Weekly Market View 6-25-23
The SPX closed the week lower by -1.5% as the post OPEX week seasonals played out as expected from the markets frothy overbought state. The pullback is healthy overall but did fail to hold above the 8 EMA by Friday’s close, and breadth faded more negatively, which implies a possible test of the 21 EMA this week which happens to line up quite closely to the large 4320 level and JPM collar strike call that expires this week for the quarterly expiration. SPX has stiff resistance into the 4400 level for now likely a ceiling until MACD can turn back higher, as of Fridays close the MACD is about to cross lower. RSI is back to the 60 level after working off extremely overbought levels. Overall support is seen at 4320 and 4300 while the next key spot would be 4275, which was the small consolidation prior to the OPEX week melt up. SPX rallied about +8% for the quarter while other Tech centric indices like the Nasdaq have gained much more so a further pullback to the 21 EMA would be normal and consolidation into July likely is warranted.
AAII sentiment for the week ending 6/21 showed bullish responses fall to 42.9% from 45.2% prior while bearish responses rose to 27.8% from 22.7%. Neutral sentiment fell to 29.4% from 32.1%. The bull-bear spread (bullish minus bearish sentiment) decreased to 15.1%, down 7.4 percentage points. The bull-bear spread has been above its historical average of 6.4% for three consecutive weeks. The NAAIM Exposure index increased to 83.60 from 81.66 and still well above last quarter’s average of 63.74. Lipper fund flows for the week ending 6/21 had $16.5B of outflows in equities, 3 of the last 5 weeks seeing outflows. Friday’s close saw NYSE new highs at 52 while new lows of 47 and the 10-day MA of New High/Low Differential is positive now at +71. The percentage of SPX stocks above their 50-MA is 53.4% while those above their 200-MA was 55.6%. NYSI and NASI Summation indexes on Friday both crossed below 8-MA and in a short term sell signal. NYMO McClellan Oscillator closed at -32 and in a Neutral zone. The cumulative AD line is retesting the 40 EMA short term trend and the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.64. CNN Fear and Greed index is in Greed zone at 74 from 79 last week. VIX/VXV ratio is back down to 1-year lows to 0.797, which measures the spread between 1- and 3-month implied volatility.