The SPX closed strong for the week up another +1.5% with Nasdaq leading to fresh new all-time closing highs, not bearish occurrences clearly. Markets continue to be resilient in a clear bullish trend that now looks poised to unleash a potential surge to highs as this multi month consolidation range could result in a gamma squeeze of sorts heading into Feb monthly expiration this week. The SPX closing back over 6100 is positive sign of green light condition in place and further VIX contraction should create fuel for new highs that could target the 1.272 Fibonacci extensions at 6190 and 6225 while a higher extension target at the 1.618 fib would be at 6300 and possibly an eventual target into March. Support now moves up to the 8 EMA at 6075 and the 21 EMA of 6050 while big picture wise the 6000 level is a clear line in sand for risk on action and any weekly close below that level from here would be a good sign to lighten up exposure but for now with sentiment below average levels and breadth expanding, it points to new highs likely on deck.

Market Sentiment/Breadth

AAII sentiment for the week ending 2/12 showed bullish responses fell to 28.4% from 33.3% prior while bearish responses rose to 47.3% from 42.9%. Neutral sentiment rose to 24.3% from 23.8%. The bull-bear spread (bullish minus bearish sentiment) declined 9.3 percentage points to –18.9%. The bull-bear spread is below its historical average of 6.5% for the sixth time in eight weeks. The NAAIM Exposure index fell to 75.62 from 84.91 last week and is below last quarter’s Q4 average of 85.81. Total equity fund flows for the week ending 2/5 had $-21.8 billion in outflows in equities. Friday’s close saw NYSE new highs at 114, while new lows of 39 and the 10-day MA of New High/Low Differential is positive at +23. The percentage of SPX stocks above their 50-MA is 54.4% while those above their 200-MA was 60.0%. NYSI Summation index is still above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +16 and is Neutral. The cumulative AD line is moving to new fresh highs and is above the 40 EMA short term breadth trend and above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA is at 0.55. CNN Fear and Greed index is still in the Fear zone at 44 from 38 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.