The financial landscape this week has seen notable struggles within the stock market, particularly leading into Friday’s session with the highly anticipated Personal Consumption Expenditures (PCE) inflation report. Major indices, such as the Spyder Trust (SPY) and the Invesco QQQ Trust (QQQ), have dipped by 0.90% over the week, reflecting a broader trend of declines over the past three days that has instilled a sense of apprehension among traders.
The American Association of Individual Investors (AAII) released a survey on Thursday indicating a static bullish sentiment at 41.7%, contrasted by a dip in bearish sentiment, which fell from 42.2% to 39.2%. This nuanced shift suggests a growing cautiousness in market outlook among individual investors.
Analyzing the daily performance of SPY, the chart reveals three consecutive lower closes, testing the rising 20-day Exponential Moving Average (EMA) situated at $654.49. Also noteworthy is the daily starc-band support around the $650 mark. Key levels include a pivot for September at $636.18 and a preliminary October pivot near $652. Significant support lies at $607, akin to the February 2025 high, while the September R2 resistance at $666.28 was surpassed earlier in the week with a high reaching approximately $667.34.
Despite the minor positivity in the bullish-bearish sentiment metrics, the S&P 500 advance/decline line fell below its EMA on Thursday, indicating current corrective behavior. An initial support line has been reached, but stronger support points exist that may help stabilize the market. A rally of 1-2% could potentially bring the A/D line back above its EMA, and the weekly and monthly A/D lines currently exhibit positive trends.
Historically, the bull%-bear% ratio from AAII data has shown significant low bullish sentiment, marking below -30 during significant bottoming periods in the $SPY. Earlier this year, this indicator reached a record low of -51.4% on March 5, 2009, the lowest since the 1990 recession. It has recently climbed to 2.5%, still suggesting that improvements may follow, although a stronger correction is anticipated.
In the world of cryptocurrency, Bitcoin (BTC) appears similarly challenged. The BTC to US Dollar conversion (BTCUSD) registered higher highs in 2025, testing resistance at $124,723 before retreating to the 20-week EMA around $109,559. Meanwhile, the weekly starc-band indicates a threshold near $97,565, with the annual pivot placed at $81,742.
As BTCUSD experienced its highs in August, accompanying MACDs formed lower highs, indicating a bearish divergence—typically a reliable precursor to further declines. Presently, Bitcoin has fallen by 5% this week alone, outlining a concerning trajectory even as the stock market reacts positively to the PCE report. Given these bearish divergences, any anticipated rebound for BTC is likely to encounter resistance in the $111,000-$113,000 region.
