Weekly Market View 8-22-22
The SPX pulled back off the 4300-resistance level to end the week back at 4228 and just under the 8 EMA for the first time all month. The 21 EMA is slightly lower near the open gap from the CPI report closer to 4150 and would be the next level of support. The market needed a technical pullback off current price levels as the RSI over 70 last week showed a bit of froth and overbought nature. SPX was led down by the growth stocks this week as yield popped but there is notable support below at 4200 and sentiment is still quite bearish in a bigger picture view. The 61.8% fib retracement overhead at 4367 would still be a natural next target if buyers emerge and hold price above the 21 EMA. MACD is nearing a bear cross lower and that will be watched this week for more slowing of momentum and trend changes.
AAII sentiment for the week ending 8/17 showed bullish responses rise to 33.3% from 32.26% prior while bearish responses rose to 37.2% from 36.7%. Neutral sentiment fell to 29.5% from 31.2%. Optimism among individual investors about the short-term direction of the stock market is at its highest level of the year. This is the highest level of optimism recorded since December 30, 2021 (37.7%). Despite recent increases, bullish sentiment remains below its historical average of 38.0% for the 39th consecutive week. NAAIM Exposure index decreased to 64.44 from 71.59 and still above last quarter’s average of 41.75. Lipper fund flows for the week ending 8/17 had $7.3B of inflows in equities. Friday’s close saw NYSE new highs at 26 while new lows of 57 and the 10-day MA of New High/Low Differential at +17. The percentage of SPX stocks above their 50-MA is 88.2% while those above their 200-MA was 44.8%. NYSI and NASI Summation index both in bullish mode above 8-MA but curled lower Friday. NYMO closed at -30 and is back down below zero after being overbought. Cumulative AD pulled back a touch but is above the 40 EMA and 89 EMA long term signal is 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 51 from 54 last week.