The SPX closed strongly higher for the week by +1.6% and sustaining above the key 5600 level with now just a stone’s throw away from all-time highs which stand at 5670 and likely the next level to be tagged into month end, with potential to blow through it and go hit 5700 on a positive NVDA earnings report next week. The cumulative breadth of the NYSE has already made new highs well in advance of the indices, so it makes it highly probably to see SPX continue into a new high and now with a holiday coming for Labor Day it also brings the likelihood of the late summer grind up price action with declining volatility. Also, outside of NVDA earnings this week the main economic data will be GDP and the PCE index, but no real substantial catalysts are on deck until the 9/6 September jobs report, which is now the top interest for markets as the labor market matters more than inflation going forward. As for price levels the SPX is cleanly trending above its 8-day EMA near 5560 which was nearly tested Thursday on the one-day dip, during which breadth did not show much concern. Then on Friday with the bounce back, market breadth showed incredible strength, by some metrics being the strongest in two months. This paves the way to new highs into 5700 as a likely round number target this week while a further advance would then target Fibonacci extensions above that coming in at the 1.272% fib of 5819 and the 1.618% fib extension is measuring up to 6010 or roughly the big 6k round number which would ideally be a target into the rest of year and doesn’t have to go there immediately but from a simple trend analysis, new highs tend to target those Fibonacci extensions eventually as long as the trend in place persists.

Market Sentiment/Breadth

AAII sentiment for the week ending 8/21 showed bullish responses rose to 51.6% from 42.5% prior while bearish responses fell to 23.7% from 28.9%. Neutral sentiment fell to 24.7% from 28.6%. The bull-bear spread (bullish minus bearish sentiment) increased 14.3 percentage points to 28.0%. The bull-bear spread is above its historical average of 6.5% for the 15th time in 16 weeks. The NAAIM Exposure index rose to 74.68 from 56.57 last week and is now just below last quarter’s average of 81.70. Total equity fund flows for the week ending 8/14 had $-10.6 billion of outflows in equities. Friday’s close saw NYSE new highs at 294, while new lows of 6 and the 10-day MA of New High/Low Differential is rising and still positive at +119. The percentage of SPX stocks above their 50-MA is strong and making new recent highs at 79.8% while those above their 200-MA was 77.6%. NYSI Summation index is above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +54 and back to above Neutral but not yet overbought. 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 Neutral zone now at 53 from 35 last week. The VIX/VXV ratio closed at 0.87 after peaking at 1.14 early this month. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.