Technical Market View

The SPX closed mostly unchanged for the week but spent the week seeing dips bought anytime prices came back towards 5600 midweek and were holding above the 200 EMA currently at 5640. The 61.8% Fibonacci retracement at 5646 also seeing prices close above this week which likely points to more upside at some point in this uptrend but now potential to consolidate further into May expiration week on deck next. Markets have stayed resilient and while SPX has a lot of resistance in the 5750-5800 zone, plenty of single stocks have emerged from basing patterns to lead the indexes higher. Potential to see some backing and filling continue on the broad averages into an expiration week that is pricing in about 135 points of movement for the week based on May 16^th options. VIX has further receded back to under 22 as realized volatility also shrinks, all good signs for markets. Clearly crypto markets like Bitcoin have been leading the risk on advance in equities and should continue to be a tell going into the second half of May and the rest of Q2 as Bitcoin clearing that 61.8% fib retrace of its own seems to be suggesting SPX prices will push higher and do the same. A lot of sentiment readings have normalized from extreme oversold levels so now it becomes more important for the SPX to be drive by a continuation of the strong expanding breadth metrics that produced the Zweig breadth thrust in late April.

Market Sentiment/Breadth

AAII sentiment for the week ending 5/7 showed bullish responses rise to 29.4% from 20.9% prior while bearish responses fell to 51.5% from 59.3% but stayed unusually high even after this sharp rally. Neutral sentiment fell to 19.8% from 22.5%. The bull-bear spread (bullish minus bearish sentiment) increased 16.3 percentage points to –22.1%. The bull-bear spread is below its historical average of 6.5% for the 18th time in 20 weeks and is below –20.0% for the 11th consecutive week. The NAAIM Exposure index rose to 81.06 from 59.92 last week and is now back above last quarter’s Q4 average of 72.50. Total equity fund flows for the week ending 4/30 had $-14.8 billion in outflows in equities. The prior day’s close saw NYSE new highs at 50, while new lows at just 24 and the 10-day MA of New High/Low Differential is rebounding to positive at +5. The percentage of SPX stocks above their 50-MA is at 62.2% while those above 200-MA was 43.8%. NYSI Summation index is still firmly above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +51 and now back to Upper Neutral zone short term. The cumulative AD line stayed strong and is above the 40 EMA short term breadth trend and above the 89 EMA long term bull signal showing the recent bottom is likely secure. CBOE Equity P/C 50-day MA is at 0.61. CNN Fear and Greed index is in Greed zone at 62 from 43 last week. The VIX/VXV ratio closed at 0.937 and under the key 1.0 level of inversion. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.