The SPX made a sharp advance this week after CPI came in lower and the market was caught short once the SPX cleared 3850 and then clearing the cup and handle resistance at the round number 3900 level. With RSI leading higher and already clearing its trendline it looks like the SPX can see the 200-day EMA at 4080 at least this week into OPEX for November and potentially the 4100 level as that is near YTD VWAP. Also, the trendline from the January highs comes in just above these levels so a confluence of price areas that could act as a magnet from here as the 21 EMA nears a cross above the 55 EMA. MACD is still in bullish mode since crossing up in mid-October and 3900 is a clear line in sand of support now that it has been cleared with authority this past week. Weekly MACD also confirmed a bull cross this week.

Market Sentiment/Breadth

AAII sentiment for the week ending 11/9 showed bullish responses fall to 25.1% from 30.6% prior while bearish responses rose to 47.0% from 32.9%. Neutral sentiment fell to 27.9% from 36.5%. Pessimism among individual investors about the short-term direction of the stock markets rebounded strongly after having fallen to a seven-month low last week. NAAIM Exposure index decreased to 53.33 from 54.57 and is above last quarters average of 40.63. Lipper fund flows for the week ending 11/9 had $8.5B of outflows in equities. Friday’s close saw NYSE new highs at 81 while new lows of 35 and the 10-day MA of New High/Low Differential is still negative at -57 but nearing a positive cross. The percentage of SPX stocks above their 50-MA is 82% while those above their 200-MA was 55.6%. NYSI and NASI Summation indexes are positive above 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at 68.8 and is slightly overbought short term. Cumulative AD line has crossed above the 40 EMA while is nearing a bullish cross above the 89 EMA long term signal. CBOE Equity P/C 50-day MA at 0.73 and still at 2-year highs showing high pessimism. CNN Fear and Greed index is in Greed zone at 66 from 58 last week.