Weekly Market View 12-1-24
The SPX closed higher for the week by +1.1% in just the 4 days for the holiday shortened week and +5.7% return for the month of November which lived up to its true form of being the top calendar month of the year seasonally during election years. SPX hardly even pulled back the past week since it got back over the 8 EMA it has stayed above that and also the key 6000 strike price now acting as clear support as prices closed firmly above it for the week and month with just 4 weeks left in the year. Now the 6055 JPM collar strike becomes the next upside level that may see some small resistance on the first touch but any strong thrust that closes above that mark would increase positive gamma considerably from the dealers perspective and likely would zap realized volatility further which creates a more slower grind up sort of rally, which could melt up into the year end timeframe. Support now rises to the 6000 and 5935 levels on the downside with those signifying the 8 and 21 EMA’s. MACD and RSI both also in bull mode on multiple timeframes so the rally has a lot of tailwinds in place as seasonality sees positive flows really overtaking now as December triple witching expiration gets closer as well. Another notable event from this November was the Russell small caps (IWM) outperforming handily and rising over 7.5% in the month as it too has strong seasonals in favor of upside through February and IWM has often seen stronger Decembers when it rises during November election years.
Market Sentiment/Breadth
AAII sentiment for the week ending 11/27 showed bullish responses fall to 37.1% from 41.3% prior while bearish responses rose to 38.6% from 33.2%. Neutral sentiment fell to 24.3% from 25.5%. The bull-bear spread (bullish minus bearish sentiment) decreased 13.4 percentage points to 8.1%. The bull-bear spread is above its historical average of 6.5% for the 28th time in 29 weeks. The NAAIM Exposure index rose to 98.93 from 91.33 last week and is now at more extreme levels and above last quarter’s average of 80.82. Total equity fund flows for the week ending 11/20 had $-16.2 billion in outflows in equities. Friday’s close saw NYSE new highs at 181, while new lows of 32 and the 10-day MA of New High/Low Differential is positive at +150. The percentage of SPX stocks above their 50-MA is at 71.0% while those above their 200-MA was 76.0%. NYSI Summation index crossed above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +39 and is Neutral. The cumulative AD line surged to new highs and is above 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 0.55 and new lows for this year. CNN Fear and Greed index is in the Greed zone at 66 from 61 last week. The VIX/VXV ratio closed at 0.83. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.