S&P500 Daily Action Areas & Price Targets 17/8/26

***QUOTING ES1! FOR CASH US500 EQUIVALENT LEVELS, SUBTRACT POINT DIFFERENCE***

SPX PUT/CALL RATIO 1.13 (The numbers reflect options traded during the current session.) A put-call ratio below 0.7 is generally considered bullish, and a put-call ratio above 1.0 is generally considered bearish.

GS Flow Desk: large S&P 31Aug 7000/7950 strangle in roughly $20mm vega / $115mm premium …My Read – classic “big convexity versus carry” trade: either someone paid a lot to own a wide August move, or someone got paid a lot to bet that the S&P stays comfortably inside the 7000–7950 corridor

JHEQX Q3 Collar Short Call Cap: ~7,750 – 7,900 - Long Put Strike: ~7,050 – 7,100 (approx. 5% downside protection) Short Put Strike: ~5,950

DEC2025 OPEX to DEC2026 OPEX is 945 points giving us a range of [5889,7779]

WEEKLY BULL BEAR ZONE 7660/50

WEEKLY RANGE RES 7890 SUP 7720

MONTHLY RANGE RES 7838 SUP 7258

DAILY VWAP BULLISH 7787

WEEKLY VWAP BULLISH 7618

MONTHLY VWAP BULLISH 7503

DAILY STRUCTURE - OTFH - 7796

WEEKLY STRUCTURE - OTFH - 7738

MONTHLY STRUCTURE - OTFH - 7345.75

Balance: This refers to a market condition where prices move within a defined range, reflecting uncertainty as participants await further market-generated information. Our approach to balance includes favouring fade trades at the range extremes (highs/lows) while preparing for potential breakout scenarios if the balance shifts.

One-Time Framing Higher (OTFH): This represents a market trend where each successive bar forms a higher low, signalling a strong and consistent upward movement.

One-Time Framing Lower (OTFL): This describes a market trend where each successive bar forms a lower high, indicating a pronounced and steady downward movement.

DAILY BULL BEAR ZONE 7790/80

GAMMA FLIP 7802

DELTA FLIP 7782.5

DAILY RANGE RES 7870 SUP 7734

2 SIGMA RES 7938 SUP 7686

VIX BULL BEAR ZONE 17.9  (VVIX / VIX) 6.14

TRADES & TARGETS 

LONG ON REJECT/RECLAIM DAILY BULL BEAR ZONE TARGET DAILY RANGE RES

***ADDITIONAL SETUPS & TARGETS HIGHLIGHTED ON THE CHARTS***

(I FADE TESTS OF 2 SIGMA LEVELS ESPECIALLY INTO THE FINAL HOUR OF THE NY CASH SESSION AS 90% OF THE TIME WHEN TESTED THE MARKET WILL CLOSE ABOVE OR BELOW THESE LEVELS)

GOLDMAN SACHS FICC & EQUITY TRADING DESK VIEWS

Global Earnings Broadening vs. Underpriced Risk Factors

Constructive Fundamentals, But Markets May Be Too Relaxed on Rates, Funding, Oil, and China Policy

The incremental data continue to support the “broadening earnings” thesis, not just in the US but globally. Even areas that have lagged in price action — notably Software, Europe, and India — are showing more resilient earnings than the market is giving them credit for.

But the risk section matters. The market has moved quickly toward a benign Fed / soft-landing / earnings-broadening narrative, while several pain points remain unresolved:

• Fed pricing has repriced dovishly.

• Long-end yields continue to rise.

• AI-linked credit is widening versus non-AI.

• Hyperscaler debt issuance could be very large.

• Oil risk is more about refined products than crude alone.

• Leveraged ETF positioning is off highs but still elevated.

• China POE policy tone has moved back into slightly restrictive territory.

So the clean synthesis is:

Global earnings breadth is improving, but the macro-financing backdrop is becoming more fragile. That argues for continued equity upside where revisions are rising, but with greater selectivity and more attention to rates, credit spreads, and oil.

1. Software: Topline Still Resilient, But Stocks Lag

The important point on Software is that fundamentals are not breaking.

Even Software stocks are still delivering resilient topline growth.

That matters because Software has been under pressure from:

• duration sensitivity

• AI disruption fears

• weaker seat-based growth

• lower net retention

• consolidation of enterprise budgets

• migration of spend toward infrastructure / compute

• valuation compression

But the topline picture suggests the sector is not collapsing.

