Weekly Market View 7-11-21
The S&P 500 (SPX) closed at new all-time highs on Friday despite a choppy week overall that saw us continue to hold the rising 8-EMA. We continue to trend well above the June value area but over-extended near channel resistance and the small consolidation this month has not really helped overbought conditions. Our next major target of focus higher is 4,385 which is the 161.8% extensions of the 2016-to-2020 range. Then, we expect to see 4,400, a double from the COVID correction low from March and 4,428 is the current weekly upper Bollinger Band. Last Thursday’s low is an important spot to watch at 4280.25 and underneath can move back to the top of June value at 4,247 and then 50-MA at 4,212. Overall, the trend is positive, and we haven’t seen price action that warrants a more bearish outlook. The 8-, 21- and 55-MA all continue to slope higher and supportive of the broader bull trend. MACD and RSI are both a bit extended short-term but not close to being overbought or near extremes.
Overall, sentiment continues to flash cautious signals. AAII Sentiment for the week ending 7/7 showed a big drop in bullish responses to 40.2% from 48.6% while bears rose slightly to 24.5% from 22.2%. Neutral sentiment rose to 35.3% from 29.2%. NAAIM Exposure fell to 82.54 from 91.72 and remains elevated. Lipper Fund flows showed $4.3B in outflows from equities, breaking a small streak of positive flows. As of Friday’s close we saw 152 new highs on the NYSE, continuing to show a bearish divergence with the recent push to new highs. The percentage of stocks above their 50-MA was 51.79% and those above their 200-day was 78.6%, both well below their June highs even though the market climbs, so a sign that breadth is becoming narrower. NYSE Summation continued to fall to 553 and remains well below the 8-EMA in a cautious signal. NASI broke below its 8-EMA last week and fell each day. CBOE Equity P/C 50-day MA ticked higher this week to 0.48. Cumulative AD remains not far off of new highs. NYMO fell to -46.75 this week and bounced back a bit to -14.58. CNN Fear and Greed was 32 and continues to fall despite the rise in the indices.