The SPX closed at +1.0% for the week and now clinching an 8^th straight positive week showing the breadth of this rally expanding and sustaining into year end as seasonality plays out as expected with funds chasing performance into highs. The minor dip midweek looked sharp but only came back to its rising 8 EMA and held perfectly holding above SPX 4700 which is now a key short term inflection point going into the new year. A bit of a volume pocket now developing below that level with some minor bearish RIS divergence to keep an eye on so any selloff below that zone could see a test of 4600 in the coming weeks but with seasonal bull flows likely sustaining into year end with the Santa rally typically going into the second trading day of a new year it likely grinds up to the next objective which is now SPX 4800 and the all time highs just above that of 4818. The final week of the year should feature dull lower volume action which benefits bulls.

Market Sentiment/Breadth

AAII sentiment for the week ending 12/20 showed bullish responses increased slightly to 52.9% from 51.3% prior while bearish responses increased to 20.9% from 19.3%. Neutral sentiment fell to 26.2% from 29.4%. The bull-bear spread (bullish minus bearish sentiment) remained unchanged at 32.0%. The bull-bear spread is above its historical average of 6.5% for the seventh consecutive week and the eighth time in 16 weeks. The NAAIM Exposure index increased sharply to 97.32 from 77.97 and is above last quarter’s average of 60.53 now hitting more extreme sentiment levels near the July highs. Total equity fund flows for the week ending 12/13 had $-18.9 billion of outflows in equities. Friday’s close saw NYSE new highs at 183 while new lows of 10 and the 10-day MA of New High/Low Differential is positive at +162. The percentage of SPX stocks above their 50-MA is 90.0% while those above their 200-MA was 76.4%. NYSI Summation index is above its 8-MA for a short term buy signal. NYMO McClellan Oscillator closed at +45 and now Neutral. The cumulative AD line is above the 40 EMA short term breadth and firmly above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.70. CNN Fear and Greed index is in the Extreme Greed zone at 77 from 67 last week. The VIX/VXV ratio closed at 0.815. This measures the spread between 1- and 3-month implied volatility, above 1.0 exhibits fear and tends to mark a low.