The S&P 500 (SPX) dropped sharply to close the week as uncertainty around a new variant of COVID-19 drove investors into safe-haven assets. Price action was ugly as we sliced below the 21- and 34-EMA with the 55-day just below at 4553.75. RSI closed to its lowest level since in early October while MACD continues to be in a bearish signal and both have plenty of room to fall still back to the zero level. There is some notable support coming up where we could see a reaction. The prior breakout zone is at 4548-4537 and below that area is the top of monthly value at 4500. Given the weak candle on Friday, the key for a bounce will be seeing a reversal bar where we open within the prior day’s range, trade lower, and then reverse to close above the prior day’s low. And, a bounce could be sharp initially. The declining 21-EMA is above at Friday’s high near 4645 and then the 8-EMA is at 4665.

Market Sentiment/Breadth

AAII sentiment for the week ending 11/24 showed a dip in bulls to 33.8% from 38.8% while bearish sentiment jumped to 35.7% from 27.2%. Neutral sentiment fell from 33.9% to 30.5%. NAAIM Exposure rose slightly to 103.14 from 102.54 and remains in a narrow range near extreme highs. Lipper Fund flows had $4.1B of outflows from equities, the second straight week of outflows. As of Friday’s close we had 34 new highs vs 562 new lows, the weakest breadth in months. The percentage of stocks above their 50-day MA fell to 40.28% while those above their 200-day fell to 50.31%, both hitting multi-week lows. NYSI Summation continued to fall this week to 169.50 and remains well below the 8-EMA in a bearish signal. Cumulative AD fell to the lowest level in six weeks. CBOE Equity P/C 50-day MA rose to 0.466. CNN Fear and Greed fell to 31, down from 69 last week.