Indexes Close MixedOpinion
The indexes closed mixed Friday with positive internals on the NYSE while NASDAQ internals were mixed. Volumes rose on the NYSE from the prior session while NASDAQ volumes declined. Some new closing highs were achieved on the charts while others saw some negative action worth noting below. Short term trends are now a mix of positive and neutral as are the cumulative advance/decline lines. The data is mixed while the forward 12-month earnings estimates from Bloomberg have declined, forcing the forward p/e to another 15-year high. As such, we are becoming a bit more cautious regarding near term market prospects.
- On the charts, the indexes closed mixed with positive NYSE internals. However, the NASDAQ A/D was negative while up/down volumes were positive. The SPX (page 2), DJI (Page 2), COMPQX (Page 3), NDX (page 3) and VALUA (page 5) closed higher with the DJI, COMPQX and NDX making new closing highs. However, the DJT (page 4), MID (page 4) and RTY (page 5) closed lower with the DJT closing back below its short term uptrend line and flashing a bearish stochastic crossover. So we now find the DJT and MID in near term neutral trends as the rest remain positive. The VALUA also gave a bearish stochastic crossover in spite of closing marginally higher. The cumulative advance/decline lines remain positive on the All Exchange and NYSE while the NASDAQ’s is neutral. So the charts are showing some potential for shifts in trend from their current generally positive status.
- The data is mixed. The 1-day McClellan OB/OS Oscillators are neutral with the 21-day levels overbought (All Exchange:+1.1/+64.3 NYSE:+13.69/+73.31 NASDAQ:-10.84/+61.7). The Equity Put/Call Ratio and Open Insider Buy/Sell Ratio are neutral at 0.65 and 43.9 respectfully while the OEX Put/Call Ratio (1.46) and ISEE Put/Call Ratio (13.92) are bearish. As well, the % of SPX stocks trading above their 50 DMAs is 74.5%, a level seen near market short term peaks.
- Of possibly greater concern is the drop in forward 12 month SPX earnings estimates from Bloomberg to $136.79 from $137.37, pushing the forward 12-month p/e to a new 15-year high of an 18.7 multiple. If earnings season does not meet or beat estimates, there may be a price to pay. Thus we are becoming a bit more cautious for the near term given some chart developments and valuation.