The SPX closed higher for the week by +1.9% showing impressive strength even after a midweek gap down found buyers near 5160 and retraced back up to the 5200 strike which it closed above on Friday. A strong market but a very dull tape the past week a lack of any type of catalysts which drained implied volatility levels to multi month lows as the VIX futures got smacked down. These flows of volatility supply do a great job of dampening realized volatility and thus keeping a floor under stocks into OPEX which now comes this week already as May continues to fly by and earnings season wrapping up with just some key retailers left to report. For now, the underlying breadth is supporting higher lows forming and any pullback into or after options expiration this week would likely be met with buyers with first support on SPX at the 8 EMA of 5167 and then the 21 EMA at 5130. The prior March high is at 5265 on the upside as a likely target but still plenty of potential to chop around and consolidate with the next clear catalyst being CPI this week and then likely more importantly the highly anticipated NVDA earnings report due on 5/22. Momentum is positive with MACD confirming and also the RSI solidly above the 50-midpoint level. Weekly option expected moves continue to shrink with this week just pricing in about +/- 68 points and seemingly feels low for the price ranges that have been occurring.

Market Sentiment/Breadth

AAII sentiment for the week ending 5/8 showed bullish responses rise to 40.8% from 38.5% prior while bearish responses fell sharply to 23.8% from 32.5%. Neutral sentiment rose to 35.4% from 29.0%. The bull-bear spread (bullish minus bearish sentiment) increased 11.0 percentage points to 17.0%. The bull-bear spread is above its historical average of 6.5% for the first time in four weeks. The NAAIM Exposure index increased to 91.55 from 61.97 last week and is now back above last quarter’s average of 87.84. Total equity fund flows for the week ending 5/1 had $-7.8 billion of outflows in equities. Friday’s close saw NYSE new highs at 217 while new lows of 24 and the 10-day MA of New High/Low Differential is positive at +110. The percentage of SPX stocks above their 50-MA is at 58.0% while those above their 200-MA was 78.4%. NYSI Summation index is back above its 8-MA for a short term buy signal. NYMO McClellan Oscillator closed at +44 and at 4-month highs. The cumulative AD line is showing strength and is above the 40 EMA short term breadth trend while above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.66. CNN Fear and Greed index is in the Neutral zone at 48 from 40 last week. The VIX/VXV ratio closed at 0.856. This measures the spread between 1- and 3-month implied volatility, above 1.0 exhibits fear and tends to mark a low.