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Based on price action alone, last week did not look promising for the most benchmarked index in the world. It suffered what most would consider a negative outside reversal week, typically taken as a sign of exhausted buyers.

To clarify exactly what we're looking at, we can go back to 1962 and look for any week that had:

• A higher high than the prior week
• A lower low than the prior week
• A lower close than the prior week

Using those definitions, we get the following returns going forward. To wrap some context around the reversals, we'll only include those weeks where the high was the highest in at least 12 weeks, but not so high that it was the highest in the past 52 weeks. These capture medium-term rallies within longer-term falling or gyrating markets.

These patterns were decent at showing a slight headwind in the shorter-term. Up to two months later, risk was higher than reward, but overall returns were about in line with random after the first month. There also was not a consistent bias toward weakness after that first month. We'd rate the pattern as a slight shorter-term negative, but nothing beyond that.

Thanks perhaps to the latest Federal Reserve announcement on buying individual bonds, the S&P enjoyed a very large positive reversal, not quite an "outside up day" but it was close. It erased more than a 2% decline to close positive on the day.

While it always looks impressive on a chart and gets people excited, it wasn't that great of a predictor. Returns over the next two weeks were negative, then slightly positive. Across most time frames, it wasn't far from random, with a z-score below 1 up to six months later.

Overall, there isn't much here to get too excited about on a daily basis, and maybe just a little bit to get negative about over the next couple of weeks.

Over the past few weeks, we've looked at the high and increasing amount of speculative activity among options traders, particularly the smallest of them that transact 10 contracts or less.

As stocks rose 3% or more each week, it was kinda-sorta understandable. But last week, stocks suffered high volatility and a big decline on Thursday, coupled with a mostly-failed rally attempt on Friday. That did not put off speculative traders - in fact, it emboldened them.

Last week, the net speculative activity (calls bought to open minus puts bought to open) of the smallest of traders was more than twice as extreme as it was at the peak in February.

They spent nearly $4 billion more in premiums on these calls relative to the premiums they paid on puts.

Using relative percentages, small traders spent 52% of their volume on buying call options to open. This is a record high, tied with the most extreme weeks in 2000.

Speculation wasn't rampant only among the smallest of traders. Even the largest of them, trading 50 or more contracts at a time, focused to a near-record degree on speculative calls.

Among all traders, there were approximately 22 million more calls bought to open than puts. This is astounding.

They spent over $6 billion more on calls than puts.

The Options Speculation Index, which is the most comprehensive look at how traders allocated their volume across speculative versus hedging activity, moved to the highest level since a few weeks in the year 2000.

Maybe the legions of new traders have spawned some kind of perverse front-running scheme among hedge funds, which are breaking their trades into tiny pieces and skewing this data. That's doubtful. More likely, it's a hoard of new traders stuck at home who have seen stocks only go up for months on end. This has never ended well and remains a large risk over the short- to medium-term.

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