The SPX pulled back to 50% retracement of the recent rally and found support at 3700 which held Thursday and Friday after the FOMC selloff midweek. Technically the market is still in a good spot but holding above that 3700 is crucial and with the 61.8% fib below that at 3650 being a make-or-break level going forward. The Nasdaq took the brunt of the selling this week but tried to reverse late Friday so really a bifurcated market with Dow and Russell behaving best and nowhere near the October lows. The SPX closed the week right at the 21 EMA so this election week and CPI catalysts should decide where it wants to go into November expiration nearing. Recovering above 3825 will be a key level for buyers to push through. MACD still in slightly positive mode and RSI is right at the 50 mid-point level.

Market Sentiment/Breadth

AAII sentiment for the week ending 11/2 showed bullish responses rise to 30.6% from 26.6% prior while bearish responses fell to 32.9% from 45.7%. Neutral sentiment rose to 36.5% from 27.7%. Pessimism about the short-term direction of the stock market among individual investors plunged to its lowest level in more than seven months. The survey also shows a large increase in neutral sentiment. Optimism was last higher on August 18, 2022 (33.3%). NAAIM Exposure index increased to 55.22 from 53.91 and is above last quarters average of 40.63. Lipper fund flows for the week ending 11/2 had $9.6B of inflows in equities, the 3rd straight week of inflows. Friday’s close saw NYSE new highs at 85 while new lows of 217 and the 10-day MA of New High/Low Differential is still negative at -83. The percentage of SPX stocks above their 50-MA is 57.8% while those above their 200-MA was 37.2%. NYSI and NASI Summation indexes are positive above 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at 49 and is back into a neutral zone. Cumulative AD line is trying to cross above the 40 EMA while still below 89 EMA long term signal. CBOE Equity P/C 50-day MA at 0.73 and at new 2-year highs. CNN Fear and Greed index is in Greed zone at 58 from 61 last week.