Weekly Market View 12-3-23
The SPX closed +0.8% higher for the week and extending the strong advance from the late October lows now printing a 5th straight week of gains, and it has not seen 6 straight weeks of gains during this decade so far as the last occurrence was in late 2019. The SPX closed just below the big 4600 resistance zone which lines up with the July highs. This level equates to 460 in the SPY and as shown in the chart below the upper edge of the uptrend channel is getting closer to a test which sits near 465 currently. Clearly now overbought with RSI hitting 74 but a very strong market that should not be faded if it continues to close above the rising 8-day EMA, currently at 455. The other impressive part of this rally is the one-time framing nature of it, which simply means since the start of November, very few daily candles have even tested the prior days lows, the signature of a bullish trend with expanding breadth and sector rotational flows not allowing much of a pullback to those that want to get in. Support below is strong at the 4500 SPX level if a dip were to materialize this coming week, with the 21-day EMA just below at 4483 and rising. If a minor pullback was to occur ahead of December OPEX on 12/15 then this would be the logical week with that common swing low ahead of OPEX a more likely scenario usually in uptrends, with then the rally resuming into the often stronger December triple witch expiration.
AAII sentiment for the week ending 11/29 showed bullish responses increased slightly to 48.8% from 45.3% prior while bearish responses decreased to 19.6% from 23.6%. Neutral sentiment ticked up to 31.7% from 31.1%. The bull-bear spread (bullish minus bearish sentiment) increased 7.5 percentage points to 29.2%. The bull-bear spread is above its historical average of 6.5% for the fourth time in eight weeks. Pessimism decreased to its lowest level in almost six years. The NAAIM Exposure index increased to 81.38 from 77.95 and is above last quarter’s average of 60.53 but still not overly extreme. Total equity fund flows (ETF’s and Mutual Funds) for the week ending 11/15 had $-8.2 billion of outflows in equities. Friday’s close saw NYSE new highs at 179 while new lows of 16 and the 10-day MA of New High/Low Differential is positive at +72. The percentage of SPX stocks above their 50-MA is 86.0% while those above their 200-MA was 66.6%. NYSI Summation index is above its 8-MA for a short term buy signal. NYMO McClellan Oscillator closed at 81 and now Overbought. The cumulative AD line is above the 40 EMA short term breadth and firmly above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.76. CNN Fear and Greed index is in the Greed zone at 67 from 68 last week. The VIX/VXV ratio closed at 0.822. This measures the spread between 1- and 3-month implied volatility, above 1.0 exhibits fear and tends to mark a low.