The SPX closed lower on the week after a quiet start to expiration week the first 3 days pinning near 6000 but then getting that anticipated dip to the rising 21 EMA after this strong recent runup. OPEX accelerated the Friday selloff and likely was not much else than an overdue retracement and profit taking back to retest the 5850 volume shelf on the profile which is where prices built value at last month so will be a key spot to watch going into the second half of November as seasonality now increases to the bulls side after last week was more of a bearish bias for expiration week. The 6000 massive open interest gamma strike held true to form as resistance and that also lined up as the 1.618 fib extension target we had been mentioning for a few months now. If prices did want to fill the election gap fully then it would target 5785 roughly with that zone offering quite a bit of volume support. The gap fill scenario however seems too obvious and unless is driven by a follow through in higher VIX levels after Fridays pop, it will be tough to see this market sustain downside momentum under 5850 going into some of the more bullish weeks of the year coming now ahead of two holidays and likely more positive drift due to flows and sentiment. The prevailing path of least resistance into year end is often a compression of implied volatility and that likely plays out with subdued VIX levels which makes dips buying opportunities. Of course, the short term risk is a poorly received earnings report from NVDA and continued sluggishness in Semi stocks afterwards but with the group having pulled back into this binary event it may bode well for sentiment going into earnings. This week’s NVDA report will set the tone likely into December expiration and year end. Any rebound north of 5900 this week on SPX likely retests the 6000 level and a positive NVDA report could push above that level for the test of 6055 as the JPM collar strike may get some focus into December.

Market Sentiment/Breadth

AAII sentiment for the week ending 11/13 showed bullish responses rose to 49.8% from 41.5% prior while bearish responses rose to 28.3% from 27.6%. Neutral sentiment fell to 21.8% from 30.9%. The bull-bear spread (bullish minus bearish sentiment) increased 7.5 percentage points to 21.5%. The bull-bear spread is above its historical average of 6.5% for the 27th time in 28 weeks. The NAAIM Exposure index rose to 91.60 from 88.31 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 11/6 had $-19.4 billion in outflows in equities. Friday’s close saw NYSE new highs at 65, while new lows of 73 and the 10-day MA of New High/Low Differential is positive at +176. The percentage of SPX stocks above their 50-MA is at 55.0% while those above their 200-MA was 68.6%. NYSI Summation index is back below its 8-MA for a short-term bearish signal. NYMO McClellan Oscillator closed at -44 and is between Neutral and Oversold. The cumulative AD line slid back down to test 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 0.57 and new lows for this year. CNN Fear and Greed index is in the Neutral zone at 51 from 62 last week. The VIX/VXV ratio closed at 0.91. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.