Weekly Market View 6-4-23
The SPX closed the week strong into fresh highs on the year with a convincing breakout above the 4225 level and now approaching the 4300 highs from last August with RSI confirming the move higher as well to recent highs. Support is holding well each time the 8 EMA is tested recently and now being at 4200 roughly should signify a key line in sand with two weeks until a large June quad witching OPEX and FOMC meeting the same week. The 55-day MA at 4125 would be the next downside support, a level that has held price since climbing above it in early April. SPX has a bullish weekly chart as well with MACD and RSI in bull mode pointing to momentum on the bull’s side now as the recent 21/55 EMA weekly cross confirms strength. The 4311 level represents a big 61.8% fib retracement from the all-time highs to the bear market lows so will be a key level to watch and see how prices react to.
AAII sentiment for the week ending 5/31 showed bullish responses rise to 29.1% from 27.4% prior while bearish responses fell to 36.8% from 39.7%. Neutral sentiment rose to 34.1% from 32.9%. This keeps optimism within its typical range for just the fourth time in the last 15 weeks. Nonetheless, bullish sentiment remains below its historical average of 37.5% for the 78th time out of the last 80 weeks. The bull-bear spread (bullish minus bearish sentiment) increased to –7.8% after being unusually low for the last five weeks. The NAAIM Exposure index decreased to 53.92 from 65.51 and is still below last quarter’s average of 63.74. Lipper fund flows for the week ending 5/31 had $2.2B of inflows in equities. Friday’s close saw NYSE new highs at 88 while new lows of 15 and the 10-day MA of New High/Low Differential is at -27. The percentage of SPX stocks above their 50-MA is 52.4% while those above their 200-MA was 53.0%. NYSI and NASI Summation indexes closed Friday with a bull cross above 8-MA and in a short term buy signal. NYMO McClellan Oscillator closed at +42 and in a Neutral zone but at 6-week highs. The cumulative AD line is back over the 40 EMA short term trend and the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.68. CNN Fear and Greed index is in Greed zone at 65 from 66 last week. VIX/VXV ratio is back down to 6 months lows to 0.815, which measures the spread between 1- and 3-month implied volatility.