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The S&P 500 (SPX) marched higher for the third straight week and made a new all-time weekly closing high at 4536.50 as earnings season kicked off and concerns around Washington and China abated. Friday’s candle ended a streak of seven straight sessions highs and now fairly extended above its short-term moving averages, setting up for a possible breather and consolidation phase. S&P futures broke out above monthly value on Tuesday at 4484 which now aligns with the rising 8-EMA, a logical spot to watch for a potential bounce. Other areas of note include VWAP from 10/13 at 4464.25 and then the monthly POC is down around the 21-EMA at 4436.50. A breakout above 4550 in the futures has no resistance as we’re at all-time highs. The multi-week range from the September pullback measures out to 4840. Ahead of that level are some key Fibonacci extensions at 4621.50, 4664.75 and then 4700.
Sentiment overall surged to the bullish side of the ledger this week. The latest AAII sentiment survey for the week ending 10/20 showed another jump in bulls to 46.9% vs 37.9% prior and up from 25.5% on 10/6. Neutral sentiment fell to 25.4% vs 30.3% prior and bears are 27.8% and down from 40.7% in late September. Bulls are now well above the long-term average while bears are below for the first time in over two months. NAAIM Exposure jumped sharply back to 98.02 from 64.46 and now near multi-month highs. Lipper Fund flows had $10.9B of inflows to equities, the biggest by far in over a month. As of Friday’s close we had 570 new highs vs 204 new lows, strong breadth. The percentage of stocks above their 50-day and 200-MA also increased again with the former at 56.6%. NYSE Summation continued to rise to 225 and remains above its 8-EMA. NASI also hit its highest level since July and in a bull signal above its 8-EMA. Cumulative AD hit new highs this week. CBOE Equity P/C 50-day MA was 0.49 and continues to fall. VXV:VIX rose to 1.325 this week. CNN Fear and Greed rose to 67, up from 50 last week, and the highest level since early 2021.
Bath and Body Works (BBWI) triggering a strong breakout this morning after consolidating for the last few weeks. BBWI a name we featured in a recent writeup with over 23,000 November $65 calls accumulating from buyers and also 20,000 of the Nov. $70 calls.
Abercrombie & Fitch (ANF) working above monthly value high on Monday and starting to clear a bull wedge with room above $41 to run back to 52-week highs. Shares are forming an inverted head-and-shoulders pattern as well around the 38.2% Fibonacci retracement of the rally. ANF is hitting the ‘ready to run’ scan today with MACD nearing a bull cross and RSI reset but crossing back above 50 in a sign of strength.
Tech Stocks made fresh highs Wednesday with the Nasdaq leading the early action thanks to strong earnings reports from MSFT and GOOG. The Nasdaq made a new high but then closed weaker with the SPX also closing at the lows for the first time in the last few weeks. Earnings reports will be key the rest of the week with AAPL and AMZN a few of the bigger names still to report. The VIX creeped higher since Tuesday morning and showing a bit of caution here after hitting 15 recently. Internals sold off early today and pulled the indices down by the end of the day. Sector leaders included Solar, Bonds, Consumer Discretionary. Weakness was seen in Banks, Energy, Payment Processors. The market overall is in the heart of earnings season after a large move back to new highs the past two weeks. With the FOMC meeting looming the first week of November, could be a time for some profit taking to end October. The SPX is up over 6% for the month of October after the weakness in September so a time for caution but as long as 4500 holds in the short term, it likely provides a path for continued strength into November which is seasonally a stronger month.
Option Flows were active in some beaten up Tech stocks with longer dated call buys in TWTR, SNAP, INTC
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