Technical Market View

The SPX closed at new all-time highs going into the holiday weekend, hitting a high of 6285 after the week gained +1.7% in just 4 days extending the rally from the end of June that launched from the 21 EMA and now with that moving average at 6080 it provides a solid support on any potential pullbacks coming in July. The uptrend is getting somewhat extended and frothy short to medium term with RSI now over 75, showing the strength of the rally but also sentiment rising to new highs on the year with NAAIM exposure as shown below in the sentiment section at the least warning of potential for a stalling out and consolidation. Prices can always correct through time as they did in mid to late June, but the seasonal bullish bias runs through mid-July and that time window is getting shorter here for the bulls so any sudden bad news or change in tariff rhetoric may start to see VIX levels grind up as a first clue to watch the next few weeks. Overall, the SPX is in a confirmed bull trend and breakout of the prior highs with the weekly chart now solidly closing above 6150 for two straight weeks and market breadth expanding into the highs, confirming the breakout that likely continues in the coming 3 months towards the bigger fib extension objective at 6500. Large macro support now rises to the 6000 round number strike and should be a decent target on any mild correction into early to mid-summer if the 21 EMA at 6080 is breached. Thus far the SPX has not closed below its rising 21 EMA since April 23^rd, an impressive streak.

Market Sentiment/Breadth

AAII sentiment for the week ending 7/2 showed bullish responses jump to 45.0% from 35.1% prior while bearish responses fell to 33.1% from 40.3%. Neutral sentiment fell to 21.9% from 24.7%. The bull-bear spread (bullish minus bearish sentiment) increased 17.1 percentage points to 11.9%. The bull-bear spread is above its historical average of 6.5% for the first time in 22 weeks. The NAAIM Exposure index rose to 99.30 from 81.41 last week, above last quarter’s average of 72.50 and hitting fresh highs since November and now into extreme territory where markets tend to stall out or pullback from. Total equity fund flows for the week ending 6/25 had $-17.2 billion in outflows in equities. The prior day’s close saw NYSE new highs at 186, the highest since November as a sign of healthy breadth while new lows at 7 and the 10-day MA of New High/Low Differential is positive at +81. The percentage of SPX stocks above their 50-MA rose to 79.4% while those above 200-MA was 64.2%. NYSI Summation index is firmly above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +63 and is now nearing overbought short term. The cumulative AD line is making all time new highs above the 40 EMA short term breadth trend and above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA is at 0.56 and falling but still in a Neutral zone. CNN Fear and Greed index is in the Extreme Greed zone at 78 from 65 last week. The VIX/VXV ratio closed at 0.853, with 0.80 often a lower extreme. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.