emerge:

  • buybacks

  • retail

  • systematic players

  • hedge funds re-grossing / re-levering

This remains consistent with the August re-risking thesis.

17. Monetization Menu: Tech / Cyclicals Barbell Still Preferred

No week-over-week changes to trade expression.

Preferred exposure remains:

• Tech / AI

• cyclicals

• broadening beneficiaries

The note also asks:

If Mag7 and/or Software catches a durable bid, what is the next funding short?

Answer:

• Brazil

• Europe

Why?

• more insulated from the AI trade

• higher sensitivity to oil / USD

That is a tactical funding view, not necessarily a long-term bearish call.

The old monetization menu favored the Tech / Cyclicals barbell, which should benefit from:

• AI theme

• broadening rally

That still fits the current tape.

18. Tactical Interpretation

What Today Says

Today was a warning on breadth but not a breakdown in the bull case.

The market absorbed:

• oil up nearly 3%

• long-end yields higher

• geopolitical risk premium

• weak breadth

Yet headline indices only fell modestly, and AI momentum held.

That is constructive, but also shows fragility under the surface.

What Needs to Happen for August Upside to Continue

• oil stabilizes below recent highs

• 10Y / 30Y stop rising

• Fed hike odds stay contained

• AI / semis leadership persists

• retail earnings do not crack consumer confidence

• NVDA setup remains constructive

• Jackson Hole does not reprice rates materially higher

What Would Threaten the View

• WTI breaks materially higher

• 30Y continues to bear steepen

• September hike odds move back toward / above 50%

• software weakness broadens into all Tech

• retail earnings signal consumer deterioration

• NVDA fails to validate capex / ROIC cycle

• VIX breaks higher from low 15s

19. Cross-Asset Signal

The day’s cross-asset message:

Oil Up+Gold Up+Long-End Yields Up+Poor BreadthOil Up+Gold Up+Long-End Yields Up+Poor Breadth

This is not the ideal risk-on mix.

But AI leadership and muted VIX show that investors are not broadly de-risking yet.

VIX at 15.19 remains contained, which means:

• index protection demand is not surging

• realized volatility remains subdued

• investors are still comfortable carrying risk

• single-stock / factor dispersion remains the bigger action

US equities closed lower, with SPX down 0.5%, NDX down 0.2%, and RTY down 0.4%, but the underlying tape was weaker than the headline: 71% of S&P stocks declined. The pressure came from renewed US/Iran escalation risk, WTI up 2.8% to US$84.71, and another move higher in long-end yields, with the 30Y up 6bps.

The market’s internal rotation was clear: AI / semis / memory / photonics / infrastructure outperformed, while software, Mag 7, retail, housing, airlines, and other rate-sensitive baskets lagged. The JPM Momentum L/S pair rose 2.8%, reflecting a return to the pre-semi-selloff playbook.

JPM Market Intel remains Tactical Bullish, expecting buybacks, retail, and systematic players to support re-risking in coming weeks. But today’s tape also highlights the key risks into September / October: oil, long-end rates, Fed repricing, and supply. For now, the August upside thesis survives, but the market is becoming more selective and more sensitive to geopolitical/rates shocks.