Weekly Market View 10-31-21
The S&P 500 (SPX) closed higher for the fourth straight week and extended its strong recent move breaking out to new all-time highs. The rally continues to feel over-extended but finding support at the 8-EMA all week until we see a break below, the path of least resistance remains higher. Both MACD and RSI are sitting at overbought levels but similar to July/August, potential to see a slow grind higher rather than a more significant correction. The longer-term view continues to see a bigger rising channel from the February lows and back above the mid-point with upside to 4,700. Some other notable targets above include 4621.50 and 4664.75. A break below the 8-EMA at 4,549 has room back to 4,500 and the top of monthly value.
AAII sentiment for the week ending 10/27 showed bulls fading a bit to 39.8% vs 46.9% prior while neutral sentiment rose to 30.7% from 25.4% and bears rose to 29.4% from 27.8%. Bullish sentiment overall remains above the long-term historical average. NAAIM Exposure rose again to 103.35, the highest close since 4/28. Lipper Fund flows had $15.1B of inflows to equities, the largest in over two months, and follows $10.9B of inflows last week. As of Friday’s close there were 424 new highs vs just 137 new lows, strong breadth, and the NYSE weekly new highs minus new lows rose for the fourth straight week. The percentage of stocks above their 50-day MA was 61.5% and negative divergence below the mid- October highs. The percentage of stocks above their 200-day MA remains below the 10/20 peak as well. NYSI rose again this week and remains above the 8-EMA. NASI remains above its 8-EMA as well. Cumulative AD sits just below new highs. CBOE Equity P/C ratio 50-day MA is 0.477 and continues to fall. NYMO is 12.11 and somewhat neutral after hitting a recent peak near 47.5. CNN Fear and Greed was 72, up from 67 last week, and the highest since February.