The SPX closed at fresh 3 months highs to finish the week at 4280 and above the 50% retracement level and YTD VWAP key zone on the futures. The market will enter August options expiration week on a strong note, but positive gamma is likely to give an early week follow through after closing on the highs Friday. The next logical level of interest is the 61.8% fib retrace at 4367 and is interestingly the level from where the SPX broke down from in late April. The MACD and RSI continue to point higher as momentum and relative strength in full buy mode since early July, however RSI is now at the overbought zone over 70 so something to keep in mind. Technically on a pullback the market now has strong support in the 4175 and 4050 levels as the 21/55 EMA bull cross shows a medium-term shift of trend and both moving averages sloping higher above the 4000 zone.

Market Sentiment/Breadth

AAII sentiment for the week ending 8/10 showed bullish responses rise to 32.2% from 30.6% prior while bearish responses fell to 36.7% from 38.9%. Neutral sentiment rose to 31.2% from 30.6%. Pessimism among individual investors about the short-term direction of the stock market fell to its lowest level in almost five months. Optimism rose to its highest level since late March. Optimism was last higher on March 24, 2022 (32.8%). Despite recent increases, bullish sentiment remains below its historical average of 38.0% for the 38th consecutive week. NAAIM Exposure index increased to 71.59 from 55.28 and now above last quarter’s average of 41.75 and at 3-month highs. Lipper fund flows for the week ending 8/10 had $4.4B of inflows in equities. Friday’s close saw NYSE new highs at 56 while new lows of 24 and the 10-day MA of New High/Low Differential at +5 and seeing a positive cross for first time since early April. The percentage of SPX stocks above their 50-MA is 92.4% while those above their 200-MA was 48%. NYSI and NASI Summation index both in bullish mode above 8-MA and sloping higher. NYMO closed at 72.97 and is overbought short term. Cumulative AD is above the 40 EMA and the 89 EMA long term signal has turned positive. CBOE Equity P/C 50-day MA at 0.65 and declining recently from June extremes. CNN Fear and Greed index in Neutral zone at 55 from 50 last week.