Data Remains Mixed
Opinion: Post our last report, the major equity indexes managed to continue their respective short term uptrends on relatively good breadth. The data remains mixed with some cautionary short term signals. However, the move up and out of the prior sideways consolidation patterns of the major index charts suggests the current trends should continue to be respected until proven otherwise, in our opinion.
- On the charts, since our last comment, the SPX (page 2), DJI (page 2), COMPQX (page 3) and DJT (page 3) have all managed to post new closing highs with the COMPQX’s being a 13 year high. All of the indexes have resolved their prior sideways trading patterns to the upside leaving the short term uptrends intact as internals have shown relatively positive breadth. At this point only the RUT remains below a notable resistance level. All other short term support levels have been adjusted higher as noted below. As such, the charts remain in good shape.
- The data has shifted a bit in both directions leaving a mixed general signal. The Gambill Insider Buy/Sell Ratio has improved slightly to a neutral 9% as of 7/2 along with the OEX Put/Call Ratio (smart money) at a neutral 1.34. The Total Put/Call Ratio (contrary indicator) is a very bullish 1.02.
- On the other side of the coin, we find the McClellan OB/OS Oscillators mostly overbought (NYSE:+8.57/+83.33NASDAQ:+56.69/+68.68) with only the 1 day NYSE neutral. The WST Ratio and its Composite are both bearish at 69.8 and 169.4 with the Equity Put/Call Ratio (contrary indicator) a bearish .49. So, the data continues to send a slightly weighted cautious message.
- In conclusion, although the data is displaying some concern, the charts of the indexes have generally seen bullish resolutions of their prior consolidations suggesting, in our opinion, that the trends should continue to be honored over the near term.
- For the longer term, we remain bullish on equities as they remain comparatively undervalued with a 6.29 forward earnings yield for the SPX based on 12 month IBES forward earnings estimate.