Data Primarily Neutral
All of the indexes closed higher Tuesday with positive internals on the NYSE and NASDAQ as volumes increased on both exchanges from the prior session. One of the indexes closed above resistance while two others regained their 50 DMAs. However, no short term trends were altered. The data is primarily neutral with a few modestly bullish signals. So given the current state of the charts and data, we are maintaining our near-term “neutral/positive” outlook for the major equity indexes.
- On the charts, all of the indexes closed higher yesterday with increased volume and positive internals. A couple of positive technical events occurred in the form of the DJT (page 4) closing above its near term resistance level while the COMPQX (page 3) and MID (page 4) regained their 50 DMAs that were violated at the close of the previous session. We would also note the stochastic levels for the COMPQX, NDX (page 3) and MID are now oversold but have not yet triggered bullish crossover signals. As such, the short term trends cover all of the bases with the DJI and DJT positive, the SPX, RTY and VALIA neutral while the COMPQX, NDX and MID remain in short term downtrends. The cumulative advance decline lines for the All Exchange and NYSE are neutral with the NASDAQ’s negative and below its 50 DMA.
- The data continues its largely neutral message including all of the McClellan OB/OS Oscillators (All Exchange:-24.75/+25.67 NYSE:-10.0/+46.61 NASDAQ:-40.24/+8.77). The Equity Put/Call Ratio (0.69) and OpenIsider Buy/Sell Ratio (44.6) are neutral while the Total P/C (contrary indicator) is a bullish 1.0 as is the OEX P/C at 0.92. Valuation finds consensus forward 12 month earnings estimates for the SPX of $168.48 leaving the forward 12 month p/e for the SPX at 16.7, versus the “rule of 20” implied fair value of a 17.0 multiple, and a 5.98% earnings yield.
- In conclusion, while some of the index charts remain negative, we suspect some of the prior market leaders with significant market capitalization may be exerting enough influence to make things look a bit more negative than may actually may be the case. And while some shift in leadership may be at hand, we are maintaining our near term “neutral/positive” outlook for the indexes at this point in time based on the state of the charts and data.
- SPX: 2,790/2,853
- DJI: 25,000/26,000
- NASDAQ: 7,589/7,821
- NDX: 7,100/7,373
- DJT: 10,769/11,100
- MID: 1,956/1,982
- Russell: 1,654/1,712
- VALUA: 6,365/6,487