The S&P 500 (SPX) closed lower for the second straight week as concerns over Russia and the pace of Fed tightening weigh on sentiment. We gapped higher during the week into the declining 8-EMA but were unable to push past some sizable overhead resistance at 4450 and pulled back into the end of the week. Now, the S&P is back into the balance zone where we bounced in late January and looking to put in a higher low before the broader range breaks. Momentum is showing some signs of weakness as RSI broke an uptrend and MACD had a bearish crossover this week. A key area of support to watch will be the 4275 area which aligns with the September/October pivot lows as well as an area where dip buyers were aggressive in January. A move lower has support at 4239.5 and then a breakdown target 4133.5. There’s a lot of supply above us to contend with next week. The 4400 level will be a big early test which will align closely with the declining 8-EMA. A move higher targets 4470 and then 4510.

Market Sentiment/Breadth

AAII sentiment for the week ending 2/16 showed a drop to 19.2% from 24.4% prior while bears rose to 43.2% from 35.5%. Neutral sentiment fell to 37.6% from 40.2%. This is the lowest bullish reading since May 2016 and just the 32nd week below 20% since 1987. NAAIM Exposure fell to 53.49 from 66.8 prior and nears historical extreme lows. Lipper Fund Flows for the week had $4.8B of inflows to equities and this follows the big $16B inflow last week. As of Friday’s close we had 46 new highs versus 554 new lows, continued weak breadth. The percentage of stocks above their 50-MA was 28.1% while those above their 200-day was 26.9%, both remaining low and confirming the weakness. NYSI remains flattish and below it’s 8-EMA but the spread between the two is getting narrower, so potential for a break back above soon. NASI remains above its 8-EMA. Cumulative AD fell again last week and weakest levels since April 2021.  CBOE Equity P/C 50-MA rose again this week to 0.55. CNN Fear and Greed is 37 and up from 34 last week, although remaining fearful. NYMO closed the week at -6, a neutral reading.