The issue is more about:

Resilient Revenue Growth≠Stock OutperformanceResilient Revenue Growth=Stock Outperformance

Why performance continues to lag:

• investor preference for AI infrastructure over applications

• uncertainty around AI monetization in software

• pressure on pricing / seats from AI agents

• still-elevated multiples in parts of the group

• margin reinvestment requirements

• lower tolerance for “in-line” guidance

• lower scarcity value versus semis / hardware / power

Software may stabilize, but it likely needs one of three catalysts to lead:

1. clear AI monetization evidence

2. reacceleration in net new ARR / RPO

3. lower real yields

Until then, resilient growth may only be enough for relative stabilization, not leadership.

2. Europe: Surprisingly Resilient Earnings

Europe’s performance continues to surprise positively.

Key earnings data:

• 1H EPS +14% YoY

• strongest pace in 3 years

• expected 2H acceleration

• full-year EPS expected around +15%

That is notable because Europe has lacked the obvious AI tailwind of the US and has faced meaningful headwinds:

• TTF gas has doubled this year

• weaker structural growth

• tariff uncertainty

• geopolitics

• China demand uncertainty

• political fragmentation

Despite that, earnings are holding up.

Possible drivers:

• financials strength

• defense spending

• industrial exports

• global cyclicals exposure

• cost discipline

• weaker currency benefits in some exporters

• shareholder returns

• lower starting valuations

• better-than-feared macro

This supports the idea that broadening is global, not just US ex-Mag7.

3. Europe 2027 Revisions Are Moving Up

The point that 2027 earnings are being revised up is important because it says the rally is not just backward-looking.

Markets can absorb high index levels if forward earnings are also rising.

The Europe setup becomes more credible if:

2026 Earnings Strength+2027 Upward Revisions=Valuation Support2026 Earnings Strength+2027 Upward Revisions=Valuation Support

This is especially powerful in a market that started from cheaper multiples than the US.

The key constraint remains rates and energy.

If long-end yields continue rising or gas prices remain elevated, Europe’s valuation re-rating may be capped even if earnings improve.

4. Asia: Earnings Revisions Up Sharply

Asia earnings have been revised up:

• +10% over the past three months

The ERLI signal points to:

• further upgrades

• but at a moderating pace

Leadership is concentrated in:

• Korea

• Taiwan

• hardware tech

• industrials

That maps directly onto the AI infrastructure / semiconductor cycle.

This is consistent with flow commentary that China ADR weakness may reflect source-of-funds rotation into:

• Korea

• Taiwan

• Japan

Asia’s strongest earnings momentum is in the AI supply chain, not broad China domestic demand.

5. Memory Cycle: Higher-for-Longer Still Intact

You remain believers in a higher-for-longer memory cycle, and the regional earnings data support that.

The memory cycle has several tailwinds:

• AI server demand

• HBM intensity

• GPU attach rates

• advanced packaging constraints

• data-center buildout

• rising DRAM content

• disciplined supply from major producers

• longer lead times

• improving pricing

• hardware-tech earnings upgrades in Korea / Taiwan

The key point:

The AI infrastructure cycle is not just about GPUs. It is also about memory, networking, power, packaging, and storage.

A higher-for-longer memory cycle benefits:

• Korea

• Taiwan

• Japan equipment / materials

• select US semiconductor supply chain

• industrials tied to data-center hardware

Risk to the thesis:

• hyperscaler capex slowdown

• China substitution

• inventory overbuild

• excessive capacity response

• HBM pricing normalization

• AI ROI skepticism

But for now, revisions support the bull case.

6. India: Earnings Improve, But Market Lags

India ex-commodities earnings growth has picked up to the:

• mid-teens

• first time in 6 quarters

That is a meaningful fundamental improvement.

Yet NIFTY is still:

• -7% YTD

making it the second-worst performing market after:

• JCI at -26%

This creates a potential valuation / positioning debate.

Reasons India may have lagged despite improving earnings:

• high starting valuation

• foreign outflows

• rotation into Korea / Taiwan / Japan

• weaker INR sensitivity

• policy / election concerns

• slower consumption in pockets

• preference for AI hardware exposure elsewhere

• crowded ownership at the start of the year

India may become more interesting if earnings upgrades continue while price performance remains weak.

But the hurdle is valuation.

India tends to require either:

• sustained domestic inflows

• accelerating earnings revisions

• lower global yields

• or improved foreign appetite

to outperform.

