Weekly Market View 7-18-21
The S&P 500 (SPX) snapped a three-week winning streak last week while the Russell (IWM) underperformed with its lowest weekly close since January as inflations concerns and a correction in energy weighed. Momentum has clearly shifted towards bears recently with Friday’s engulfing day and the weak breadth. And, we have the broader weekly rising wedge to watch with plenty of downside potential below 4,150. On Friday, the S&P broke through the key 4,335 level on Friday and outside of the recent balance area and now into a low-volume node that stretches back to 4,255. VPOC for the year is further down at 4,182. Short-term momentum has turned bearish with the 8-EMA sloping down but the 21-day (4,309) and 55-day (4,230) continue to slope higher and areas of interest for bulls to potentially step in. The top of June value is also important support at 4,248.25. A bullish reversal and snapback would target July VPOC at 4,359 and then recent highs.
Breadth overall continues to show signs of caution. The latest AAII sentiment survey for the week ending 7/14 showed a slight dip in bulls to 36.2% vs 40.2% prior while bearish responses rose to 26.8% vs 24.5%. Bullish sentiment overall dropped below the long-term average for the first time in seven weeks. NAAIM rose again to 93.27, up from 82.54 and remains elevated. Lipper Fund flows had $628M of inflows to equities, the third week of positive flows in the last four. As of Friday, there were 188 new highs vs 148 new lows, much more balanced breadth. The percentage of stocks above their 50-day MA fell to 35.7% while those above their 200-MA fell to 63.9%. NYSE Summation fell again to 363.67 and remains well below the 8-EMA, bearish signal. NASI remains below its 8-EMA also with continued weakness. CBOE Equity P/C ratio 50-MA rose to 0.484. Cumulative AD fell again for the week and now below its 50-MA for the first time since November 2020. CNN Fear and Greed fell to 23, ‘extreme fear’, and lowest level of 2021.