The SPX closed nearly unchanged for the week after exhibiting one of the biggest volatility spikes on Monday since the March 2020 Covid crash but ultimately seeing a lot of bullish hammer candles on the weekly chart that formed, especially in key Tech growth names that have led this overdue correction since mid-July. Bitcoin, also a risk on asset, had a tremendous rebound off the lows and likely has formed a key bottom. A lot of sentiment readings, as shown below are still not near extremes to the downside so that could mean the SPX still has an end of summer period where it may stay volatile in a wider range as VIX is still just above 20, which indicates more than 1% daily moves priced in. As for SPX levels, the crucial 5200 support held this week after the initial bounce into Wednesday faded back down but formed a higher low. The low for the week came in near 5120 and got close to the open gap from May at 5073 but still is not filled so that would be a potential next target on downside if this relief rally were to fail still in August. Massive long-term support is just below that at 5000 from a options gamma perspective and technical view since that is just below the 200 day MA and near the April lows. For now if SPX holds above 5300 it can work back to the 5400 level where more stiff resistance is at with the 50% retracement from the highs and the 21 and 55 day MA’s converging. End of summer markets are classic for more volatile rangebound rotations especially after a strong first half of year so this ‘wobble’ we have seen is likely healthy and setting up more tradable trends after September once the first rate cut happens.

Market Sentiment/Breadth

AAII sentiment for the week ending 8/7 showed bullish responses fell only slightly to 40.5% from 44.9% prior while bearish responses jumped to 37.5% from 25.2%. Neutral sentiment fell to 22.0% from 29.9%. The bull-bear spread (bullish minus bearish sentiment) decreased 16.6 percentage points to 3.1%. The bull-bear spread is below its historical average of 6.5% for the first time in 14 weeks. The NAAIM Exposure index fell to 75.33 from 83.93 last week and is under last quarter’s average of 81.70 but still relatively higher than would be expected after 3 turbulent weeks in markets. Total equity fund flows for the week ending 7/31 had $-8.7 billion of outflows in equities. Friday’s close saw NYSE new highs at 47, while new lows of 54 and the 10-day MA of New High/Low Differential is declining but still positive at +74. The percentage of SPX stocks above their 50-MA is at 58% while those above their 200-MA was 68.4%. NYSI Summation index crossed lower below its 8-MA for a short-term bearish signal. NYMO McClellan Oscillator closed at -7 and back to Neutral. The cumulative AD line is still above the 40 EMA short term breadth trend after bouncing solidly and above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.64 as the ratio itself spiked. CNN Fear and Greed index is in the Fear zone now at 27 from 45 last week. The VIX/VXV ratio closed at 0.96 after peaking Monday at 1.14. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.