Data Remains Mostly NeutralOpinion
All of the indexes closed lower Monday with negative internals on the NYSE and NASDAQ as volumes rose on the NYSE from the prior session while NASDAQ volumes dipped. No major technical events of import occurred oi the charts although breadth is starting to be of some possible concern. The data remains largely neural and uninstructive. As such, we are maintaining our near term “neutral” outlook for the major equity indexes at present although some issues of concern are starting to arise.
- On the charts, all of the indexes closed lower yesterday with negative internals on both exchanges. All closed at or near their intraday lows. While no support levels were violated, the MID (page 4) and RTY (page 5) closed on support that, if broken, would turn their trends negative. The DJT (page 4) and VALUA (page 5) closed below their 50 DMAs. So all of the short term trends are still neutral with the exception of the DJI (page 3) that remains negative.
- Breadth is starting to become a possible issue as the cumulative A/D for the NASDAQ has turned negative and below its 50 DMA while the All Exchange and NYSE are neutral but the All Exchange is now below its 50-DMA as well. We would also note the chart for the U.S. Dollar, while nearing short term resistance, has broken above its long term downtrend line dating back to January of 2017. It implies the potential for more Dollar strength over the intermediate term.
- The data is largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:-25.44/+9.9 NYSE:-18.58/+18.45 NASDAQ:-34.79/+2.55). The Equity (0.61) and OEX (1.37) Put/Call Ratios are also neutral as are the OpenInsider Buy/Sell Ratio (40.5) and new AAII Bear/Bull Ratio (32.0/33.0). The Total Put/Call Ratio is a bullish 0.92. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $161.82 at a 16.4 multiple versus the “rule of 20” implied fair value of 17.0.
- In conclusion, while breadth is showing some possible trouble, the combination of chart trends combined with the data suggest our near term outlook for the major equity indexes should remain “neutral” at this point in time.
- SPX: 2,613/2,683
- DJI: 23,825/24,690
- NASDAQ: 6,959/7,177
- NDX: 6,459/6,700
- DJT: 10,391/10,788
- MID: 1,873/1,912
- Russell: 1,545/1,595
- VALUA: 6,028/6,142