The SPX had a strong week closing on the highs right at 3900 after holding support above the 8-day EMA and seeing resilience in the face of bad Tech earnings. The strength in October has been steady and now up 9% for the month while Small Caps have led the strength. Now with price back at 3900 that represents the key 50% retracement level where things could pause or pullback especially with a FOMC meeting this week there is risk to both sides. On the upside follow through to 4000 would be the 61.8% fib retrace while a move back down would find first support at 3800 and then the 21 EMA is near 3760. Also with Midterm elections the following week, the market could possibly stay in this volatile range between 3725-3950 as well. MACD and NYSI breadth signals are still in bull mode so staying above 8 EMA is key.

Market Sentiment/Breadth

AAII sentiment for the week ending 10/26 showed bullish responses rise to 26.6% from 22.6% prior while bearish responses fell to 45.7% from 56.2%. Neutral sentiment rose to 27.7% from 21.2%. Optimism among individual investors about the short-term direction of the stock market rose to a nine-week high. At the same time, pessimism plunged to a nine-week low. Optimism was last higher on August 25, 2022 (27.7%). NAAIM Exposure index increased to 53.91 from 43.28 and slightly back above last quarters average of 40.63. Lipper fund flows for the week ending 10/26 had $7.8B of inflows in equities, the second straight week of inflows. Friday’s close saw NYSE new highs at 89 while new lows of 113 and the 10-day MA of New High/Low Differential is still negative at -171. The percentage of SPX stocks above their 50-MA is 64.3% while those above their 200-MA was 38.9%. NYSI and NASI Summation indexes are positive above 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at 90.5 and is the most overbought since the August high. Cumulative AD line is trying to cross above the 40 EMA while still below 89 EMA long term signal. CBOE Equity P/C 50-day MA at 0.71 and at new highs. CNN Fear and Greed index is in Greed zone at 61 from 45 last week.