Weekly Market View 1-2-22
The S&P 500 (SPX) broke out of a multi-week range and closed near new all-time highs last week as 2021 drew to a close. We pulled back a little on Thursday and Friday towards the rising 8-EMA but ranges overall compressed after a big run off the 12/20 low up through 4720. The November/December range breakout has long-term upside to 5,000 and a near-term target near 4865-4870. Both MACD and RSI are bullish and not yet near overbought on the daily timeframe while the longer-term weekly is nearing a bull cross and inflection higher in momentum. Support under the 8-EMA is down near 4713.5 and then the rising 21-EMA at 4700 and bulls would prefer to stay above that key spot and continue to balance. A bigger volume node at 4618 would be further downside support.
AAII sentiment for the week ending 12/29 showed a rise in bullish sentiment to 37.7% from 29.6% while bearish sentiment fell to 30.5% from 33.9%. Neutral sentiment fell to 31.8% from 36.6%. Bullish sentiment ended the year at a new six-week high. NAAIM Exposure rose to 85.71, continuing to rebound from extreme oversold levels and now back near a neutral reading. Lipper Fund flows had $24.6B of inflows to equities, as is typical into the final week of the year. As of Friday’s close there were 246 new highs vs 158 new lows, balanced breadth. The percentage of stocks above their 50-day MA was 50.95%, the highest since mid-November. The percentage of those above their 200-day was 55.2%. Both NYSI and NASI rebounded sharply over the last two weeks and now above their 8-EMA in a bullish sign. Cumulative AD also rebounded well back to its best levels since mid-November. CBOE Equity P/C 50-day MA was 0.483 and remains overall complacent. NYMO finished the week at 48.49 which is quite extended and could be overbought near-term. CNN Fear and Greed was 61, ‘greed’, and up from 40 or ‘fear’ last week.