Data Remains Mostly Neutral
All of the indexes closed lower Wednesday with negative internals on both the NYSE and NASDAQ. Trading volumes declined on the NYSE from the prior session while those on the NASDAQ rose. There were no violations of trend or support on the charts while the data remains largely neutral. As such we are inclined to maintain our near term “neutral/positive” outlook for the major equity indexes in place.
- On the charts, all of the indexes posted losses yesterday with negative internals. However, there were no violations of support or trend, leaving all in near term uptrends with the exception of the DJT (page 4) being neutral. The DJT did close on support which may be something to closely monitor. The only shift noted was in the cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ that turned neutral from positive. They remain above their 50 DMAs. The stochastic levels discussed yesterday remain overbought but have yet to give bearish crossover signals.
- The data is mixed but largely neutral. All of the McClellan OB/OS Oscillators are neutral (All Exchange:+9.39/-0.35 NYSE:+21.74/+6.7 NASDAQ:+0.52/-67.9) as are the Equity P/C (0.59), OpenInsider Buy/Sell Ratio (34.8) and detrended Rydex Ratio (0.96). The Total P/C (contrary indicator) and OEX P/C are at opposite ends of the spectrum with the Total showing some fear rising to a very bullish 1.02 while the OEX P/C is at one of its highest levels of comparative put/call buying at 4.68 as the pros essentially doubled their put exposure with a heavy bet on near term weakness. Valuation finds consensus forward 12 month earnings estimates for the SPX of $167.63 leaving the forward 12 month p/e for the SPX at 16.6 versus the “rule of 20” implied fair value at a 17.2 multiple and a 6.04% earnings yield.
- In conclusion, nothing occurred on the charts or data yesterday to alter our “neutral/positive” near term outlook for the major equity indexes.
- SPX: 2,741/2,813
- DJI: 24,300/25,163
- Nasdaq: 7,597/7,797
- NDX: 7,100/7,306
- DJT: 10,436/10,771
- MID: 1,968/NA
- Russell: 1,654/1,712
- VALUA: 6,365/NA