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The Bonds Don’t Lie: AI Debt, 5% Yields, and the ES Sitting on the Edge
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I am always worried about the bonds, but…
Michael Burry was blasting away about all the circular financing of the AI Co.: “Well, you could have heard it first, months ago—2025 even,” Big Short investor Michael Burry wrote on X while sharing a Wall Street Journal report.
According to the Journal’s analysis, Alphabet, Amazon, Meta, Microsoft, Oracle, Nvidia, Broadcom, SpaceX, and AMD have accumulated approximately $3 trillion in off-balance-sheet commitments, largely tied to AI data centers, chips, equipment, and energy. That compares with roughly $600 billion in reported capital spending over the past year.
And the next thing on the chopping block....
U.S. credit-card debt rose $21 billion in Q2 2026 to $1.263 trillion—an increase of $54 billion year over year. Serious-delinquency transitions were 6.97%, roughly steady but elevated. New York Fed
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Tom Incorvia - Blue Tree Strategies
SPY (Daily)
SPY's daily chart shows two areas of balance. The first and most notable runs 6/2 to 7/31, roughly two months sideways in the mid 730s to upper 750s. Price exited to the upside over two trading days in early August. The breakout was not as dramatic as one would like to see, but there was no immediate rejection back into the old range, and price then balanced for seven trading days above it. Sideways trade at the higher prices is acceptance, not hesitation. The upper balance is now the working reference, with the top of the June to July area below as the first support shelf. Accepting above the seven day balance means the market is free to explore higher. Rejecting back inside the old range flips it from support to supply.
SPY (30 Min)
Zooming to the 30 minute chart shows today's action retreating back into the upper value area, a tight zone of only about six points from 768 to 774. That is the first rotation back inside since the early August departure. Re entering the area is not yet a failure, it is a test. What matters now is whether price accepts inside that value area or rejects and works back to the highs. Acceptance inside 768 to 774 puts the lower edge in play, and a departure below 768 turns attention back to the more prominent June to July area, where the real supply question gets answered.
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The ES traded in a 7801.25 to 7824.50 Globex trading range, with 120k contracts traded, and opened Monday’s 9:30 ET regular session at 7803.00, down 2.50 points, or -0.03%.
I had surgery on my hand at 6:30 a.m., and I need to keep it elevated, so if the OP seems small, you know why.
After the open, the ES traded up to 7809.50 and sold off 15 points down to 7794.50. It rallied up to a higher low at 7802.00, then made four lower lows down to 7790.00. It rallied up to 7800.00 at 11:15, sold off 11.75 points down to 7788.25 at 11:30, and rallied up to 7797.50 at 12:15. It then made another sequence of lower lows down to 7772.00 at 1:30 after a headline hit saying, “Iran will escalate tensions in the Strait of Hormuz and beyond and launch an attack if the U.S. fails to implement an interim peace deal fully in a matter of weeks.”
The ES back-and-filled in a six- to seven-point range and then sold off down to a new low at 7767.75 at 3:30 and traded 7774.00 as the 3:50 cash imbalance showed $1 billion to buy. It traded 7774.75, sold off down to a new low at 7766.25 at 3:58, and traded 7768.75 on the 4:00 cash close.
After 4:00, the ES traded down to a new low for the day at 7763.50 and settled at 7765.50, down 39.50 points, or -0.51%. The NQ settled at 30078.25, down 63.50 points, or -0.21%; the YM settled at 53509, down approximately 296 points, or -0.55%; and the RTY settled at 3062.29, down 2.70 points, or -0.09% on the day.
In the end, the bonds were down early, and after the Iran headline hit, crude oil was up over $2.00. In terms of the ES’s overall tone, it was weak, and every rally was for sale. In terms of the ES’s overall trade, volume was low at 934k contracts traded.
MOC Recap: Early Buy Imbalance Reverses into Wholesale Selling
The MOC opened with a $1.1B buy imbalance, driven by $4.1B in buy orders against $3.0B in sells. The opening dollar lean was +58.0%, while the symbol lean was only +51.6%, showing that the early buy pressure was concentrated in larger-dollar names rather than a broad market-wide program. The S&P 500 was the strongest opening index at +$1.2B, with a +59.0% dollar lean, while Nasdaq opened at +$424.6M.
The buy imbalance held briefly, reaching +$1.2B at 15:52, but began fading quickly. By 15:53 it had dropped to +$385.0M, flipped to -$158.0M at 15:54, and accelerated to -$1.4B at 15:55. Selling remained in control through the final minutes, reaching -$1.8B at 15:59 before finishing near -$1.0B at 16:00. The closing dollar lean reached -82.0% and the symbol lean -71.2%, both well beyond the 66% threshold and signaling a broad wholesale sell program into the bell.
Sector action remained mixed despite the late sell wave. Consumer Discretionary showed the strongest dollar buy lean at +79.4%, followed by Consumer Staples at +74.7% and Health Care at +71.6%. Technology remained buy-leaning at +60.1%. Energy stood out on the sell side, with a -70.0% symbol lean, while Industrials and Communication Services were also net sellers.
Among individual names, AMAT led the buy imbalances at $258.4M, followed by SNDK at $220.9M, MU at $148.4M, UNH at $128.1M, and CRM at $127.2M. On the sell side, AAPL led at $264.9M, followed by INTC at $231.3M, GE at $115.3M, GEV at $103.1M, and VLO at $78.0M.
