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Weekly Market View 6-23-24

Weekly Market View 6-23-24

by | Jun 23, 2024 | Weekly Market View

The SPX closed higher for the week by +0.6% after being higher into a Thursday peak near 5500 which was our max ceiling zone for the week based on expected moves and open interest. The market likely has that level to contend with as stiff resistance into the quarter end with a lot of seasonal headwinds also in play for the final week of June. The month of June is up about +3.6% thus far, which is coming off a nearly +5% leap higher in May and overall, the second quarter is positive by +4% even with the minor correction in April. All time highs are likely to lead to higher levels into Q3 and year end as is typical during election years that tend to feature shallow pullbacks, but the sluggish breadth and lack of broader sector participation should give potential to a pullback into this week as the midyear point nears. Even just a pullback to the rising 21 EMA near 5370 currently would be constructive and lines up with a gap fill from this month’s CPI gap up day. Holding above 5400 on a weekly closing basis would show strength persisting a potential to move up further to the 5550-level next into early July, which is a top 3 bullish month of the year generally as a new quarter starts. The next long-term Fibonacci extension target also comes in at 5638 so that will be a key level to look for later in Q3. While a close under 5400 could bring a lower test towards the 55-day MA at 5265, which is just where June began. The leadership in the Nasdaq has been apparent and the QQQ itself should be watched to see how well the 475-support level holds on a dip. It does seem that this market wants to tag the 500 number on QQQ at some point this summer. As a new month and quarter approaches and bonds start to exhibit further strength with yields sinking, I would not be surprised to see the small cap sector finally start to take off once this quarter concludes and fresh money flows enter July. This would strengthen the breadth of the market as more than just mega cap tech names would be joining in.

Market Sentiment/Breadth

AAII sentiment for the week ending 6/19 showed bullish responses at 44.4% from 44.6% prior while bearish responses fell to 22.5% from 25.7%. Neutral sentiment up ticked to 33.1% from 29.7%. The bull-bear spread (bullish minus bearish sentiment) increased 2.9 percentage points to 21.9%. The bull-bear spread is above its historical average of 6.5% for the seventh consecutive week. The NAAIM Exposure index decreased to 85.26 from 86.30 last week and is near last quarter’s average of 84.57. Total equity fund flows for the week ending 6/12 had $-10 billion of outflows in equities. Friday’s close saw NYSE new highs at 40 while new lows of 51 and the 10-day MA of New High/Low Differential is falling further at +9. The percentage of SPX stocks above their 50-MA is at 53.60% and back above the 50 level but still sluggish while those above their 200-MA was 70.80%. NYSI Summation index is below its 8-MA for a short term sell signal. NYMO McClellan Oscillator closed at -19 and back near Neutral. The cumulative AD line is now at the 40 EMA short term breadth trend but still above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.64. CNN Fear and Greed index is in the Fear zone at 41 from 39 last week. The VIX/VXV ratio closed at 0.870. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.