The SPX closed higher for the week after a sharp decline started the shortened holiday week, but NVDA saved the day with its stronger earnings report even as the Nasdaq overall felt soft until the report. For now, SPX support is crucial to hold above 5040 as a key line in sand going into the large March triple witching OPEX now just 3 weeks away. SPX tested and held the 21 EMA last week on the lows almost perfectly near 4950 which would now be a level to watch on any break of 5000 with the large open gap eventually an area that likely gets filled at 4980. The uptrend channel is still in place from the October lows as shown below so would prices to fall outside the channel to change momentum, but RSI continues to show some negative divergence on the recent new high this week. Important to note however that an RSI above 50 is what matters in an uptrend and I often like to wait for that level to break. The 5100 round number just above here is first resistance and this overall zone of 5050 lines up with the bigger picture fib extension target. Looking forward the next few months any selloff below the 21 EMA would likely see that former all time high of 4800 in play.

Market Sentiment/Breadth

AAII sentiment for the week ending 2/21 showed bullish response rise to 44.3% from 42.2% prior while bearish responses decreased to 26.2% from 26.8%. Neutral sentiment fell to 29.5% from 31.1%. The bull-bear spread (bullish minus bearish sentiment) increased 2.7 percentage points to 18.1%. The bull-bear spread is above its historical average of 6.5% for the 16th consecutive week. The NAAIM Exposure index decreased to 74.70 from 95.58 last week but is recorded usually on Wednesdays so maybe does not reflect the strong rally late this week, now just above last quarter’s average of 67.81. Total equity fund flows for the week ending 2/14 had $-7 billion of outflows in equities. Friday’s close saw NYSE new highs at 273 while new lows of 37 and the 10-day MA of New High/Low Differential is still positive at +145. The percentage of SPX stocks above their 50-MA is at 68.4% while those above their 200-MA was 76.6%. NYSI Summation index remains choppy but crossed back above its 8-MA for a short term buy signal. NYMO McClellan Oscillator closed at +14 and Neutral. The cumulative AD line increased this week and is above the 40 EMA short term breadth and above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.66. CNN Fear and Greed index is in the Extreme Greed zone at 78 from 78 last week. The VIX/VXV ratio closed at 0.902. This measures the spread between 1- and 3-month implied volatility, above 1.0 exhibits fear and tends to mark a low.