7. Risk Factor 1: Fed Pricing May Be Too Relaxed

Market pricing for a September hike has moderated sharply:

• roughly 30% now

• versus roughly 70% at the start of August

GS maintains the view that inflation will stay benign enough to keep the Fed on hold in September.

But the margin for error is thin.

Why?

• the Committee is divided

• inflation is lower but not dead

• core PCE tracking remains above target

• oil / refined product pressures remain a risk

• long-end yields are rising

• labor data are not weak enough to force easing

• financial conditions have loosened with equities higher

This creates asymmetric risk:

Market Prices Fed Hold⇒Hot Data Has Bigger Negative ImpactMarket Prices Fed Hold⇒Hot Data Has Bigger Negative Impact

The market has reduced the hike probability, so a hawkish data surprise can reprice rates quickly.

8. Risk Factor 2: Long-End Yields Keep Rising

Longer-dated yields remain a major risk.

The US 30-year auction reportedly produced the highest print since 2001.

That matters because the equity market can tolerate some Fed-on-hold repricing, but persistent long-end pressure is more dangerous.

Drivers of long-end yield upside:

• large fiscal deficits

• Treasury supply

• term premium

• inflation uncertainty

• corporate issuance

• AI-related debt

• hyperscaler bonds

• real neutral rate repricing

• foreign demand uncertainty

This is the heart of the rates disconnect discussed earlier.

Even if the Fed stays on hold:

Long-End Yields↑⇒Equity Multiples↓Long-End Yields↑⇒Equity Multiples↓

So the risk is not just Fed hikes.

It is the entire duration supply / real yield complex.

9. Risk Factor 3: AI Credit Spreads Are Widening

AI-related IG spreads are now:

• 25bps wider than non-AI counterparts

That is a warning signal.

Earlier in the cycle, AI exposure was viewed almost entirely as a positive. Wider spreads suggest credit investors are beginning to price risks around:

• capex intensity

• funding needs

• uncertain ROIC

• customer concentration

• vendor financing

• debt-funded infrastructure

• technology obsolescence

• power / utility constraints

• asset duration mismatch

This does not mean the AI capex cycle is breaking.

But it does mean equity investors should stop assuming credit markets are fully validating the theme.

A key point:

Equities may still reward AI capex, while credit starts demanding more compensation for funding it.

That divergence is important.

10. Risk Factor 4: Hyperscaler Debt Supply

Potential additional IG debt issuance from hyperscaler capex alone:

• around US$400bn

This is a large amount of high-grade duration supply.

The issue is not default risk. The hyperscalers have access to capital.

The issue is absorption and pricing.

Potential consequences:

• wider IG spreads

• higher term premium

• higher corporate borrowing costs

• crowding out of lower-quality issuers

• pressure on levered data-center operators

• more scrutiny of AI ROI

• upward pressure on real yields

This links the AI theme directly to the bond market.

The equity bull case depends on whether the market continues to accept:

More AI Debt→More AI Capex→More Future EarningsMore AI Debt→More AI Capex→More Future Earnings

If investors start worrying instead about:

More AI Debt→Lower ROE / Lower FCF→Multiple CompressionMore AI Debt→Lower ROE / Lower FCF→Multiple Compression

then AI leadership becomes more volatile.

11. Risk Factor 5: ROE Question

Funding is one issue. ROE is another.

Even if hyperscalers can borrow, the market still needs proof that incremental capex earns attractive returns.

The question is:

Does AI capex generate enough incremental revenue, margin, and retention to justify the capital intensity?

Key metrics to watch:

• cloud revenue growth

• AI-specific cloud backlog

• utilization rates

• inference margins

• depreciation schedules

• capex-to-revenue ratios

• FCF conversion

• ROIC / ROE commentary

• customer concentration

• pricing power

• GPU useful lives

The equity market recently rewarded MSFT and AMZN for drawing a clearer link between AI capex and ROIC.

That link must persist.

12. Risk Factor 6: Geopolitics and Oil

Geopolitical risks remain live:

• US-Iran / Hormuz

• Russia

• tariffs

• China policy

• export controls

Oil is a key transmission channel, but the note correctly highlights that the bigger pain point may not be crude alone.

The real pressure is in:

• downstream refined products

Refined products matter directly for CPI through:

• gasoline

• diesel

• jet fuel

• transportation costs

• logistics

• airfare

• consumer inflation expectations

Even if crude is rangebound, refinery constraints can tighten product spreads and keep consumer-facing energy inflation sticky.

