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S&P (SPX) closed the week poorly breaking below all of its shorter-term moving averages and looking at the rising 55-day moving average that aligns with the OpEx-week lows from May and July trend support near 4415 as potential support early this week. A bullish inflection would occur on a move back above 4535 and set up for a higher-high. The SPY 444.2 level is 1-month VPOC and there is a small gap to fill at 443.75, a level we could see act as support on a weak start to the week. Other notable levels are provided below and really into this week have to be cautious with the sell-signal in place and look for a nice 195-minute reversal candle off a key support.
AAII Sentiment for the week ended 9/8 was 38.9% Bullish to 27.2% Bearish, a sharp jump in Neutral to 33.9% from 23.2% the week prior while Bearish below its historical average and at a 1-month low. NAAIM Exposure Index dipped to 84.68, a three-week low, though remains elevated above the 81.2 quarterly average. Lipper Fund Flows showed $1.1B of equity fund inflows for the week after $12.7B the week prior. CNN’s Fear & Greed Index closed the week at 34, an indication of Fear in the market with the VIX surging to close the week near 21. CBOE’s Put/Call ratio 50-day moving average at 0.51 is at the highest level of 2021. As of Friday’s close we had 190 new highs to 59 new lows while 56% of stocks are above the 200-day moving average and 46.5% above the 50-day. S&P 500 stocks below the 50-day is below the mid-August sell-off level yet the overall market is higher, a bearish divergence. NYSI broke back under its 8-day moving average to close the week along with the S&P closing under its 8-MA, a sell signal in effect. NYSE Cumulative A/D pulled back but remains above the 89-day EMA, so no fresh sell-signal and the only sell signal with that indicator came just ahead of the March 2020 drawdown. NYMO finished the week -24.25, a slightly oversold market. TRIN is not yet giving any new signals, the 55-MA is 1.098. The VIX/VXV ratio pushed up to 0.9 to close the week, with a reading above 1 often a short-term buy signal.
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Datadog (DDOG) a favorite Tech name all year as it builds out an impressive platform in massive and growing areas of software. Shares have consolidated and continue to drift higher from the earnings gap and look poised to continue to $150 or higher. DDOG saw size buyers in October $140 calls on 9/8 and been a favorite of call buyers for a while now.
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HubSpot (HUBS) shares working back above monthly value yesterday and near a flag breakout above $715 that has room to run to $780. Shares have been in a strong trend higher and ready to run with MACD near a bull cross and RSI back above 60.
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Stocks had another volatile day selling off early before rallying midday back to flat and then pulling back to close slightly red on the day. Quad witching options expiration and index rebalancing tends to create a whipsaw of choppy price action this week. Most sectors were lower most of the day with Software, Housing, and Transports stronger. While weakness was seen in Metals, Solar, and Energy. The VIX was stronger early on but could not maintain strength which helped markets bounce. It remains a choppy expiration week with an upside bias usually seen into the Friday OPEX day. With the FOMC meeting looming next week and stalling of Biden’s economic plan, it seems bulls are hesitant to put on much risk ahead of the seasonal weak end of September. Sentiment for the week dropped significantly which may help produce a rally once the S&P can follow thru above the 8/21 EMA zone of resistance. 4500 remains a key level for bulls to regain for meaningful upside.
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Highlights
Option Flows were generally quiet Thursday ahead of the Quarterly rebalance and quad witching expiration Friday likely keeping conviction low for new option flows ahead of FOMC next week. Some call buyers were present in the China internet KWEB and bullish put sale in UNG Natural Gas.
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