The SPX remains in a one-year rising channel pattern and last week tested the lower boundary nearly also reaching a key 50% retracement and the rising 200-MA, putting the 4190-4210 zone in focus as major support that needs to hold or the longer-term trend inflects bearish. Breadth measures continue to say stay cautious until we see healthier price-action but we did see the USD and Yields start to act toppy last week and Q4 sets up favorable for a rally given the dynamics of the move earlier in 2023. The first substantial test on a real rally would come near 4425 as trend resistance if the S&P can work over its 8-MA that acted as resistance last week. AVWAP off those Oct. 2022 lows where the channel starts comes in at SPY 412.25 as a key level to watch is the trend breaks and aligns with a major long-term VPOC.

Market Sentiment/Breadth

AAII Sentiment for the week ending 9/27 showed Bullish sentiment drop to 27.8% from 31.3% the week prior while Bearish sentiment surged to a multi-week high of 40.9%. The NAAIM Exposure index also moved lower to 43, the lowest since 8/23 and well below the quarterly average. Lipper showed outflows of $10.9B last week from equities, the fourth week of outflows out of five. As of Friday’s close there were 69 new highs comparing to 263 new lows and just 20.4% of stocks are above the 50-day MA while 33.5% above the 200-day MA. NYSI Summation and A/D breadth signals remain in a sell signal. CBOE Equity/Put Call ratio 63-EMA at 0.74 continues to climb higher, another cautious signal. NYMO closed the week -24.77, slight oversold, after hitting a low of -69 mid-week. TRIN 55-MA signal remains in a cautious signal. The VIX:VXV ratio hit a 0.962 high last week and closed at 0.95, a reading above 1 typically marks a tradable bottom.