The SPX closed a volatile week slightly lower overall but well off the Friday bottom after a month end surge saw prices higher into the close and reclaiming the 5950 level after filling the open gap down near 5850 and testing the anchored VWAP from the August low which coincided with that price zone. For now, the market likely has put in a short term low at that key reference point with a lot of momentum stocks fairly washed out and due for a snapback. SPX quickly corrected off that new high just the prior week and now has potential seasonal tailwinds working for a bounce to continue into early March that sees first resistance at the 8 EMA near 5975 while 6000 is then stiff gamma resistance that would be a clear line in sand to get above for stability to increase and see VIX contract back down. Overall the markets are simply rangebound on a longer timeframe for the past 3 months moving between 5800 and 6100 and a decisive break of that range would likely bring with it the next 200-300 point move. The 200 day EMA is down at 5700 and would be a clear target on a downside break of 5850 but with sentiment historically low in some measures and it still being a bull market an upside move is still more likely than not as long as implied volatility retreats.

Market Sentiment/Breadth

AAII sentiment for the week ending 2/26 showed bullish responses drop to 19.4% from 29.2% prior while bearish responses jumped to 60.6% from 40.5%. Neutral sentiment fell to 20.0% from 30.3%. Bullish sentiment was last lower on March 16, 2023, (19.2%) and was among the lowest 65 readings in the survey’s history. The bull-bear spread (bullish minus bearish sentiment) decreased 30.0 percentage points to –41.2%. The NAAIM Exposure index fell to 87.87 from 91.48 last week and is just above last quarter’s Q4 average of 85.81. Total equity fund flows for the week ending 2/19 had $-7.1 billion in outflows in equities. Friday’s close saw NYSE new highs at 61, while new lows of 143 and the 10-day MA of New High/Low Differential is negative at -15. The percentage of SPX stocks above their 50-MA is 55.2% while those above 200-MA was 60.0%. NYSI Summation index is below its 8-MA for a short-term bearish signal. NYMO McClellan Oscillator closed at -8 and is Neutral. The cumulative AD line bounced off the 40 EMA short term breadth trend and is still above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA is at 0.56. CNN Fear and Greed index is in Extreme Fear zone at 20 from 35 last week. The VIX/VXV ratio closed at 0.97 after hitting 1.0 on Thursday. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.