Data Remains Largely Neutral
All of the indexes closed lower Monday with negative internals on the NYSE and NASDAQ as trading volumes declined on both exchanges from the prior session. No technical events of import were generated on the charts while the data remains largely neutral in its projection. As such, we are maintaining our near term “neutral/positive” outlook for the major equity indexes at this time.
On the charts, all of the indexes closed lower yesterday on lighter trading volume with negative internals on both the NYSE and NASDAQ.
- No technical events worthy of note were generated on the charts.
- In our view, the pullback from recent all-time closing highs on some of the large cap indexes would be a normal process that may result in tests of trend or support.
- All of the indexes remain in short term uptrends and above their 50 DMAs.
- The cumulative advance/decline lines for the All Exchange and NYSE remain positive while the NASDAQ’s has shifted from positive to neutral.
- High “volume at price” (VAP) levels remain supportive on all but the DJT and VALUA where they are viewed as resistant.
The data remains largely neutral.
- The 1-day McClellan OB/OS Oscillators are all neutral (All Exchange:+14.4 NYSE:+13.45 NASDAQ:+16.65).
- The detrended Rydex Ratio (contrary indicator) at +0.55 is neutral as is the Open Insider Buy/sell Ratio (77.8).
- The % of SPX stocks above their 50 DMAs (76.0) is back to neutral from bearish.
- This week’s AAII Bear/Bull Ratio (contrary indicator) at 32.0/30.33 is neutral as well. We continue to view this lack of enthusiasm on the part of the crowd as a positive.
- The 12-month forward consensus earnings estimate from Bloomberg for the SPX stands at $174.15, leaving the forward p/e at a 17.1 multiple while the “rule of twenty” finds fair value at 18.0, suggesting the SPX remains slightly undervalued at current levels.
- The 10-Year Treasury yield is 2.03%.
- The earnings yield stands at 5.85%.
In conclusion, we are maintaining our near term “neutral/positive” outlook for the major equity indexes given the current state of the charts and data..