The SPX had a wild week with early week dips finding strong buyers ahead of and after the FOMC meeting midweek which then resulted in a frothy rally to new highs at 4200 before pulling back Friday and closing just back under the 50% retracement of the entire bear market down trend which sits at 4155. That 50% halfway back level is often a pause point or level where reversals can occur so it will be a key spot to see if buyers can hold above or not. A move lower would see first support at 8 EMA near 4090 and then the 21 EMA comes in near a retest of the trendline from highs near 4020 with the round number 4000 just beneath there. Overall, the MACD and RSI are still in bull mode and the latter made a higher high on this recent rally so that bodes well for eventual further upside after a potential pullback.

Market Sentiment/Breadth

AAII sentiment for the week ending 2/1 showed bullish responses rise to 29.9% from 28.4% prior while bearish responses fell to 34.6% from 36.7%. Neutral sentiment was unchanged at 35.5% from 35.0%. This is the highest level of optimism registered by the survey since November 17, 2022 (33.5%). Nonetheless, bullish sentiment remains below its historical average of 37.5% for the 57th consecutive week. The bull-bear spread is –4.7%. This is still below the historical average of 6.6%. NAAIM Exposure index increased to 78.37 from 75.23 and is at the highest levels since last April and above last quarters average of 51.03. Lipper fund flows for the week ending 2/1 had $637M of inflows in equities. Friday’s close saw NYSE new highs at 121 while new lows of 4 and the 10-day MA of New High/Low Differential is positive at +106. The percentage of SPX stocks above their 50-MA is 69.6% while those above their 200-MA was 73.2%. NYSI and NASI Summation indexes are above the 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +27 and is now back near the neutral zone. Cumulative AD line had a strong surge above the 40 EMA and above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.85 and falling the past few weeks as put arb trades slow. CNN Fear and Greed index is in Greed zone at 76 from 69 last week.