SPX Estimates Lift Slightly
All of the indexes closed higher Tuesday with positive internals on the NYSE and NASDAQ as volumes declined on both exchanges from the prior session. However, none of the short term trends were altered, leaving them a mix of neutral and negative. No important technical events were registered on the charts. The data remains almost entirely neutral although there was a slight lift in forward 12 month consensus earnings estimates for the SPX. As such, given the state of the charts and data, we are maintaining our near term “neutral” outlook for the major equity indexes.
On the charts, all of the indexes closed higher yesterday with positive internals but on shrinking volume.
- The various closes were near either the midpoint or lows of the intraday ranges.
- No technical events of import were registered.
- As such, we find the near term trends unchanged with the SPX (page 2), DJI (page 2), COMPQX (page 3), NDX (page 3) and VALUA (page 5) neutral with the rest negative.
- The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain neutral and above their 50 DMAs.
- The stochastic reading for the DJT has moved into oversold territory but has not yet flashed a “bullish crossover” signal.
The data is generally neutral.
- The 1 day McClellan OB/OS Oscillators are all neutral (All Exchange:-19.05 NYSE:-12.9 NASDAQ:-23.83).
- The Open Insider Buy/Sell Ratio (65.0), detrended Rydex Ratio (0.19) and % of SPX stocks trading above their 50 DMAs (65.0) are all neutral as well as is the AAII Bear/Bull Ratio at 26.67/35.33.
- Valuation finds the SPX forward p/e based on 12 month forward consensus earnings estimates from Bloomberg of $166.98 at 16.9. The estimate was raised slightly from $166.72. The “rule of twenty” finds fair value at 17.6 largely due to the recent notable drop in the 10 year Treasury yield. As such, the SPX appears to be slightly undervalued.
In conclusion, in spite of yesterday’s gains, there was not sufficient shift of evidence to cause an alteration of our near term :”neutral” outlook for the major equity indexes.