The SPX closed slightly higher for the week after a wildly strong end of Friday buy program pushed the market into positive territory for the week, and overall registered a positive August, as finished +2.35% on the month after a turbulent start the first week saw a temporary drawdown of -7%. Overall breadth was decidedly strong the past week which argued for support to hold near the 8 day EMA which it did all week and now the past 10 years formed a bullish flag just below new highs which likely come next above 565 SPY or 5670 on the SPX. The summer pattern also appears to be forming a cup and handle look if this breaks above highs and sustains, which seems likely based on breadth expanding and the equal weight S&P already at highs while VIX still has room to crush lower into September triple witching OpEx in three weeks. Showing the SPY chart below to be able to see volume profile you can see price holding firm above that 8/15 gap and could be one that does not fill as many are expecting. Also anchored VWAP from the August lows (orange line) is at 542 now and rising so would be a strong support on the next pullback. MACD and RSI are firmly in bullish territory as well and a close above 565 SPY likely sees the next objective at the 1.272% Fibonacci extension of 580, while the upper extension comes in at near 600 and would likely be a solid target later into Q4.

Market Sentiment/Breadth

AAII sentiment for the week ending 8/28 showed bullish responses fell slightly to 51.2% from 51.6% prior while bearish responses rose to 27.0% from 23.7%. Neutral sentiment fell to 21.9% from 24.7%. The bull-bear spread (bullish minus bearish sentiment) decreased 3.8 percentage points to 24.2%. The bull-bear spread is above its historical average of 6.5% for the 16th time in 17 weeks. The NAAIM Exposure index rose to 81.34 from 74.68 last week and is right at last quarter’s average of 81.70. Total equity fund flows for the week ending 8/21 had $-9.3 billion of outflows in equities. Friday’s close saw NYSE new highs at 278, while new lows of 23 and the 10-day MA of New High/Low Differential is rising and still positive at +197. The percentage of SPX stocks above their 50-MA is strong and making new recent highs at 82.0% while those above their 200-MA was 79.2%. NYSI Summation index is above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +30 and near 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 Greed zone now at 63 from 53 last week. The VIX/VXV ratio closed at 0.86. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.