The SPX closed lower on Friday after a somewhat volatile week that tested both the lower bound of the expected move for the week and nearly hitting 5200 to the upside before closing slightly lower for the week by -0.25% at 5123. The market formed a wide range doji weekly candle showing some tug of war action and sometimes a warning sign of a short-term peak as prices are now above the upper edge of the trend channel in place since the October lows with plenty of resistance in this 5150-5200 zone from a options market perspective. The 8-week EMA at 5008 just above the round number 5k level would be first support on a continued dip lower that could start into or after the March triple witching OPEX week which is highlighted by CPI Tuesday and then the following week’s FOMC meeting a key date. Any stronger bid in volatility could see the start of a pullback into quarter end that would see large support down at 4800 which is the former all time high and lines up with the rising 21-week EMA. The weekly RSI now at 75 and daily RSI still making yet another lower high as a yellow flag in this market but momentum is continuing to hold above the 8 EMA outside of Tuesday’s one day decline so it will need to confirm first with a close under 5055 which was this week’s low.

Market Sentiment/Breadth

AAII sentiment for the week ending 3/6 showed bullish responses rise to 51.7% from 46.5% prior while bearish responses increased to 21.8% from 21.3%. Neutral sentiment fell sharply to 26.5% from 32.2%. The bull-bear spread (bullish minus bearish sentiment) increased 4.8 percentage points to 30.0%. The bull-bear spread is above its historical average of 6.5% for the 18th consecutive week. The NAAIM Exposure index increased to 93.99 from 88.99 last week and is now well above last quarter’s average of 67.81 and into bullish extreme zones. Total equity fund flows for the week ending 2/28 had $-20.9 billion of outflows in equities. Friday’s close saw NYSE new highs at 289 while new lows of 15 and the 10-day MA of New High/Low Differential is still positive at +203. The percentage of SPX stocks above their 50-MA is at 77.8% while those above their 200-MA was 79.6%. NYSI Summation index remains above its 8-MA for a short term buy signal. NYMO McClellan Oscillator closed at +26 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 0.67. CNN Fear and Greed index is in the Greed zone at 71 from 77 last week. The VIX/VXV ratio closed at 0.904. This measures the spread between 1- and 3-month implied volatility, above 1.0 exhibits fear and tends to mark a low.