Data MixedOpinion
All of the indexes closed higher Friday with positive internals on the NYSE and NASDAQ as trading volumes declined from the prior session. Two of the indexes closed above their near term resistance levels. The data is a mix of neutral, positive and negative signals. In spite of the improvement on two of the index charts, we believe there is not quite enough evidence presented to alter our near term “neutral” outlook for the major equity indexes.
- On the charts, all of the indexes closed higher Friday with positive internals. However, trading volumes did decline from those seen during the prior session’s selloff. Improvements were seen on the COMPQX (page 3) and NDX (page 3) as both closed above their near term resistance levels. The RTY (page 5) also appears to have made another new closing high. However, we would note the gains seen on the COMPQX and NDX pushed their stochastic readings into overbought territory but have not given a bearish signal yet. So we find a mix of trends with the COMPQX, NDX and RTY in uptrends as the rest remain neutral. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ are positive and above their 50 DMAs.
- The data is mixed. The Equity Put/Call Ratio (0.56), OEX P/C (1.18) and OpenIsider Buy/Sell Ratio (41.0) are neutral. The 1 day McClellan OB/OS Oscillators are also neutral but the 21 day readings are now bearish and overbought (All Exchange:+26.87/+59.8 NYSE:+28.69/+67.4 NASDAQ:+25.47/+56.06). The Total Put/Call Ratio (contrary indicator) is a mildly bullish 0.86. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $163.34 at a 16.7 multiple versus the “rule of 20” implied fair value of 17.1.
- In conclusion, while we have seen some improves in some of the charts, the bulk are still in neutral sideways patterns while the data is a mixed bag and inconclusive. As well, valuation is nearing the midpoint of the “rule of 20” fair valuation level suggesting upside may be limited via that metric. As such, we are maintaining our current near term “neutral” outlook for the major equity indexes until the weight if the evidence suggests otherwise.
- SPX: 2,671/2,741
- DJI: 24,357/25,017
- Nasdaq: 7,418/7,560
- NDX: 6,943/7,100
- DJT: 10,713/10,995
- MID: 1,917/1,979
- Russell: 1,608/NA
- VALUA: 6,124/6,288