Data ModeratesOpinion
All of the indexes closed higher yesterday with positive internals on the NYSE and NASDAQ as volumes rose from the prior session on both exchanges. New closing highs were made on the large cap indexes while the rest of the indexes remain within their respective sideways patterns, leaving all of the current trends intact. The data has moderated a bit but remains largely neutral. As such, we are shifting our short term outlook from “neutral” to “neutral/positive”, largely based on the current chart trends, as some psychology data remains a concern. We are keeping our intermediate term view “neutral” due to the extended forward valuation of the SPX at historic highs.
- All of the indexes closed higher yesterday with positive internals as volumes rose from the prior session. The SPX (page 2), DJI (page 2) and COMPQX (page 3) all made new closing highs as the SPX and DJI broke above resistance. The RTY (page 4) managed to close above its 50 DMA but remains confined within its 2 month long “rectangle” sideways pattern as do the DJT (page 3), MID (page 4) and VALUA (page 5). So the net result was no change in trend for any of the indexes as they continue their mix of up and sideways action. We would repeat our observation that the % of SPX stocks trading above their 50 DJMAs remains in a downtrend, showing fewer of its components participating in the index’s advances.
- The data remains largely neutral with some moderation occurring. All of the McClellan OB/OS Oscillators are neutral (All Exchange:+3.63/+23.86 NYSE:+15.98/+45.72 NASDAQ:+8.85/+2.75) as is the Equity Put/Call Ratio at 0.58. The OEX Put/Call Ratio (smart money) finds the pros jumping from prior heavy put exposure to now being long calls at 0.64 as they now expect strength. Also, the Gambill Insider Buy/Sell Ratio has slipped to a neutral 9.8 from its prior bearish readings. One data point that continues to bother us is the Inventors Intelligence Bear/Bull Ratio (contrary indicator) that has become more disturbing as advisors have increased their bullish attitudes even further form their prior state to 16.7/62.7. When everyone is bullish, any proverbial bump in the road is more difficult to absorb as there would be little pent up demand to buffer the shock.
- In conclusion, the scales have tilted just enough to change our near term outlook to “neutral/positive” from “neutral”. Our intermediate term view remains “neutral” due to extended valuation of the SPX.