Weekly Market View 1-14-24
The SPX closed higher for the week by +1.8% and closed at a new weekly closing all-time high after seeing a perfect rebound off the 21-day EMA we were looking for last week. The SPX 4800 big wall of resistance continues to hold tough, and the market is running out of time seasonality wise as we near the large January options expiration this week and with breadth not looking impressive on this week’s staunch move higher led by largely the Mag7 mega cap Tech names, it breeds caution from here. The below chart also signals a bearish RSI divergence materializing the past several weeks as prices grind higher but are not met with higher levels in RSI or MACD indicators. A yellow warning light for now but confirmation would come on a close below the 21-day EMA, now at just under 471, or roughly that 4700 key level on SPX cash index. If you look below that you can clearly see a decent sized volume pocket and prices would likely cascade lower into that zone to fill the space of the volume profile. This would lead to a target down into that rising 55-day MA near 460. For now, upside rallies need to close above 4800 with breadth participation from more sectors, otherwise the late January and early February time period historically has brought a mild pullback to markets to be on watch for.
AAII sentiment for the week ending 1/10 showed bullish responses unchanged at 48.6% from 48.6% prior while bearish responses increased to 24.2% from 23.5%. Neutral sentiment fell slightly to 27.2% from 27.9%. The bull-bear spread (bullish minus bearish sentiment) decreased 0.6 percentage points to 24.4%. The bull-bear spread is above its historical average of 6.5% for the 10th consecutive week and the 11th time in 22 weeks. The NAAIM Exposure index increased to 80.18 from 70.95 last week and back above last quarter’s average of 67.81. Total equity fund flows for the week ending 1/3 had $-21.3 billion of outflows in equities. Friday’s close saw NYSE new highs at 107 while new lows of 23 and the 10-day MA of New High/Low Differential is still positive at +36. The percentage of SPX stocks above their 50-MA is 84.0% while those above their 200-MA was 75.6%. NYSI Summation index is below its 8-MA for a short term sell signal. NYMO McClellan Oscillator closed at -26 and 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 0.71. CNN Fear and Greed index is in the Greed zone at 71 from 70 last week. The VIX/VXV ratio closed at 0.85. This measures the spread between 1- and 3-month implied volatility, above 1.0 exhibits fear and tends to mark a low.