The SPX closed slightly lower for the week in a choppy holiday shortened start to July and overall, an inside week candle for the major index while seeing a Thursday bounce fill the gap of the island formation and then close weak on lows Friday even with breadth finishing the day positive. SPX is just under its 8 EMA support while stronger support is at the 21 EMA just below at 4365 and a likely bounce point early this week if 4400 is breached. SPX still has a window of seasonal strength into the mid-July timeframe and options expiration week nearing so seeing a dip this week to the 21 day would present an interesting dip buy opportunity as long as 4350 holds on a closing basis then the next upside resistance would target 4460 and then 4500 the larger level of open interest and then the 78.6% fib retracement at 4550 of the entire bear market decline. MACD is starting to lose momentum and cross lower, but RSI is still at 60.

Market Sentiment/Breadth

AAII sentiment for the week ending 7/5 showed bullish responses rise to 46.4% from 41.9% prior while bearish responses fell to 24.5% from 27.5%. Neutral sentiment fell to 29.1% from 30.6%. The bull-bear spread (bullish minus bearish sentiment) increased 7.4 percentage points to 21.9%. The bull-bear spread is above its historical average of 6.4% for the fifth consecutive week. The NAAIM Exposure index increased to 83.11 from 75.93 and is above last quarter’s average of 70.22. Lipper fund flows for the week ending 7/5 had $6.2B of inflows in equities, the 3^rd week of inflows in the last 5 weeks. Friday’s close saw NYSE new highs at 54 while new lows of 21 and the 10-day MA of New High/Low Differential is positive at +68. The percentage of SPX stocks above their 50-MA is 73.0% while those above their 200-MA was 64.4%. NYSI Summation index is above 8-EMA and in a short term buy signal, but the NASI Nasdaq signal is crossing lower now. NYMO McClellan Oscillator closed at +8.5 and in a Neutral zone. The cumulative AD line rebounded off the 40 EMA short term breadth trend and above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.62. CNN Fear and Greed index is in Extreme Greed zone at 78 from 83 last week. VIX/VXV ratio is bouncing back to 0.86, which measures the spread between 1- and 3-month implied volatility.