The SPX closed sharply higher for the week by nearly 5% and much stronger returns for the small cap Russell index up over 8% on the week. The SPX tagged our long awaited 6000 round number target and with several weeks to spare before year end. The markets now have just 7 full trading weeks remaining in the year and 2 weeks away from the holiday shortened Thanksgiving week which tends to bring with it lower volatility and an upside grind in markets that are already in established uptrends. This coming week is the November monthly OPEX already and should provide support on any dips early in the week while the 6000 SPX strike looms large as a potential sticky pinning price level. Volatility has collapsed as expected after the large catalysts of this week passed and VIX is now near 15 so intraday ranges will be smaller with this week’s SPX options expected move down to near +/- 85 points only. With 6000 being a key resistance based on gamma and open interest it could also become a key spot to anticipate a break above and melt up higher into the remainder of the year as there is a lot of the dealer community that would be caught offsides, very similar to what transpired in TSLA stock this week and created a wild gamma squeeze of sorts. For now, short-term support has risen with the 8 day EMA at 5875 and would be a strong first dip buy level with the former highs near that price zone as well. With SPX hitting that upper 1.618 fib extension it does warrant some caution but with sentiment not quite euphoric, although getting closer, it likely points to sideways consolidation for a week or two while single stocks see more moves.

Market Sentiment/Breadth

AAII sentiment for the week ending 11/6 showed bullish responses rose to 41.5% from 39.5% prior while bearish responses fell to 27.6% from 30.9%. Neutral sentiment rose to 30.9% from 29.6%. The bull-bear spread (bullish minus bearish sentiment) increased 5.4 percentage points to 14.0%. The bull-bear spread is above its historical average of 6.5% for the 26th time in 27 weeks. The NAAIM Exposure index rose to 88.31 from 82.53 last week and is above last quarter’s average of 80.82 but still not extreme like back in July when it was near 105. Total equity fund flows for the week ending 10/30 had $-20.8 billion in outflows in equities. Friday’s close saw NYSE new highs at 309, while new lows of 47 and the 10-day MA of New High/Low Differential is positive at +126. The percentage of SPX stocks above their 50-MA is at 65.4% while those above their 200-MA was 74.6%. NYSI Summation index is curling higher and near a bull cross above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +21 and back near Neutral. The cumulative AD line rebounded strongly and is above the 40 EMA short term breadth trend and still above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA is at 0.59 and new lows for this year. CNN Fear and Greed index is in the Greed zone at 61 from 49 last week. The VIX/VXV ratio closed at 0.89 and faded perfectly off the 1.0 extreme level. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.