Data Slightly PositiveOpinion
The indexes closed mixed Thursday with negative internals on the NYSE while NASDAQ internals were mixed with a positive advance/decline but negative up/down volumes. Volumes rose versus the prior session on both exchanges with one new closing high being achieved on the charts. The near term trends are unchanged with a mix of neutral/positive. The data is largely neutral with a slightly positive tone this morning. So as we continue to see valuation extended and market participants selective with no change in trends, we remain of the opinion that the near term trends of the indexes should continue to be respected until proven otherwise.
- On the charts, The SPX (page 2), DJI (page 2), MID (page 4) and RTY (page 5) closed higher yesterday with the rest posting losses. The DJI managed to make another new closing high. The near term trends for the indexes are unchanged with the SPX, DJI, COMPQX (page 3), NDX (page 3) and MID (page 4) positive with the DJT (page 3), RTY (page 5) and VALUA (page 5) neutral. The All Exchange and NYSE cumulative advance/decline lines remain neutral with the NASDAQ’s negative. We continue to view the cumulative A/Ds as evidence of the selectivity regarding the number of individual issues participating in rallies.
- The data is largely neutral with a slightly positive tone. All of the McClellan OB/OS Oscillators are neutral (All Exchange:-33.45/-6.91 NYSE:-31.09/+10.14 NASDAQ:-36.02/-19.24) as are the Equity Put/Call Ratio (0.63) and Open Insider Buy/Sell Ratio (30.3). The slightly positive message is coming from a very bullish OEX put/Call Ratio at 0.33 and a mildly bullish Total Put/Call Ratio (contrary indicator) of 0.87.
- In conclusion, valuation does remain a concern as the forward p/e for the SPX based on Bloomberg consensus estimates of forward 12-month SPX earnings remains at a 15-year high of an 18.9 multiple. However, as these estimates are updated only monthly, there is the possibility of said estimates being raised in the future. So with keeping in mind how selective the markets have been in terms of the number of stocks performing with the indexes, we remain of the opinion that the near term index trends should continue to be respected.
- Forward 12-month earnings estimates for the SPX from Bloomberg of $136.79 leave a 5.35 forward earnings yield on a 18.9 8orward multiple, a 15-year high.
- SPX: 2,547/NA
- DJI: 23,314/NA
- NASDAQ: 6,557/NA
- NDX: 5,994/NA
- DJT: 9,542/9,986
- MID: 1,810/NA
- Russell: 1,450/1,512
- VALUA: 5,646/5,843