The SPX closed on a weak note Friday into a volatile OPEX day after making new all-time highs just two days prior at 6147. SPX now back under the 21 EMA key short term support of 6060 and nearly tested the large round number 6000 level which also lines up with the 55-day EMA and should be a line in sand to hold from here into the end of month if the market is going to rebound. Odds are likely to favor a further drop lower if that breaks with a retest of the Feb low at 5925. Prices have built a lot of volume balance in this 6050-6100 range the past few months and starting to see some negative divergence in RSI and MACD so combined with end of February seasonal weakness it could produce some further pullback and if selling accelerated then the open gap down at 5875 becomes a target. Overall that late Friday selloff seemed very driven by 0DTE flows and gamma exposure into monthly expiration so if prices rebound into month end then a bounce back to start March would not be surprising, especially if NVDA reported positive numbers and a bullish outlook on their earnings report this week that is clearly the top event in the Tech sector along with a handful of important software names reporting. While the late Feb to early March timeframe can often see corrections, the sentiment in markets remains too pessimistic to suggest a more violent down move for now.

Market Sentiment/Breadth

AAII sentiment for the week ending 2/19 showed bullish responses tick up to 29.2% from 28.4% prior while bearish responses fell to 40.5% from 47.3%. Neutral sentiment rose to 30.3% from 24.3%. The bull-bear spread (bullish minus bearish sentiment) increased 7.6 percentage points to –11.3%. The bull-bear spread is below its historical average of 6.5% for the seventh time in nine weeks. The NAAIM Exposure index rose to 91.48 from 75.62 last week and is just above last quarter’s Q4 average of 85.81. Total equity fund flows for the week ending 2/12 had $-14 billion in outflows in equities. Friday’s close saw NYSE new highs at 54, while new lows of 73 and the 10-day MA of New High/Low Differential is positive at +20. The percentage of SPX stocks above their 50-MA is 53.2% while those above their 200-MA was 59.8%. NYSI Summation index is fading lower still above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at -25 and is Neutral. The cumulative AD line showed a small negative divergence at the recent highs but 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 35 from 44 last week. The VIX/VXV ratio closed at 0.93. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.