Weekly Market View 12-19-21
S&P Futures (ES_F) hit fresh all-time highs before reversing on Thursday and Friday to close down nearly 2% on the week. Overall, we remain in balance with the prior six-week range and building a big volume node between 4709.25 and 4596. Momentum is showing som signs of weakness with MACD curling lower on Friday and RSI remains in a big negative divergence from the November peak. We do have some notable support coming into focus just below despite closing below monthly value on Friday. The 55-EMA sits right at Friday’s session low at 4588 while trend support from the October lows is around 4577.50-4570. VWAP from the October lows is also at 4567.75. A breakdown outside of this area would target 4512.75 and then 4436. A move above Friday’s value high at 4640.50 can set up a relief rally back into the top of this balance with 4685.50 and then 4707.25 POC from 12/15. The upside target outside of this bigger balance zone is 4813.25.
AAII sentiment for the week ending 12/15 showed another dip in bullish responses to 25.2% vs 29.7% prior while bearish responses rose to 39.3% from 30.5%. Neutral sentiment fell to 35.4% vs 39.8%. Bullish sentiment hit a new 3-month low while the bearish line was near a historically elevated level, the spread overly pessimistic. NAAIM Exposure fell again to 52.22 and now near its lowest level since May, overly bearish. Lipper Fund flows had $1.3B in outflows for the week, the second straight week of negative flows. As of Friday’s close, there were 82 new highs versus 561 new lows, weak breadth continuing while NYSE New High / New Low ratios remain negative for the third straight week. NYSI and NASI remain below their 8-EMA and both fell again this week to close on their lowest levels since April 2020. Cumulative AD remains weak. CBOE Equity P/C ratio 50-day MA is 0.55 and neutral overall. CBOE Skew is steep at 140.29. CNN Fear and Greed is 26, down from 38 last week. Areas of extreme fear include weak breadth, performance of stocks versus bonds, and a surge in put volumes.