The SPX closed strongly higher for the week by +4% and showing solid follow through from last weeks bullish weekly reversal candle with breadth actually driving the move higher and expanding to new highs based on NYAD cumulative breadth. The monthly expiration passing now could allow for some digestion or pullback this week with also the VIX expiration on Wednesday upcoming can often be a turning point when it comes the week after stocks options expire. The 8/21 EMA bull cross also confirmed the past few days along with the 61.8% fib retracement being breached to the upside. All of this points to eventual retest of the highs and likely a breakthrough them as shorts are underwater. For now any dips back to the 5450 level this week would be ideal for new entries into the trend. Many got bearish on Aug 5^th but its key to remember the market peaked a month ago on 7/16, which coincided with July VIX options expiration. The market did get off to a rocky start in August but remembering that election years feature stronger seasonality in August and September than normal could be important to keep in mind on a path to likely new highs above 5700 by next month. Short term resistance is at 5575 and 5600 while support is at 5450 and 5400 being the 55 day MA below. With NVDA earnings in the following week it also can be a catalyst to further reignite the correlation trade and see Semi’s continue the recent sharp rebound and see Tech leadership while also seeing expanding breadth in other sectors.

Market Sentiment/Breadth

AAII sentiment for the week ending 8/14 showed bullish responses rose to 42.5% from 40.5% prior while bearish responses fell to 28.9% from 37.5%. Neutral sentiment rose to 28.6% from 22.0%. The bull-bear spread (bullish minus bearish sentiment) increased 10.6 percentage points to 13.7%. The bull-bear spread is above its historical average of 6.5% for the 14th time in 15 weeks. The NAAIM Exposure index fell to 56.57 from 75.33 last week and is now just below the April low and well under last quarter’s average of 81.70. Total equity fund flows for the week ending 8/7 had $-9.3 billion of outflows in equities. Friday’s close saw NYSE new highs at 128, while new lows of 18 and the 10-day MA of New High/Low Differential is declining but still positive at +18. The percentage of SPX stocks above their 50-MA is rebounding back at 69% while those above their 200-MA was 73.8%. NYSI Summation index crossed back above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +43 and back to mid-range but above Neutral. The cumulative AD line is impressively making 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 at 0.63. CNN Fear and Greed index is in the Fear zone now at 35 from 27 last week. The VIX/VXV ratio closed at 0.83 after peaking last week near 1.14. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.