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S&P Futures (ES_F) had an indecisive week after pulling back from recent highs and bouncing back off VWAP from the October lows. We held trend support from the October lows and also forming another higher low against the December pullback. There’s been a big balance building since the beginning of November with a lot of volume forming between 4720 and 4646.50 and expectation for more chop within this zone while the edges around 4740 and 4540 have been faded. The 55-EMA was supportive last week while the 8-EMA crossed just below the 21-EMA on late in the week, a potentially cautious signal. RSI broke an uptrend on 1/5 and MACD crossed over bearish as well, both showing signs of momentum weakening. Resistance above next week will be at 4690-4695, 4735, and then 4765. Support below the 4605-4595 zone targets 4549.25, 4515, and then 4450.
AAII sentiment for the week ending 1/12 fell to 24.9% from 32.8% prior while bearish responses rose to 38.3% from 33.3%. Neutral responses rose to 36.8% versus 33.9%. Bullish sentiment fell for the second straight week and now at a four-month low, overly pessimistic. NAAIM Exposure fell to 74.78 and remains in a neutral level. Lipper fund flows had $9.9B of inflows to equities last week, the fourth straight week of positive flows (~$56B during that span). As of Friday’s close we had 213 new highs versus 840 new lows, continued weak breadth. The percentage of stocks above their 50-MA was 36.9% while those above their 200-day was 40.8%, both remaining weak. NYSI remains above its 8-EMA and remains in a bullish trend while NASI moved below its 8-EMA last week in a cautious sign. Cumulative AD remains in a bull trend. NYMO closed at 12.15. CNN Fear and Greed closed at 55, Neutral, and up from 53 last week.
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.
Endeavor (EDR) forming a nice bull wedge back into the 8-week EMA last week as well as the top of January value with potential to rip back above recent highs on a breakout move. EDR broke out of a 35-week post-IPO range in late December and now back-testing the prior resistance with room above $35 to $43-44. Both RSI and MACD are working well off of overbought levels and now positioned well to turn and run.
Stocks closed the week somewhat unchanged overall from last week after a wide range from low to high. Overall the Tech heavy Nasdaq was able to bounce Friday off the lows but remains heavy and under the 8/21 EMA’s which have crossed bearish. The week was highlighted by alot of Fed speakers noting rate hikes on the horizon and yields pressuring growth. The ARKK Innovation high beta fund continues to show concern as sellers push it lower under 80 this week. The sector leaders for the week were Energy, Large Cap Tech, and Healthcare. Laggards included Discretionary and Retail as well as REITs. VIX topping out and some key names like TSLA reversing higher to close Fridays action helped provide a short covering rally off the overnight lows near 4600 but we remain in a headline driven market with geopolitics also in focus with Russia and Ukraine concerns. Breadth and internals continue to lag on up moves so will be key to watch for a change in character with advance/decliners participate more on the upside instead of just the constant sector rotations week to week. Next week starts the bulk of earnings season with more large cap names reporting the week after. Also a big January monthly options expiration next week and ahead of the FOMC meeting on 1/26 so plenty for the market to digest which means its a good market to exercise caution and be selective.
Option Flows saw put sellers in to weakness for Banks in March expiration. Also there were May put buyers for social media names like SNAP and TWTR.
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