The SPX closed slightly lower on the week by -0.6% but overall a quiet rangebound week within the expected move in the options market and settling right at the 8 day EMA of 6050. Stronger support is at 6000, which now lines up with the rising 21 EMA as prices consolidated the week prior to triple witching expiration as is common and healthy. The SPX now enters a massive expiration week with a lot of expiring Dec options, but these weeks often tilt to a bullish bias based on flows and hedging action. The weaker breadth of the past several days is a yellow flag and could start to point to warning signs once the calendar flips to January as a lot of money flows were pouring into the Mag7 stocks but markets will need to see broader participation starting this week if the year end continuation move sustains. With the SPX up so strong in 2024, over 25% gains now, it does point to follow through melt up likely as volatility sinks, especially after the FOMC meeting this week as that will be the last real market catalyst of the year and with a half day of trading on the 24^th plus two market holidays in the coming few weeks, the VIX often bleeds lower into this time period which points to dull market drift higher in the indices. Of course, risk lies in a decisive break and close below the 6000 key support and that is a simple level now to lean against as a directional bias. A move higher than 6100 from here could potentially see 6150 and 6180 while the 6055 JPM collar strike still looms large into Dec 31^st as a pinning zone if price wants to revert there.

Market Sentiment/Breadth

AAII sentiment for the week ending 12/11 showed bullish responses fell to 43.3% from 48.3% prior while bearish responses rose to 31.7% from 30.7%. Neutral sentiment rose to 25.0% from 21.0%. The bull-bear spread (bullish minus bearish sentiment) decreased 6.0 percentage points to 11.7%. The bull-bear spread is above its historical average of 6.5% for the 30th time in 32 weeks. The NAAIM Exposure index jumped to 99.24 from 85.49 last week and is now near extreme levels above last quarter’s average of 80.82. Total equity fund flows for the week ending 12/4 had $-17.7 billion in outflows in equities. Friday’s close saw NYSE new highs at 40, while new lows of 113 and the 10-day MA of New High/Low Differential is positive at +62. The percentage of SPX stocks above their 50-MA is at 47.6% while those above their 200-MA was 66.6%. NYSI Summation index is now below its 8-MA for a short-term bearish signal although quite choppy recently. NYMO McClellan Oscillator closed at -56 and is near Oversold. The cumulative AD line slipped under the 40 EMA short term breadth trend and was still above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA is at 0.55 and lows for this year. CNN Fear and Greed index is in the Neutral zone at 50 from 53 last week. The VIX/VXV ratio closed at 0.81 and near lows for the year, perhaps showing complacency. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.