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The SPX finished the week higher by +1.4% after a midweek reversal lower after FOMC was bought at key support near 3900 and closed Friday with a strong rally back to close just above the 21 day EMA which sits at 3965 now. The index is balanced in the high volume node near this 4000 magnet number with a week left into end of quarter and potential to see a choppy upside grind towards the larger resistance of 4065. With all the bad news out there, SPX has held firm impressively when it had every chance to breakdown. Fridays low also back tested the downtrend line from 2022 highs and the 200 day MA at 3925 also continues to hold now as the MACD crossed bullishly and RSI back near 50 and has broken above a trendline from the February highs which implied price may do the same soon. For now the SPX is stuck between key support of 3900 and strong resistance closer to 4075-4100.
AAII sentiment for the week ending 3/22 showed bullish responses rise slightly to 20.9% from 19.2% prior while bearish responses rose to 48.9% from 48.4%. Neutral sentiment fell to 30.2% from 32.4%. Optimism is at an unusually low level for the fifth consecutive week and the 45th time out of the past 64 weeks. Pessimism was last higher on December 22, 2022 (52.3%). The bull-bear spread (bullish minus bearish sentiment) rose by 1.2 percentage points to –27.9% but remains unusually low for the fifth consecutive week. The NAAIM Exposure index decreased to 53.21 from 41.92 but still at an overall low level and near last quarter’s average of 51.03. Lipper fund flows for the week ending 3/22 had $11.9B of inflows in equities, the first week of inflows in 6 weeks. Friday’s close saw NYSE new highs at 23 while new lows of 260 and the 10-day MA of New High/Low Differential is -164. The percentage of SPX stocks above their 50-MA is at 23.0% while those above their 200-MA was 42.8%. NYSI and NASI Summation indexes are still below their 8-MA and in a short term sell signal. NYMO McClellan Oscillator closed at -21 after bouncing back to near Neutral. The cumulative AD line is still below the 40 EMA short term trend and now under the 89 EMA long term signal. CBOE Equity P/C 50-day MA at 0.69 and falling. CNN Fear and Greed index is back in Fear zone at 33 from 24 last week. VIX/VXV ratio back down at 0.907 after recently hitting 1.00 levels often seen near bottoms.
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Fidelity Info (FIS) shares with an early breakout move Thursday of a flag with the 200-MA overhead a potential target, FIS has 7000 October $100 calls bought in open interest with 5000 of the $110 calls short. We discussed FIS in-depth on 6/1, noting FIS spoke at a BAML Conference in March outlining why the market is undervaluing shares with its premier assets and 70% of revenue is generated from software and services to clients with deep, long-term and recurring relationships while the other 30% is generated via consumer spending. Forecasts see revenues growing at a 7% CAGR and EPS 10-15% annually the next three years. FIS cited strong wins last quarter in Banking and Capital Markets and plans to raise buybacks to $6B in 2023 though also likely to be active in M&A to defend/gain market share and increase exposure to faster growing segments.
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CoStar (CSGP) a name that recently tested some trend support and filled a key gap and looks to be basing the last two weeks. Although shares are triggering a bearish 21/55 crossover, a move back above $79 could regain momentum and take aim back at the highs.
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Stocks held onto gains overnight with positive Macro data as China services PMI surged and Eurozone inflation cooled while unemployment remained steady at low levels. In morning US data, Income beat estimates while Spending came in a bit light, and PCE Core also showed signs of cooling. Growth stocks led the early charge higher with the idea of the Fed hikes easing. Chicago PMI came in at expected weak levels while Consumer Sentiment came in weaker than expected. The rally continued all morning with the S&P moving up to VWAP off record-highs and the Nasdaq continued its major breakout. NYSI and NYSE A/D signals both pushed back into buy signals to close this week. The stock market closed out this final session of Q1 with sizable gains. The main indices moved up right out of the gate and spent most of the day inching higher. A sharp upside move in the late afternoon had the S&P 500 close above the 4,100 level. Strength from the mega cap space had an outsized influence on index level performance today and throughout Q1. The Vanguard Mega Cap Growth ETF (MGK) rose 1.8% versus a 1.5% gain in the Invesco S&P 500 Equal Weight ETF (RSP) and a 1.4% gain in the market-cap weighted S&P 500. The MGK rose 18.9% this quarter versus a 2.4% gain in the RSP.
Q2 kicks off with a slow earnings schedule with reports due from STZ, CAG, LW, RPM, SAIC. The economic schedule features ISM on Monday, Factory Orders Tuesday, ISM Services on Wednesday, and the key Jobs Report to close the week on Friday.
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The end of March saw strength in Tech as Call buyers were hot across Software names like AI, PLTR, U, CRWD and others with breakouts triggering everywhere. We saw opening put sellers in growth Tech again in August with GOOGL, ABNB, DOCU. PINS as well as June put sales in PANW. We also saw some Bank put buys in EWBC and MCB signaling more troubles ahead of smaller names on deposit concerns. We then saw longer-dated opening put sales in Insurance large caps MET and PRU. We saw bull risk reversals open in Airliners UAL and DAL. Call buyers in OTM low Delta small cap gold miners was seen again with KGC and others. Chinese names like PDD, BIDU, JD continue to draw bullish positioning. Chinese education names EDU, TAL also saw unusual call buys. Financials like USB, FRC, MET, and LNC saw more put buying.
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