The SPX closed lower on the weekly as the end of month typical profit taking took place after a strong recent run and that big 1.272 fib extension resistance mentioned has held firm as a first ceiling. Prices now pulling into the rising 8 week EMA and likely will be able to bounce into November seasonal strength as VIX premiums coming down post-election and FOMC should be a tailwind for buy side pressure. Key support on the weekly chart comes in just below here at 5700 while a break under that would set up a nicer buying opportunity near 5650 if it came it would retest the summer highs and anchored VWAP from the August lows. A lot of positive signals pointing to dips getting bought into the final 2 months of this strong 2024 as year end money flows and potential Vanna related fuel are due to boost markets after these events pass next week. Vanna refers to the buyside pressure invoked from option dealers unwinding hedges as implied volatility falls from extended levels and as a result decreases delta exposure that dealers hold, which then creates the mean reverting bias that VIX always shows eventually. Looking ahead in two weeks also has Nov monthly OPEX coming quickly and then a holiday week with Thanksgiving as well as the December period of holidays and thinner volume suppressing volatility even further. All this simply means that if the market holds up above 5600-5700 in the next few weeks, then that allows VIX to get crushed and fuels an upside chase in stocks for year end. This week’s options expected move is higher at 150 points with the catalysts in play so potential for a wider violent range but last week’s selloff held first support of the 55 day EMA at 5700. The weekly chart still shows longer term RSI divergences so that likely continues and will could be a bigger factor once the year ends and January brings more uncertainty.

Market Sentiment/Breadth

AAII sentiment for the week ending 10/30 showed bullish responses rose to 39.5% from 37.7% prior while bearish responses rose to 30.9% from 29.9%. Neutral sentiment fell to 29.6% from 32.4%. The bull-bear spread (bullish minus bearish sentiment) increased 0.8 percentage points to 8.6%. The bull-bear spread is above its historical average of 6.5% for the 25th time in 26 weeks. The NAAIM Exposure index rose to 82.53 from 79.13 last week and is just above last quarter’s average of 80.82. Total equity fund flows for the week ending 10/23 had $-20.8 billion in outflows in equities. Friday’s close saw NYSE new highs at 64, while new lows of 64 and the 10-day MA of New High/Low Differential is falling but still positive at +53. The percentage of SPX stocks above their 50-MA is at 49.2% while those above their 200-MA was 69.6%. NYSI Summation index is below its 8-MA for a short-term bearish signal. NYMO McClellan Oscillator closed at -60 and quickly is near oversold. The cumulative AD line pulled back off highs and is testing 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 Neutral zone at 49 from 60 last week. The VIX/VXV ratio closed at 1.00 and maybe nearing a turning point for a market low. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.