Some considerably more positive news here from VolSignals, the ex market maker, which fits with the overall view that a violent rally is still ahead, even if we see slightly more decline in them near term.
We discussed previously how the market maker positioning had got extremely sparse.
And that the last times we had seen this to this extent were around March 2026 and March 2025.
That's the bearish side of the data.
But it is worth noting that he himself spells out that potential drawdown aside, the results 3 months out were extremely bullish and that such sparse dealer positioning typically points to a sharp turning point ahead.
Let's review:
His chart was the following:
https://preview.redd.it/qfrbod2m0dgh1.png?width=1400&format=png&auto=webp&s=2a07258bf9c7ac588045a8bbe986d3de402a58f8
3 consecutive closes under $1B in gamma, so basically yes, sparse dealer positioning as we highlighted.
This is the 5th time since July 2024 (as far back as his data went) that we have seen dealer positioning so sparse.
The point being by him is that this typically precedes more volatile action.
Not always down in the immediate term, but the last few instances we had seen it, especially when paired with the Abi signal (outside of his analysis, that's me adding that), the outcome has been near term drawdowns.
So
Mar 31, 2025: -11.2%
Mar 11, 2025: -10.6% (same event)
Mar 5, 2026: -7.1%
Nov 20, 2025: no drawdown (+5.5% up instead)
Aug 5, 2024: none - it fired ON the crash low (+8.9% up)
So in a number of cases we had a sharp drawdown.
That is the worry here, more selling to come.
However, the point made which is the other side of this is that 3 months later, every instance was up significantly, up 10% on average.
That's from the date of the trigger (so yesterday), not from the low.
So even if we do se further decline, this does support my view that even if we do see more decline, the rally that ensues will likely be quite aggressive.
Even if we don't go as far as the average, the 7800 target I have on SPX seems very realistic into Midterms.
So the takeaway is what we have been saying:
Even if we do have emore selling here, which is why I am playing the put side, the rally that will ensue will be violent and will take the index likely to new highs. What that does for semiconductors and the AI complex is yet to be seen, but one can only suggest it will be a large rally after such a historic momentum unwind.
So try to take things with a pinch of salt right now. Things will be fine a few months out.
https://preview.redd.it/5j124kqm0dgh1.png?width=1050&format=png&auto=webp&s=ee59e011d4116405ea66df3c40b3f6e9f9b74676
https://preview.redd.it/q7g23i8n0dgh1.png?width=899&format=png&auto=webp&s=5aad9a1a006da74b8ad88d2b0a40601d28977d83
https://preview.redd.it/xo42pu1o0dgh1.png?width=987&format=png&auto=webp&s=14de47b426c72e2e6125d34fb724593109a87247
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