The SPX closed higher by +0.32% for the week and clinched a 9^th straight positive week for the first time since 1985. The new year starts at extended levels and just below the all-time highs of 4818 that have still yet to be cleared. The first two trading days of the new year are often seasonally strong with new flows likely supporting prices and could get that push to a new all time high before any potential volatility uptick brings a more decent pullback that is overdue but price action staying above the rising 8 EMA bodes well for trend continuation. The 21 EMA at 4690 now is first strong support on a down move while the former breakout zone near 4610 would possibly be a lower target on any correction later in January. RSI is showing small bearish divergence so the first signs of a rally losing fuel but with new year flows dominating possibly until mid-month when the large January expiration comes it pays to wait for bearish confirmation.

Market Sentiment/Breadth

AAII sentiment for the week ending 12/27 showed bullish responses decreased to 46.3% from 52.9% prior while bearish responses increased to 25.1% from 20.9%. Neutral sentiment rose to 28.6% from 26.2%. The bull-bear spread (bullish minus bearish sentiment) decreased by 10.8 percentage points to 21.3%. The bull-bear spread is above its historical average of 6.5% for the eighth consecutive week. The NAAIM Exposure index increased to 102.71 from 97.32 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 12/20 had $-21.9 billion of outflows in equities. Friday’s close saw NYSE new highs at 39 while new lows of 6 and the 10-day MA of New High/Low Differential is positive at +150. The percentage of SPX stocks above their 50-MA is 90.0% while those above their 200-MA was 78.4%. NYSI Summation index is above its 8-MA for a short term buy signal. NYMO McClellan Oscillator closed at +6 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 0.65. CNN Fear and Greed index is in the Extreme Greed zone at 76 from 77 last week. The VIX/VXV ratio closed at 0.816. This measures the spread between 1- and 3-month implied volatility, above 1.0 exhibits fear and tends to mark a low.