Data Neutral
The indexes closed mixed Friday with positive internals on the NSYE and NASDAQ as volumes rose from the prior session on the NYSE and declined on the NASDAQ. While they managed to close well above their intraday lows with a few minor improvements on the charts, the action was not sufficient to alter our near term “neutral/negative” short term outlook for the major equity indexes. The data is largely neutral.
On the charts, the indexes closed mixed Friday with positive internals on the NYSE and NASDAQ and well above their intraday lows.
- The DJT (page 4) and RTY (page 5) closed lower on the day as the rest advanced.
- Minor positive events occurred with the MID (page 4) closing above its short term downtrend line turning said trend neutral while the VALUA (page 5) closed above its 50 DMA.
- So the SPX (page 2), DJT, MID and VALUA are in neutral trends with the rest negative.
- The overall action was not sufficient, in our opinion, to alter our concerns. The trends remain a mix of neutral and negative while cumulative breadth for the All Exchange, NYSE and NASDAQ remains negative and below their 50 DMAs.
- Regarding the charts, we would need to see some improvement in breadth and bullish technical violations on increased volume to become more encouraged.
The data is largely neutral.
- All of the 1 day McClellan OB/OS Oscillators are neutral (All Exchange:-36.24 NYSE:-49.78 NASDAQ:-40.48).
- Insiders have yet to show any strong appetite for purchasing their own stock with a neutral 37.5% Open Insider Buy/Sell Ratio.
- The detrended Rydex Ratio (contrary indicator) remains neutral at 0.56 as is the % of SPX stocks trading above their 50 DMAs at 55.1%.
- The 12-month forward consensus earnings estimate from Bloomberg for the SPX now stands at $171.57, leaving the forward p/e at a 16.8 multiple while the “rule of twenty” finds fair value at 17.5, easing some of our prior valuation concerns. The earnings yield stands at 5.96%.
In conclusion, although the indexes saw some late day buying Friday that lifted most to their intraday highs, negative overall market breadth combined with the current chart trends remain questionable enough for us to maintain our near term “neutral/negative” outlook for the major equity indexes.