Below are highlights from the NDW Morning Update Video for the morning of 08/31/2026. Access the the video on the NDW Morning Update Video page. 

• Indices were negative in Friday’s trading session with only the U.S. Dollar (DX/Y finishing on the positive side. Small caps led U.S. equities to the downside with the Russell 2000 Index (RUT) falling more than 1%, leading the chart to continue to pullback to the middle of the 10-week trading band at 2980. The only other U.S. equity index to see chart action during Friday’s trading was the Nasdaq Composite (NASD), which reversed back into Xs to maintain a buy signal.
• The iShares MSCI Emerging Markets ETF (EEM) continued higher in its current column of Xs, moving above $68 before finishing the day down 70 basis points. Currently, it would take a move above $72 to return the fund to a buy signal.
• Crude oil (CL/) reversed higher during Thursday’s (8/27) trading session and is seeing higher prices pre-market Monday after renewed geopolitical tensions in Iran over the weekend.
• Short-term indicators like the weekly distribution for NYSE stocks (^WDNYSE) highlight the consolidation with the reading just below 0%. The reading indicates that the average stock has pulled back to the middle of the 10-week trading band on its default point and figure trend chart. Last week’s trading saw index related bullish percents reverse lower, while the broader NYSE universe bullish percent (^BPNYSE) resides within 1% of reversing down into Os at 52%.
• While earnings for the majority of the S&P 500 have transpired, there are still some noteworthy highlights this week. Below are brief notes, highlighting support and resistance levels.
  • Dell Technologies (DELL) – reports 9/1 – DELL improved to a 5 for 5’er earlier this month after seeing its market RS chart reversed into a column of Xs. The stock returned to a sell signal on the trend chart early last week at $424 before reversing back into Xs to $472. Beyond current support at $424, additional may be found at $360. The stock’s recent high reside at $512.
  • Palo Alto Networks (PANW) – reports 9/1 – PANW has been a 5 for 5’er since May of this year, and the stock returned to a buy signal during last Thursday’s (8/27) trading at $360. Friday’s (8/28) trading brought the chart back into Os at $356 before seeing the stock finish higher in the $370s. Current support can be found at $328 and $312 before getting down to the mid $200s and the next levels of support. The stock’s recent chart high resides at $396.
  • Broadcom (AVGO) – reports 9/2 – AVGO fell to a 3 for 5’er after seeing the stock shift into a negative trend earlier this month. Action early last week saw AVGO violate support in the $360 range before rebounding and returning to a buy signal at $376 during Friday’s (8/28) trading. Initial support lies at $352 before getting to the next levels of support in the $270 to $290 range. Resistance lies at $408, the bearish resistance line, as well as at $432 and $488, the June chart high.
  • Hewlett Packard Enterprises (HPE) – Reports 9/2 – HP improved to a 5 for 5’er earlier this month after seeing the market RS chart return to a column of Xs. The stock has maintained a sell signal since 8/19 but reversed back into Xs at $55 during last week’s trading. Initial support lies at $52 and $50, while additional can be found at $44 and $41. Note resistance in the lower $60s near recent highs.

People have strong opinions on everything these days, from politics to pineapple on pizza, and the stock market is no different. For many of us in the industry, questions from family, friends, and clients about the “AI bubble,” SpaceX, or the economy seem inescapable. So, if it feels like everyone has a take on the stock market, there’s more than just your gut feeling to support that notion.  

One way to evaluate sentiment is to compare how many investors think the market will rise versus how many think it will fall. The AAII sentiment survey does precisely that, asking investors whether they expect the market to rise, fall, or remain flat over the next six months. Historically, 31% of respondents to AAII’s survey have held a neutral outlook on the market, but there appears to be a new normal. Over the last two years, only four of 104 weeks have seen an average neutrality level of 31% or higher. It’s not like the markets have been particularly extreme during that span, either. Volatility has been relatively normal, as the VIX has averaged approximately 18.5, which is below the long-term average. The S&P 500 has been an average of 2.2% away from all-time highs, well below the normal average of 10.4% since 1987. Despite that, investors continue to have opinions about the market, with a plurality of those being negative.  

The AAII Survey Bull-Bear Spread (AAIISPREAD) subtracts the percentage of bearish respondents from the percentage of bullish respondents to gauge overall sentiment. A positive reading indicates more bulls than bears, while a negative reading suggests the opposite. Currently, the AAII spread of -11% indicates a bearish, though not overly extreme, stance on the market. The good news is that, historically, investors are poor at predicting the direction that stock prices will move. In fact, when the sentiment spread is between -20% and -10%, the forward returns for the S&P 500 have been stronger than average from one week to two years out. 

Additionally, the AAII Spread has been negative for six consecutive weeks, which is a rare occurrence. In fact, a streak of six weeks or longer occurs around once every 17 months, placing recent action in highly unusual territory. Thankfully, streaks of negative sentiment have historically been associated with stronger returns. The S&P 500 has averaged a 13.6% one-year return across the other 27 instances where the AAII spread achieved its sixth consecutive negative week. If the negative streak were to continue, it would be an even more bullish signal, as longer streaks have been associated with even stronger returns, albeit on fewer occasions.  

That said, there have also been negative streaks of 15, 9, and 7 weeks since the start of 2025, highlighting how abnormally cynical investors have been. The average AAII Spread reading over the last two years is 2.4%, which is more bearish than 87% of two-year stretches going back to 1987. While that alone is notable, the negative sentiment is even more significant given the strength of the market over that period. There’s a common market adage that says, “sentiment follows price.” Generally, trailing two-year sentiment tends to follow the trailing two-year return of the S&P 500, but recent years appear to be an exception to the rule, with sentiment remaining abnormally subdued despite the S&P 500 gaining a cumulative 38% (8/28/24 - 8/28/26).  

There have been only a handful of occasions where the market was bearish on average over the prior two years despite the S&P 500 gaining more than 20%. Looking at those six other instances, the S&P 500 averaged a one-year return of 16.2% and a two-year return of 27%, underscoring how skepticism during previous bull markets (and 2022) served as a positive sign going forward. Warren Buffett once said, “Be fearful when others are greedy and greedy when others are fearful.” With the market remaining in fearful territory, it wouldn’t be surprising to see investors eventually become greedier, which could serve as a potential catalyst for further upside.  

The option suggestions featured here are pulled from the NDW Options Ideas tool. These are just a sample of the ideas that can be found there. The Options Idea tool contains numerous additional income and speculative plays. It also offers relative strength-based screens targeting the highest (and lowest) relative strength stocks and ETFs that have recently moved counter to their longer-term trend. To access or subscribe to the Options Ideas tool, click here.

Call

Ross Stores Inc (ROST) Oct 2 $225 Call

Put

Rivian Automotive Inc (RIVN) Dec 18 $17.50 Put

Income

Cloudflare Inc Class A (NET) $280 Short Put