Technical Market View

The SPX closed at a new all-time high Friday and finishing up +2% of the week that saw price action hold strong after a midweek sector rotation saw growth stocks sell off but simply just a retest of the 21 EAM on Nasdaq while breadth confirmed positive bias and headed higher. SPX now also is triggering a fresh MACD bull cross as prices look to start a fresh leg up to the 6950 Fibonacci extension level that has been the target ultimately into year end with the 7000 round number likely a magnet. SPX also has now closed back over the early October Friday tariff tantrum selloff which shows great confidence into earnings season and the often-stronger November calendar month for stocks. First support now is seen at the rising 8 EMA of 6725 if prices wanted to dip this week to fill that open gap from last Friday. Otherwise, the notable IV crush in the volatility markets is a telling signal for a potential melt up higher now as VIX slid back down to 16.

Market Sentiment/Breadth

AAII sentiment for the week ending 10/22 showed bullish responses rise to 36.9% from 33.7% prior while bearish responses fell to 42.7% from 46.1%. Neutral sentiment moved to 20.5% from 20.3%. The bull-bear spread (bullish minus bearish sentiment) increased 6.6 percentage points to –5.8%. The bull-bear spread is below its historical average of 6.5% for the 35th time in 38 weeks. The NAAIM Exposure index rose to 90.35 from 84.87 last week and is back above last quarter’s Q3 average of 86.63, which is a historically higher average level. Total equity fund flows for the week ending 10/15 had $-16.4 billion in outflows in equities. The prior day’s close saw NYSE new highs at 139, while new lows at 16 and the 10-day MA of New High/Low Differential is still positive at +105. The percentage of SPX stocks above their 50-MA is at 53.0% while those above 200-MA is at 64.8%. NYSI Summation index crossed higher above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +27 and is back in a positive territory just above Neutral zone short term. The cumulative AD line rebounded strongly this week to close above the 40 EMA short term breadth trend and is still above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA is at 0.55 but still in a Neutral zone. CNN Fear and Greed index is in the Fear zone at 33 from 27 last week. The VIX/VXV ratio closed at 0.853 after spiking above 1.0 last week and perfectly marking a turning point. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.