The session’s defining feature was the sharp transition from a modest, concentrated buy opening to broad, aggressive selling at the close. That reversal showed how quickly closing-auction demand shifted, with early index buying giving way to decisive sell-side participation across the market
Daily Market Recap 📊
For Monday, August 17, 2026
NYSE Breadth: 31% Upside Volume
Nasdaq Breadth: 48% Upside Volume
Total Breadth: 42% Upside Volume
NYSE Advance/Decline: 32% Advance
Nasdaq Advance/Decline: 38% Advance
Total Advance/Decline: 36% Advance
NYSE New Highs/New Lows: 74 / 135
Nasdaq New Highs/New Lows: 176 / 164
NYSE TRIN: 1.04
Nasdaq TRIN: 0.67
Weekly Breadth Data 📈
For Week Ending Friday, August 14, 2026
NYSE Breadth: 55% Upside Volume
Nasdaq Breadth: 59% Upside Volume
Total Breadth: 58% Upside Volume
NYSE Advance/Decline: 52% Advance
Nasdaq Advance/Decline: 57% Advance
Total Advance/Decline: 56% Advance
NYSE New Highs/New Lows: 250 / 172
Nasdaq New Highs/New Lows: 651 / 354
NYSE TRIN: 0.88
Nasdaq TRIN: 0.94
ES & NQ Levels (Premium only)
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Polaris Trading Group Summary - Monday, August 17, 2026
Monday’s session was a good example of letting the market come to the trader rather than forcing activity. David identified the slow late-August environment early, encouraged reduced expectations, and the room ultimately saw the key downside targets fulfilled once the market finally broke lower.
Market Context
David highlighted the typically slower late-August vacation period and warned that market rhythms could remain muted.
The key Line in the Sand was 7795.
Price had already pushed into the 7820–7830 DTS target zone before the regular session.
A new cycle began, with David identifying the day as Cycle Day 1.
The guiding message from the start was to adjust expectations to the current trading environment.
Morning Session
Price action remained slow, compressed, and difficult to trade.
The room spent much of the morning studying:
Opening Range characteristics.
Buyer and seller behavior.
Absorption and passive order flow.
Dynamic levels and potential stop-running areas.
Rather than manufacture trades in poor conditions, David emphasized patience.
His key reminder was that sometimes the best trade is no trade.
Afternoon Breakdown
After lunch, the market finally produced a meaningful directional move.
Price broke below the 7795 Line in the Sand.
The decline fulfilled the 7775 downside target.
David then identified 7765 as the next lower objective.
By late afternoon, the 7765 target zone was also fulfilled.
David characterized the move as a normal Cycle Day 1 decline.
Positive Trade Highlights
The strongest opportunity came from waiting for confirmation below 7795 rather than anticipating the move.
The predefined downside roadmap worked well:
7795 break
7775 target achieved
7765 target achieved
Traders who remained patient during the slow morning were in a better position to participate when the cleaner afternoon opportunity appeared.
The day reinforced the value of target-based trading instead of chasing price.
Lessons Learned
Match expectations to the market environment. Slow summer conditions often require fewer trades and greater selectivity.
No trade can be a successful decision. Preserving capital during low-quality conditions is part of professional trading.
Wait for confirmation. The better opportunity emerged only after the key 7795 level failed.
Trust prepared levels. The projected 7775 and 7765 objectives provided a clear roadmap once the decline began.
Patience creates opportunity. The market eventually delivered a clean move, but only after several hours of constrained action.
Discovery Trading Group Room Preview – Tuesday, August 18, 2026
Macro Backdrop
Global markets are under pressure as rising bond yields, higher oil prices, and geopolitical tensions tighten financial conditions.
Elevated long-end yields remain the biggest macro headwind for ES and NQ, particularly for duration-sensitive tech.
Rising crude prices are adding inflation concerns and increasing sensitivity to geopolitical headlines involving Iran and the Strait of Hormuz.
Cross-asset signals from bonds and oil are likely to remain key drivers throughout the session.
ES Levels & Positioning
ES continues to work around the 7800 area, with upside volatility still relatively muted.
Overnight whale positioning is leaning bullish on elevated large-trader volume.
Resistance: 7838/43. A clean break above could turn this zone into support.
Support: 7620/15, followed by 7458/63, 7313/08, and 7125/20.
The 50-day MA at 7567.75 remains loose support below.
The 5-day average daily range has increased to roughly 55 points.
Stocks & Themes
Big Tech and AI remain important swing factors despite pressure from higher yields.
META faces a major social-media addiction trial, adding regulatory risk.
GOOG/GOOGL is reportedly pursuing Spirit Airlines business data as part of its enterprise-data expansion.
AI-related names could see additional volatility from ongoing copyright litigation involving generative-AI companies.
Earnings
Premarket: AS, HD
After the close: FN, KEYS, SQM, TOL, ZTO
Wednesday morning: ADI, LOW, TGT, EL, TJX, VIK
Economic Calendar
8:15 AM ET: ADP Weekly Employment Change
8:30 AM ET: Building Permits, Housing Starts, Import Prices
9:15 AM ET: Capacity Utilization, Industrial Production
10:00 AM ET: Pending Home Sales
Session Outlook
Expect a headline-driven and potentially choppy session.
Bonds, crude oil, and geopolitical developments remain the primary directional cues.
ES may struggle to establish sustained direction until yields and oil stabilize.
