S&P 500 futures are at record levels, yet the market breadth is troubling, with 75 stocks hitting new 52-week lows compared to only 14 making new highs. This divergence raises concerns among investors about the sustainability of the rally. However, options traders are signaling optimism, as evidenced by a surge in bullish positions in major indexes and leading stocks.
The volume of call options has increased significantly, reaching levels not seen since May for the SPDR S&P 500 ETF Trust (SPY) and the highest in a year for the Invesco QQQ Trust (QQQ). Options pricing suggests a 67% chance that the Nasdaq 100 will achieve a new high by the end of the week.
Key tech stocks like Meta Platforms, Intel, and Micron are also showing bullish trends, with traders expecting new records before year-end. For instance, there is a 52% probability that Meta will reach its previous high of $790 by October 2, while Intel has a roughly 50% chance of surpassing its closing high of around $140 by October 30.
Additionally, the Roundhill Memory ETF (DRAM) saw a 2% increase, with notable gains in memory stocks like Sandisk and Micron, although market-makers are less optimistic about the DRAM ETF reaching new highs soon. Overall, while the market shows signs of strength, the low breadth raises questions about the rally's durability