Happy to be joining you as a guest author this week. Throughout the week, we’ll examine markets through the lens of options positioning, technical structure, and investor sentiment.

S&P 500 Holds Support, Tests Key Pivot

The S&P 500 bounced right where it needed to last week for bulls to maintain control. The real test remains this week. As you can see from the chart, we filled and held the May 6 gap-up level. This coincided with the 730-strike put support, the lower Bollinger Band, and the widely followed 50-day moving average sitting just beneath midweek’s lows. This helped ward off an air-pocket decline in the open interest configuration, where we could have quickly tested 720 and, in a more aggressive delta-hedging scenario, potentially slid all the way to 700 on the SPY.

Now we open the week testing the 10-day and 20-day moving averages and the recent high Anchored VWAP, with call resistance sitting just above at the 750-strike. This also coincides with the mid-May high that was thwarted by the Treasury rate surge the following day. As a result, this will be a key level to monitor as we head into June’s monthly options expiration (OPEX).

Furthermore, we’ve found that choppy or corrective price action around Fibonacci extension levels often requires several days, and sometimes weeks, to resolve. Price is currently sitting near the golden ratio, or the 1.618 extension. If history is any guide, this week could remain choppy, as the period surrounding June OPEX has often served as a reset zone before favorable July seasonality begins to emerge.

For context, the last 10 years of data show the third week of June carries a win rate of just 45% and an average return of negative 0.82%. We’ll discuss this further as we move toward the end of the week. For now, we don’t find the recent price action unusual at all. On the contrary, it makes a great deal of sense as the market digests a sharp rally off the spring lows before determining its next directional move.

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Magnificent 7 Doesn’t Need to Lead, It Just Needs to Hold the Line

Despite lagging the broader market this year, the Magnificent 7 remains one of the most important areas for bulls to monitor. While the group has been more bifurcated than in previous rallies and remains underwhelming on a year-to-date basis, down -2.42% as of Friday’s close, it doesn’t necessarily need to lead. As we’ve seen throughout 2026, we simply need it to hold the line and avoid breaking down.

Given its market-cap-weighted dominance, weakness in this group would likely pressure the broader indexes and spill over into many of the AI leaders that have helped drive performance. For now, however, the MAGS basket continues to hold the year-to-date AVWAP, the 126-day (six-month) moving average, and the 200-day moving average.

Additionally, it is attempting to hold the 252-day (one-year) Volume Point of Control and completed a Sequential 9 count on Friday. It’s rare to see so much technical confluence in one area. Notably, this region marked important lows in October and November 2025, as well as January 2026, before the eventual unwind we witnessed this spring.

That’s a substantial amount of support clustered in one area and something we may break down further in options positioning in the components tomorrow.

Sentiment Bullish, But Not Extreme

Finally, there has been a great deal of discussion surrounding breadth and sentiment during this rally. While I don’t deny that options positioning has reached optimistic levels over the past several weeks, we’re not seeing the same level of enthusiasm reflected across broader sentiment surveys such as NAAIM and AAII.

In fact, investors have remained surprisingly hesitant to embrace a fully bullish outlook, which is often what we look for when trying to identify major market tops. While sentiment has approached elevated levels at times, it has remained bearish enough to avoid pushing into true extremes.

For instance, let’s look at the latest AAII survey. As the chart illustrates, bearish sentiment has remained relatively elevated throughout the rally from the spring lows. Neither bulls nor bears have been able to establish the type of extreme readings we often see near major turning points following a correction.

This healthy skepticism is one reason buying the dip has continued to work. Last week’s bearish reading of 47.7% placed bears in the 95th percentile based on Percentage Rank. To us, this suggests there is still room for a continuation rally, as we have yet to push everyone to one side of the boat, even if the hull is no longer perfectly balanced.

While this doesn’t guarantee anything, it does make us more selective when entering short opportunities and keeps us leaning bullish. We have yet to see the structural deterioration or extreme sentiment readings that typically accompany broader market corrections.

Taken together, price, positioning, and sentiment continue to suggest a market that is consolidating gains rather than undergoing a structural deterioration. With June OPEX approaching, the next several sessions should provide additional clarity on whether this pause resolves higher or develops into a deeper corrective phase.

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