The SPX closed lower for the week by about -1.5% and just below the 21 EMA which is at 4460 and a key line in sand going into an important week of CPI data and the often-volatile triple witching expiration. The low for the week held the 55-day MA at 4430 and a follow-through higher into OPEX can see 4500 as the first resistance with 4540 next. If strength really gets going there is a small gap to fill still near 4575 and would be large resistance. Any close below 4430 would be a bearish signal and likely sees selling intensify down under 4400 to retest the 4340 lows from last month. The market is seeing choppy breadth signals that are also mixed and inconsistent, but sentiment is poor and outflows continue for a 6^th straight week so a sneaky rally into options expiration would not be surprising ahead of FOMC day the following week. The SPX is still susceptible to downside after that or under 4400 and the lower end of the channel is at 4250.

Market Sentiment/Breadth

AAII sentiment for the week ending 9/6 showed bullish responses increase to 42.2% from 33.1% prior while bearish responses fell to 29.6% from 34.5%. Neutral sentiment fell to 28.2% from 32.4%. Optimism is above its historical average of 37.5% for the first time in four weeks. The bull-bear spread (bullish minus bearish sentiment) increased 14.0 percentage points to 12.6%. This is the first time in four weeks that the bull-bear spread is above its historical average of 6.5%. The NAAIM Exposure index decreased to 49.73 from 61.19 and was still under last quarter’s average of 70.22. Lipper fund flows for the week ending 9/6 had $-5.2B of outflows in equities, the 6^th straight week seeing outflows. Friday’s close saw NYSE new highs at 48 while new lows of 96 and the 10-day MA of New High/Low Differential is barely positive at +6. The percentage of SPX stocks above their 50-MA is 35.0% while those above their 200-MA was 50.2%. NYSI Summation index has crossed back below its 8-MA and in a short term sell signal. NYMO McClellan Oscillator closed at -17 and Neutral. The cumulative AD line is choppy and back below the 40 EMA short term breadth and still just above the 89 EMA long term bull signal. CBOE Equity P/C 50-day MA at 0.66. CNN Fear and Greed index is in the Neutral zone at 51 from 56 last week. The VIX/VXV ratio is at 0.857, which measures the spread between 1- and 3-month implied volatility, and under 0.80 shows market complacency while above 1.0 exhibits fear.