The SPX closed lower on the week by -3% but well off the lows after a sharp and impressive rally Friday held into the close with also breadth making a notable reversal higher as well as the VIX contracting into the weekend, a rare event this past month. The market so far made a low right at where it should find buyers in a bull market, the 200 day MA which stood near 5710. This zone of support also coincides with the AVWAP from last Aprils lows and came fairly close to the 50% retracement from the August closing low to the recent 2025 closing high. A key cluster of multiple support levels and reversing higher should give bulls confidence that a potential follow through day can materialize in the coming week which would be defined by a close above Fridays high on increasing volume or above the 8 EMA while seeing VIX slide lower as volatility deflates. First resistance higher on a rebound would be seen at 5840 and then 21 EMA up at 5925. With March OPEX now in two weeks and it being an often-bullish triple witching expiration it does setup a possible mean reversion bounce from here that could even be the start of a new uptrend based on sentiment and the inverted VIX futures curve in backwardation, commonly seen near market bottoms.

Market Sentiment/Breadth

AAII sentiment for the week ending 3/5 showed bullish responses at 19.3% from 19.4% prior while bearish responses fell to 57.1% from 60.6%. Neutral sentiment rose to 23.6% from 20.0%. Bullish sentiment was last lower on March 16, 2023, (19.2%) and was among the lowest 66 readings in the survey’s history. The bull-bear spread is below its historical average of 6.5% for the ninth time in 11 weeks. The NAAIM Exposure index fell to 74.96 from 87.87 last week and is below last quarter’s Q4 average of 85.81 but is staying more neutral overall compared to other sentiment gauges. Total equity fund flows for the week ending 2/26 had $-14.2 billion in outflows in equities. Friday’s close saw NYSE new highs at 36, while new lows of 71 and the 10-day MA of New High/Low Differential is negative at -78. The percentage of SPX stocks above their 50-MA is 47.2% while those above 200-MA was 52.4%. NYSI Summation index is below its 8-MA for a short-term bearish signal. NYMO McClellan Oscillator closed at -32 after hitting near -50 and is between Neutral and Oversold. The cumulative AD line is below the 40 EMA short term breadth trend and is testing right at 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 20 last week. The VIX/VXV ratio closed at 1.03 and is now inverted which can often be near a market bottom. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.