The SPX rebound was rejected at the 21 EMA level near 3800 before rolling back down to close the week at the June lows near 3640. Technically the week still closed in the green slightly and RSI seems to be making a higher low if this retest of the lows can hold. The market likely waits for CPI data this week to make its next thrust move that would potentially last into October OPEX in two weeks. The 3600 floor and 3800 ceiling seem to be the two key levels to watch for now that with a break of either side likely brings the next 200 point in either direction. The SPX will need to close back above the 21 EMA currently 3785 to change the momentum that is right now focused on selling rallies. The 50% retracement from the August highs comes in at 3955 and could be the next target level higher on a rebound.

Market Sentiment/Breadth

AAII sentiment for the week ending 10/5 showed bullish responses rose to 23.9% from 20.0% prior while bearish responses were fell to 54.8% from 60.8%. Neutral sentiment rose to 21.3% from 19.2%. The survey results show optimism rebounding but continuing to stay unusually low. Pessimism fell after moving above 60% on consecutive weeks but continues to be unusually high. NAAIM Exposure index increased to 38.11 from 12.61 and remain below last quarters average of 40.63. Lipper fund flows for the week ending 10/5 had $4.5B of outflows in equities, the 7^th straight week of outflows. Friday’s close saw NYSE new highs at 19 while new lows of 397 and the 10-day MA of New High/Low Differential is still negative at -439. The percentage of SPX stocks above their 50-MA is 12.2% while those above their 200-MA was 17%. NYSI and NASI Summation index both bearish below 8-MA but trying to curl higher. NYMO McClellan Oscillator closed at -37 and is more neutral now. Cumulative AD line is back under the 40 EMA and 89 EMA long term signal in bear mode. CBOE Equity P/C 50-day MA at 0.69 and back to June highs. CNN Fear and Greed index in Extreme Fear zone at 22 from 15 last week.