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Weekly Market View 10-6-24

Weekly Market View 10-6-24

by | Oct 6, 2024 | Weekly Market View

The SPX closed higher on the week by +0.35% after the strong Friday rally confirmed a lot of the bullish market breadth seen midweek as prices came back to test near the 21 day EMA of 5650 or about 565 on the SPY chart below. This is now 4 straight positive weeks for the market even as sentiment and persistent disbelief in the rally continues from the public. A good reminder that headlines and news are just that and markets will always react and price things in well ahead of time or simply brush off what is not important. The market also showed great relative strength from key Technology stocks this week even on days where the indices pulled back, often a great clue. The SPX closed near highs of 5750 and now looks poised to travel higher to the next key strike of 5800 as that is a newer open interest/gamma wall while support continues to be strong at 5650 ever since the late September FOMC meeting. The past two weeks have simply formed a high tight bullish flag and even with VIX elevated, now creates a situation where any implied vol crush lower on VIX should boost stocks into new highs. Overall, there is some rotational aspects to the current market that is worth noting as the election being just a month away and some sectors leading the way stronger than others. The SPX seems comfortable in the 5600-5800 range which could definitely continue in a choppy October trade. Longer term support below comes in at 5500 which lines up with the SPY value area for 2023 as shown below seeing the volume profile. Further follow through higher would point to 5850 and then ultimate still a Q4 target of 6000 on the S&P.

Market Sentiment/Breadth

AAII sentiment for the week ending 10/2 showed bullish responses fall to 45.5% from 49.6% prior while bearish responses rose to 27.3% from 23.7%. Neutral sentiment rose to 27.3% from 26.7%. The bull-bear spread (bullish minus bearish sentiment) decreased 7.8 percentage points to 18.2%. The bull-bear spread is above its historical average of 6.5% for the 21st time in 22 weeks. The NAAIM Exposure index was unchanged to 86.93 from 86.64 last week and is slightly above last quarter’s average of 80.82. Total equity fund flows for the week ending 9/25 had $-14.5 billion of outflows in equities. Friday’s close saw NYSE new highs at 169, while new lows of 15 and the 10-day MA of New High/Low Differential is making new recent highs at +185. The percentage of SPX stocks above their 50-MA jumped to 76.0% while those above their 200-MA was 77.2%. NYSI Summation index crossed below its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at -20 and Neutral. The cumulative AD line paused but 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 0.63. CNN Fear and Greed index is in the Greed zone now at 74 from 64 last week. The VIX/VXV ratio closed at 0.93. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.