The SPX closed higher again this week by +1.3% as stocks stayed resilient into and after the FOMC meeting and first rate cut in 4 years. SPX hit fresh all time highs at 5733 Thursday before seeing a pause Friday but overall holding firm near 5700 into monthly expiration. The market has now closed multiple days above the prior July highs indicating some acceptance of prices up here and although the final week of September can often see a profit taking pullback, these recent positive breadth thrusts are supportive of a higher market into Q4, which tends to stay strong in a year that started that way and is at new highs. The election now just about 6 weeks away should be a factor that likely keeps volatility somewhat bid ahead of that but as long as the VIX continues to see lower highs the market can drift higher. The upside 1.272% Fibonacci extension points to a target of 5815 in the short term while a higher objective likely in Q4 would see 6000 precisely line up with the 1.618% fib extension. Support below comes in at 5650 and the 21 day EMA near 5600 a key line in sand to hold for now. Any break below that would see options market gamma turn negative and indicate a failed breakout, but for now NYSE cumulative breadth is suggesting the wall of worry climb higher more likely.

Market Sentiment/Breadth

AAII sentiment for the week ending 9/18 showed bullish responses rise to 50.8% from 39.8% prior while bearish responses fell to 26.4% from 31.0%. Neutral sentiment fell to 22.8% from 29.3%. The bull-bear spread (bullish minus bearish sentiment) decreased 11.6 percentage points to 8.8%. The bull-bear spread (bullish minus bearish sentiment) increased 15.6 percentage points to 24.4%. The bull-bear spread is above its historical average of 6.5% for the 19th time in 20 weeks. The NAAIM Exposure index rose to 87.46 from 71.93 last week and is slightly above last quarter’s average of 81.70. Total equity fund flows for the week ending 9/11 had $-12.9 billion of outflows in equities. Friday’s close saw NYSE new highs at 244, while new lows of 16 and the 10-day MA of New High/Low Differential is making new recent highs at +267. The percentage of SPX stocks above their 50-MA jumped to 79.0% while those above their 200-MA was 76.6%. NYSI Summation index popped higher and is above its 8-MA for a short-term bullish signal. NYMO McClellan Oscillator closed at +26 and Neutral. The cumulative AD line had a strong thrust to new highs and is 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 0.64. CNN Fear and Greed index is in the Greed zone now at 63 from 47 last week. The VIX/VXV ratio closed at 0.85. This measures the spread between 1- and 3-month implied volatility, above 1.0 shows fear and can mark a low.