The inflation risk is therefore:

Refined Product Tightness→Higher Headline CPI→Fed RepricingRefined Product Tightness→Higher Headline CPI→Fed Repricing

This matters because the market has already repriced September hike odds down.

13. Risk Factor 7: Leveraged ETF Positioning

Leveraged ETF positions in:

• US Tech

• Korea / Taiwan

have declined meaningfully from highs, but remain elevated versus longer-term history.

This is another “less bad, not clean” positioning signal.

Like hedge-fund exposure:

• not as stretched as before

• but still not washed out

• still vulnerable if momentum turns

• still exposed to vol-targeting / leverage reduction dynamics

This matters for AI / semis / Asia hardware because retail and levered products can amplify moves both ways.

If the AI trade resumes higher, leverage can re-enter.

If it breaks lower, de-risking can accelerate.

14. Risk Factor 8: China Policy Toward POEs Back to Slightly Restrictive

The China policy proxy indicates policy toward private-owned enterprises is back in a:

• slightly restrictive zone

That is a headwind for China equities and ADRs.

It fits recent weakness in China ADRs and the rotation into:

• Korea

• Taiwan

• Japan

China remains difficult because investors face:

• policy uncertainty

• deflation pressure

• weak confidence

• property drag

• POE regulation risk

• tariff / geopolitical overhang

• AI chip restrictions

• lower visibility on earnings

This makes China less attractive relative to Asia AI supply-chain markets unless policy turns decisively supportive.

15. The Global Equity Map

Most Constructive

US Large-Cap / S&P

Supported by:

• earnings breadth

• Tech still working

• Fed hike odds lower

• positioning reset

• buybacks

• AI capex

Korea / Taiwan

Supported by:

• earnings upgrades

• memory cycle

• AI hardware

• industrials

• semis

Japan

Supported by:

• earnings

• buybacks

• governance reform

• shareholder returns

Europe

Supported by:

• resilient EPS

• upward revisions

• valuation

• financials / industrials

More Mixed

Software

Resilient topline, but needs AI monetization or lower yields to outperform.

India

Earnings improving, but valuation and YTD underperformance complicate timing.

Small Caps

Already rerated; drivers may fade unless yields decline.

China

Policy and macro uncertainty remain meaningful headwinds.

16. Market Implication: Earnings Say “Buy Dips,” Risks Say “Use Hedges”

The earnings picture argues against a bear market.

But the risk picture argues against complacency.

The right conclusion is not to abandon equities.

It is to be more selective and use risk management.

Constructive positioning:

• S&P upside in August

• quality cyclicals

• AI infrastructure leaders

• memory cycle beneficiaries

• Japan

• select Europe

• gold

• defined-risk QQQ upside

• avoid weakest AI financing chains

Risk management:

• watch long-end yields

• watch IG AI spreads

• watch refined product spreads

• watch Fed pricing

• watch China POE policy tone

• avoid crowded levered ETF expressions

• consider hedges into September / October

17. How This Fits the August / Sept-Oct / Year-End Roadmap

This update reinforces the roadmap:

August

Earnings breadth and benign CPI support continued upside.

September / October

Risks become more important:

• supply

• seasonals

• Fed uncertainty

• long-end yields

• AI debt issuance

• oil / refined products

• geopolitics

• midterm headlines

• China policy

Year-End

If those risks create chop but not earnings damage, the setup improves for a year-end push.

The path remains:

August Higher→Sept/Oct Choppy→Year-End PushAugust Higher→Sept/Oct Choppy→Year-End Push

Global earnings breadth continues to improve. Even Software is delivering resilient topline growth despite lagging stock performance. Europe’s 1H EPS growth tracked +14% YoY, the strongest in three years, with 2H acceleration expected to bring full-year growth to +15%. Asia earnings have been revised up 10% over the past three months, led by Korea, Taiwan, hardware tech, and industrials, supporting the higher-for-longer memory cycle. India ex-commodities earnings growth has improved to the mid-teens for the first time in six quarters, though NIFTY remains down 7% YTD.

The risk is that markets may not be paying enough attention to pain points. September Fed hike pricing has fallen to around 30% from 70% at the start of August, leaving a thin margin for error. Long-end yields continue to rise, with fiscal deficits and AI-related corporate financing needs creating upside risk. AI-related IG spreads are now 25bps wider than non-AI peers, and hyperscaler capex could drive roughly US$400bn of additional IG debt issuance. Geopolitics, refined-product tightness, still-elevated leveraged ETF exposure, and a slightly restrictive China POE policy backdrop all argue for more volatility into September / October.