The SPX closed lower by -3% for the week that saw everyday close lower for one of the uglier weeks of the past year but not all that surprising based on what we have been seeing and warning of transpiring into the more bearishly tilted options market in a negative gamma status last week going into monthly expiration. These monthly OPEX weeks tend to keep the market in the direction of the short-term trend and then often can see a reversion to the mean the week after all those options expire. In this case that would point to a oversold snapback rally in the coming days likely, barring more headline news but I spent some time looking at different factors and scenarios to project a possible roadmap for SPY the rest of the month and into May. Seasonality favors the bears for now, but this week can easily bounce back to at least the 8 EMA near 505 which also lines up with the 55 MA and then the 21-day average just above at 510 as a likely stiff resistance point target on the rebound. Clearly the market is weak, but downtrends have sharp rallies, and one is surely brewing. With the gap near 497 having been filled last Friday, admittedly quicker than I expected but the next rally could be sold into that 505-510 range for a potentially stronger thrust lower back to the 480 level where a large confluence of major support lies. The prior all-time highs reside here and is the anchored VWAP (orange line) from the October lows. This also coincides with the 38.2% Fibonacci retracement. If earnings report stronger and global risks abate faster than expected then another leg lower may not be in the cards but this type of selloff generally will try to bounce and then be rejected to form a lower low, quite like the September through October correction.

Market Sentiment/Breadth

AAII sentiment for the week ending 4/17 showed bullish responses fall to 38.3% from 43.4% prior while bearish responses increased to 34.0% from 24.0%, the highest since early November. Neutral sentiment fell to 27.8% from 32.5%. The bull-bear spread (bullish minus bearish sentiment) decreased 20.8 percentage points to 4.3%. The bull-bear spread is below its historical average of 6.5% for the first time in 24 weeks. The NAAIM Exposure index decreased to 62.98 from 81.92 last week and is now well below last quarter’s average of 87.84. Total equity fund flows for the week ending 4/10 had $-14.9 billion of outflows in equities. Friday’s close saw NYSE new highs at 13 while new lows of 39 and the 10-day MA of New High/Low Differential is crossing negative at -7. The percentage of SPX stocks above their 50-MA is at 37.0% and now at a 5-month lows while those above their 200-MA was 70.8%. NYSI Summation index is below its 8-MA for a short term sell signal. NYMO McClellan Oscillator closed at -52 and bouncing from oversold. The cumulative AD line decreased this week and is under the 40 EMA short term breadth trend while still above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.65. CNN Fear and Greed index is in the Fear zone at 31 from 46 last week. The VIX/VXV ratio closed at 0.972. This measures the spread between 1- and 3-month implied volatility, above 1.0 exhibits fear and tends to mark a low.