Data Remains Mostly Neutral
The indexes closed mostly higher Friday with the exception of the DJT posting a loss. Internals were positive on the NYSE and NASDAQ as volumes declined from those of the prior session on both exchanges. The charts saw the COMPQX close above resistance with no other important technical events being generated on the rest of the index charts. The data continues to send a generally neutral message. As such, we are maintaining our near-term “positive” outlook for the major equity indexes.
- On the charts, the only index to close lower Friday was the DJT (page 4) that, by our work, is currently in a neutral trend. The rest of the indexes closed higher while maintaining their short term uptrends with the COMPQX (page 3) managing to close above its short term resistance level. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ also remain positive uptrends. We have recently discussed the appearance of some “bearish stochastic crossover signals” that remain present. We continue to monitor them but reemphasize that we do not view them as actionable unless the charts actually show some violations of support.
- The data remains largely neutral including all of the 1 day McClellan OB/OS Oscillators (All Exchange:+5.58/+79.37 NYSE:+0.92/+91.16 NASDAQ:+10.07/+71.6). In spite of the significant rally from the beginning of the year, the detrended Rydex Ratio (contrary indicator) that measures the action of the leveraged ETF traders is still in neutral territory at +0.51). They are nowhere near there levels of excessive bullish sentiment registered prior to the November-December correction. We continue to view their lack of exuberance as a positive. The % of SPX stocks trading above their 50 DMAs remains near peak cautionary levels at 89.7 but is not a valuable “timing tool” by our experience. The spread between the forward p/e for the SPX, based on consensus estimates from Bloomberg at $167.52, versus the “rule of twenty” stands at 16.7 versus 17.2. While positive, it continues to get closer to fair value as forward earnings estimates have been gradually declining over the past few weeks while the SPX has risen.
- In conclusion, we have yet to see any sell signals of note on the charts, with the uptrends staying largely intact, while the data remains rather benign thus causing us to keep our “positive” near term outlook in place.
- SPX: 2,745/2,812
- DJI: 25,858/26.370
- Nasdaq: 7,435/7,663
- NDX: 7,008/7,206
- DJT: 10,298/10,675
- MID: 1,898/1,956
- Russell: 1,546/1,587
- VALUA: 6,135/6,330