The S&P 500 (SPX) closed higher for the week with an impressive hammer reversal off the 21-week MA and VWAP from the May lows. The index kicked off the week strongly negative with sentiment around China’s Evergrande and tested a big low-volume gap at 4335-4250 that held up strong and now becomes an important longer timeframe bull/bear zone. The snapback move from Tuesday onward went right back to VPOC from the prior balance (4440) and failed to gain a lot of momentum past that area. This also aligns with the 61.8% Fibonacci retracement of the move from the 9/3 high to the 9/20 low (4451) and VWAP from the high (4443). A move higher targets the monthly value high (4464.5), the top of the value area from this balance (4476.75), a low-volume node (4492.50) and then 4,500. Support below is at the 55-EMA (4408.75) and then the low-end of monthly value (4372.25).

Market Sentiment/Breadth

AAII sentiment survey for the week ending 9/22 showed a rise in bullish responses to 29.9% vs 22.4% prior. Bearish sentiment was flat at 39.2% vs 39.3% and neutral sentiment fell to 30.9% vs 38.3%. Bullish sentiment remains below the long-term average for the second straight week. NAAIM Exposure saw another dip this week down to 77.7 vs 87.02 prior. Overall, it remains in a neutral range. Lipper Fund Flows had $6.7B of outflows from equities, the largest exodus is over five weeks. As of Friday’s close, there were 78 new highs on the NYSE vs 44 new lows. The Nasdaq New Highs vs New Lows ratio for the week was -15, the first time new lows outweighed in four weeks. The percentage of stocks above their 50-MA was 48.57% while those above their 200-day were 60.92%, both continue to negatively diverge with price. NYSI fell again and remains below its 8-EMA in a sell signal. NASI actually crossed above its 8-EMA on Friday but looking for confirmation and follow-through next week. CNN Fear and Greed was 32, down from 34 a week ago and sentiment overall remains negative citing weak breadth, new highs/new lows ratio, and rising safe haven demand.