The SPX closed a rollercoaster week down by -2% but well off the lows and featured a violent Friday rally that rose 150 SPX points or nearly 3% over a few hours and the lows coming right off a key anchored VWAP from the September lows which was at 5845. The late day rally stalled right near the 8 day EMA at 5975 and ahead of the big round number of 6000 but overall closed back over the 55 day MA which was a win for bulls especially since the VIX got vaporized down over -20% on the day. This IV crush shows a more likely path higher into the shortened holiday week on tap with very little in the way of news events or earnings, which tends to lead to an upside drift an dampening volatility. Hence the start of the Santa Claus rally (more stats on that below in the Seasonal section) and this tends to see the Dec-24^th through first few days of January with bullish bias. SPX now has a clear line in the sand for bulls to lean against which was the Friday lows near 5830 and the recent swoosh lower was made after the NYMO oscillator was already oversold as prices had been slowly creeping lower since the Dec 6^th high. So overall a lot of signs of at least a short-term floor being made and the breadth thrust on Friday showing an emphatic up move could even prove to be a multi-month low. But again, the first week of January will often tell the story for the whole month so that should be key to watching. The low made Friday also came with a VIX 12-day rate of change at over 100%, which has led to a longer-term low each time the past 10 years while also the % of SPX stocks below the 20 day MA hit under 10% which often signals a solid bottom.

Market Sentiment/Breadth

AAII sentiment for the week ending 12/18 showed bullish responses fell to 40.7% from 43.3% prior while bearish responses ticked down to 31.4% from 31.7%. Neutral sentiment rose to 27.9% from 25.0%. The bull-bear spread (bullish minus bearish sentiment) decreased 2.4 percentage points to 9.3%. The bull-bear spread is above its historical average of 6.5% for the 31st time in 33 weeks. The NAAIM Exposure index fell to 82.50 from 99.24 last week and is back near last quarter’s average of 80.82. Total equity fund flows for the week ending 12/11 had $-29.3 billion in outflows in equities. Friday’s close saw NYSE new highs at 25, while new lows of 173 and the 10-day MA of New High/Low Differential is now negative at -60. The percentage of SPX stocks above their 50-MA is at 26.6% after touching near 20% this week which is often a bottoming signal, while those above their 200-MA was 56.4%. NYSI Summation index is below its 8-MA for a short-term bearish signal. NYMO McClellan Oscillator closed at -66 after hitting oversold lows under -100 this week indicating a likely snapback rebound. The cumulative AD line is under the 40 EMA short term breadth trend and did close just below the 89 EMA long term bull signal for potential for rallies to be rejected if cant reclaim that level. CBOE Equity P/C 50-day MA is at 0.55 and lows for this year. CNN Fear and Greed index is back into the Fear zone at 28 from 49 last week. The VIX/VXV ratio closed at 0.91 and peaked above 1.1 this week which is often a sign of a market bottom. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.