The SPX closed the week strong +4% and into new 2-month highs above 4125 as earnings reports surprised positively and the FOMC rate hike was received well. The Ukraine invasion low from February at 4116 is now retested and potential for some resistance to form in this area of 4150-4200 but with a pullback towards the 21 or 55 EMA the SPX could form the right shoulder of an inverted bottoming pattern that would setup the next leg higher into end of summer perhaps towards the 200-day MA overhead. RSI and MACD continue in bull mode as momentum is accelerating off lows. The market could very well spend the month of August consolidating the large July advance and finding a range between 4000 and 4200 for more back and forth price action as sector rotation plays out through earnings season.

Market Sentiment/Breadth

AAII sentiment for the week ending 7/27 showed bullish responses fall to 27.7% from 29.6% prior while bearish responses fell to 40.1% from 42.2%. Neutral sentiment rose to 32.2% from 28.2%. Neutral sentiment rising back above its historical average. In addition, the number of investors describing their outlook for stocks as bearish fell to an eight-week low. Bullish sentiment remains below its historical average of 38.0% for the 36th consecutive week. NAAIM Exposure increased to 47.21 from 44.48 as asset managers added exposure but still below Neutral levels. Lipper fund flows for the week ending 7/27 had $372M of inflows of equities. The first week of inflows in 7 weeks. Friday’s close saw NYSE new highs at 43 while new lows of 46 and the 10-day MA of New High/Low Differential at -26 and nearing a positive cross for first time since early April. The percentage of SPX stocks above their 50-MA is 77% while those above their 200-MA was 36.8%. NYSI and NASI Summation index both in bullish mode above 8-MA and sloping higher. NYMO closed at 88.9 and very overbought short term. Cumulative AD crossed above the 40 EMA and the 89 EMA long term signal that has been in bear mode since Nov 2021 is now turning positive. CBOE Equity P/C 50-day MA at 0.67 and still at high levels showing pessimism but flattening. CNN Fear and Greed in Fear zone still at 42 from 38 last week.