The SPX closed higher on the week by +1.2% and a new all time closing high on Friday right into the 5820 fib extension target as a short term level to be aware of as monthly OPEX now approaches this coming week. The mega cap Tech stocks joined in this week with especially the Software group adding strength to early week upside led by Semi’s and names like NVDA now just a hair below the former all time highs. The SPX continues to melt up above this 5700 level after clearing it now about three weeks ago so as long as the rising 21 day EMA holds as trend support (currently 5710) then dips likely get bought into the end of October and post-election. Secondary support below there would come in at 5675 and 5625 near the 55 day MA. Upside could be capped this week with a potential holding pattern into the heart of earnings season starting soon and monthly options expiration tends to start off stronger and then fade by mid to late in the week. This time also features VIX options expiration on Wednesday AM 10/16 so potentially a midweek turning point to look for a pullback. Longer term it seems more likely the round number of 6000 becomes a magnet later into year end as it also lines up with the upper 1.618% fib extension objective. If met with more euphoric sentiment it could become a good target to trim risk and dial back exposure but also realizing that seasonality is strongest to the upside in November so likely not worth betting against as a year end chase could materialize still.

Market Sentiment/Breadth

AAII sentiment for the week ending 10/9 showed bullish responses rise to 49.0% from 45.5% prior while bearish responses fell to 20.6% from 27.3%. Neutral sentiment rose to 30.4% from 27.3%. The bull-bear spread (bullish minus bearish sentiment) increased 10.3 percentage points to 28.5%. The bull-bear spread is above its historical average of 6.5% for the 22nd time in 23 weeks. The NAAIM Exposure index was ticked up to 90.26 from 86.93 last week and is slightly above last quarter’s average of 80.82. Total equity fund flows for the week ending 10/2 had $-25.7 billion in outflows in equities. Friday’s close saw NYSE new highs at 206, while new lows of 13 and the 10-day MA of New High/Low Differential is positive at +130. The percentage of SPX stocks above their 50-MA jumped to 76.8% while those above their 200-MA was 77.6%. NYSI Summation index is below its 8-MA for a short-term bearish signal. NYMO McClellan Oscillator closed at -11 and Neutral. The cumulative AD line is still near new highs and is above the 40 EMA short term breadth trend and above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.62. CNN Fear and Greed index is in the Greed zone at 74 from 73 last week. The VIX/VXV ratio closed at 0.99 and maybe partly skewed due to election IV in play. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.