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The SPX last week started with a sell-off but held right at key AVWAP from late March lows now making that 7310 level a key inflection as there is a large volume pocket below to where the market could roll back to the rising 200MA at 7025. Larger picture, the SPX continues a multi-month range-trade building a large consolidation, though some promising signs of RSI starting to work out of a downtrend. Retracement levels of note below that 7310 include 7123 and 6970, the latter a major value shelf and retest level as well if there is a sharper Q3 correction. Looking above the SPX did manage to close firmly above the now up-sloping 8MA as well as squeaking out a close above 21 and 55 day moving averages, potential for a bullish 8/21 cross on watch this week. A volatility-stop bullish inflection point if overhead at 7535 while 7500 a key round number and options strike into August followed by 7575 as upper range value and 7620 record highs, above the latter and can start looking to Fibonacci extension levels.
AAII sentiment for the week ending 7/29 showed bullish responses rise to 31.0% from 29.6% prior while bearish responses fell to 42.1% from 42.3%. Neutral sentiment fell to 26.9% from 28.1%. The bull-bear spread (bullish minus bearish sentiment) increased 1.6 percentage points to -11.1%. The bull-bear spread is below its historical average of 6.5% for the 19th time in 22 weeks. The NAAIM Exposure index fell to 79.70 from 84.02 last week and sits below last quarter's average of 87.61. Total equity fund flows for the week ending 7/22 had -$36.5 billion in outflows in equities, more than double the -$18.1 billion the week prior. Friday's close saw NYSE new highs at 47 while new lows were at 65, down from 88 highs against 73 lows a week ago. The percentage of SPX stocks above their 50-MA is at 61.5% while those above the 200-MA is at 66.1%, with the Bullish Percent Index at 57.0. NYSI Summation index is at 233.9 and on a bear signal while NYMO McClellan Oscillator closed at -9.2 and is back to neutral. The cumulative AD is at 154,186 and still on a bull trend, and the Cumulative New 52 week High/Low differential at 43,355 is above its 10-day MA for a medium-term bull signal. The S&P weekly MACD is negative at -0.4 while the 8/21 weekly EMA remains a bull trend. CBOE Equity P/C 50-day MA is at 0.9 and reading overly fearful while Friday's single session printed 0.63. CNN Fear and Greed index is in the Fear zone at 42.46 from 41.34 last week. SKEW closed at 141.23 from 139.90 and stays elevated even as VIX fell to 15.99 from 17.09 and 9-day vol dropped to 13.05. The VIX/VXV ratio closed at 0.841 from 0.876, back near the lower part of the range this year.
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Goldman Sachs (GS) shares of the investment banking giant are stabilizing after retesting the 200 EMA and large support near one year point of control on the volume profile at 775 and seeing a MACD bullish cross triggering into the new week. GS has room to rebound if markets choose to bounce back and a move back to 850-875 would fill in space on the volume profile. GS saw recent dip buyers of 300 January $925 calls at $85.25 and 300 Dec 2028 $900 calls bought on 3/12 while June 2027 $1300 calls now have over 1100x in open interest from buyers on 2/27.
Trade to Consider: Long GS May $850/$875 Call Spreads at $10 debit
Chart
Set-Ups
Alkermes (ALKS) on 6/22 with a large buy of 2500 November $55 OTM calls for $750K and has also seen 1500 August $55/$45 bull risk reversals open and 3500 August $45 calls bought on 6/15 remain in open interest.
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Stocks opened quietly into a small gap up after the CPI report rose by +0.9% but markets shrugged it off due to it likely being a temporary oil price based jump. Stocks sold off into midday to test near 6800 but stabilized overall even with VIX turning green. Software stocks continued to get pummeled which is still a looming concern while Oil stays sticky near $100. It is worth noting that the S&P 500 moved into negative territory following a New York Post interview with President Trump in which he said the U.S. military is preparing to resume strikes on Iran if peace talks fail this weekend. Overall, the market is holding up as solid semiconductor strength helps offset weakness in cyclicals and defensives.
What’s On Tap: PPI Highlights a Quieter Econ Data Week, UK GDP, Aussie Employment Change; Earnings From GS, BLK, C, WFC, JPM, BAC, MS, JNJ, NFLX, AA, TSM as reporting season begins already with banks to start
Flow
Recap/
Highlights
The past week saw early week action saw quieter volumes as traders waited for Iran clarity which then brought on a busy midweek with the ceasefire news. In that surge higher by Wednesday we saw opening call selling and overwriting into this rally which is normal and makes sense after a big move, funds would rather sell calls to cap upside rather than sell their stock. We saw a lot of industrial names the past few days rolling calls to May from April as a continued theme for months. We saw stubborn software put sellers rolling out in time in names like NOW, DDOG, SNOW.
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