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The SPX closed the week higher by +1.25% after pulling back to near the 21 EMA mid-week and found support before the spike higher on Powell’s dovish speech. The SPX now has closed above its 200-day MA for 3 straight days which is a first occurrence since early April and now nears a potential break above the trendline from 2022 highs. The market has climbed the wall of worry and now has potential to drift higher into the 4200-level next zone of resistance with December triple witching OPEX just two weeks away. That will also be the same week as the next important catalysts on the schedule being CPI and FOMC so barring news, the technical picture appears bullish with a tailwind into positive seasonality coming the mid to late part of December. Support is seen below at the key 4000 level and then 3975 being roughly the rising 21 EMA and then 3925 another large support that held recent pullbacks in November. If prices were to slip below that then the open gap becomes in play down into the 3800 zone.
Market Sentiment/Breadth
AAII sentiment for the week ending 11/30 showed bullish responses fall to 24.5% from 28.9% prior while bearish responses were unchanged at 40.4% from 40.2%. Neutral sentiment rose to 35.1% from 30.9%. Optimism among individual investors about the short-term direction of the market fell to a six-week low. Neutral sentiment jumped for the second straight week, and pessimism stayed around the same level. NAAIM Exposure index increased to 64.36 from 60.29 and is above last quarters average of 40.63. Lipper fund flows for the week ending 11/30 had $7.7B of outflows in equities, the 2nd straight week of outflows as the market rises. Friday’s close saw NYSE new highs at 89 while new lows of 44 and the 10-day MA of New High/Low Differential is at +20 and short term bullish. The percentage of SPX stocks above their 50-MA is 91.0% while those above their 200-MA was 63.8%. NYSI and NASI Summation indexes are positive above 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at 45.1 and is Neutral. Cumulative AD line is above the 40 EMA and now above the 89 EMA long term signal. CBOE Equity P/C 50-day MA at 0.77 and at new highs. CNN Fear and Greed index is in Greed zone at 63 from 64 last week.
Open
Interest
Alerts
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.
Chart
Set-Ups
Costco (COST) shares flagging in a narrow August range this month and respecting the top of monthly value area support at 540 as they closed above today and look ready to run to 558 which is an overhead VPOC that is untested from back in April when the stock made fresh all-time highs. COST has rebounded strong since the May low it made and is likely to move retail earnings reports this week. A close below 21 EMA near 530 is a good stop level.
Market
Talk
The SPX had a choppy weak overall starting lower but reversing off a key support near 3900 on Thursday. Morning strength Friday faded midday ahead of the long weekend. Overall the 4000 SPX resistance held tough this week and still remains a gamma line that needs to be reclaimed for less volatility and more dealer supported hedging flows. Staying under that key level would be a sign of caution until September OPEX in two weeks when a lot of put positions likely will expire and provide a potential rebound similar to June when options expiration marked a key turning point. September seasonality tends to be weaker to start but the quad witch options expiration week has historically been quite bullish and the week after OPEX has been more bearish. Those stats primarily in bull markets however have the potential to be the opposite in a downtrending market. Breadth got weaker the past week but overall the NYMO oscillator showed extreme oversold conditions which favors a rebound in the short term. VIX faded midweek off the highs but rebounded off the 22 handle Friday as the markets still remain jittery below that 4000 SPX level. The last week ahead of Labor Day is often a choppier dull market with low liquidity so it will be interesting to see how next week transpires as it’s a shorter week and likely more funds come back into the market. Overall the SPX holding the 3900 is needed as that is a cluster of fibonacci support and a trendline from the lows.
The sector leaders for the week were Biotech -1.3%, Insurance -2%, Utilities -1%. Laggards included Metals and Mining -8%, Semi’s -6.6%, Solar -5.5%.
The week ahead is quieter but still sees August PMIs, China Trade, ISM Services, and ECB Decision and Press Conference. Earnings from KR, NIO, ZS, UI, DOCU, PATH, BILI, GTLB, GME, COUP.
Flow
Recap/
Highlights
Options flows for the week saw put buyers active in auto names F and LCID while Sept put buys in refiners MPC, VLO. Bulls were active in EL, GM, SLB and also trucking names R, ODFL, LSTR. Later in the week saw call buys in large cap Tech AAPL, TXN while put buyers were out in consumer credit names like AFRM, AXP, ALLY. Lower delta opening put sales were seen in March for Tech names CRM, ANET, ORCL.
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