The S&P (SPX) finished -1.2% in the holiday shortened week and was one of the smaller range candles seen in recent months. The S&P is staying above its 8- and 21-day EMA’s as it digests the prior week’s large advance. 4100 is a key level that was retested this week and held thus far on a closing basis. A move back under that likely sees the round number 4000 quickly. On the upside the 55 EMA is just overhead at 4200 and the site of the January lows that has been retested numerous times since then. Short term momentum remains positive with breadth improving slightly and MACD and RSI back to pointing up. If the market surpasses the 4200 area, then the next spot of interest is the full 50% retracement back to 4314 which is a higher volume node on the S&P futures.

Market Sentiment/Breadth

AAII sentiment for the week ending 6/1 showed bullish responses rise to 32% from 19.8% prior while bearish responses dropped considerably to 37.1% from 53.5%. Neutral sentiment rose to 30.9% from 26.7%. This is the highest level of optimism recorded since March 24, 2022 (32.8%). Even with the big increase, bullish sentiment remains below its historical average of 38.0% for the 28th consecutive week. NAAIM Exposure nudged a bit higher to 34.33 but remains overly bearish. Lipper fund flows for the week ending 6/1 had $7.4B of inflows to equities, the second straight week of stronger inflows. Friday’s close saw NYSE new highs at 50 while new lows of 25, the 6^th straight day of New Highs outpacing new lows. The percentage of SPX stocks above their 50-MA was 43.4% while those above their 200-MA was 37%., well off recent May lows. NYSI and NASI Summation index both still in a bullish mode. NYMO retreated to 47.28 to end the week but still overbought. Cumulative AD remaining in a downtrend but back above the 40 EMA short term. CBOE Equity P/C 50-day MA neutral at 0.63 but at two-year highs. CNN Fear and Greed rose to 27 from 21 last week.