Data Continues To Be Largely Neutral
The indexes closed mixed Monday with negative internals on the NYSE and mixed internals on the NASDAQ. Both indexes saw volumes decline from those of the prior session. The charts saw one index close above resistance, leaving the near term trends a mix of positive and neutral, while the data continues to send a generally neutral message. As such, we are maintaining our near term “neutral/positive” outlook for the major equity indexes in place at this time.
- On the charts, the indexes closed mixed on generally negative internals on lighter trading volume. The DJI (page 3), MID (page 4) and VALUA (page 5) declined on the day with the rest posting gains, including the DJT (page 4) that managed to close above resistance, turning its near term trend from neutral to positive. So we now find the near term neutral trends in place for the MID, RTY (page 5) and VALUA while the rest are short-term positive. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ are neutral and above their 50 DMAs.
- The data continues to send its neutral message as has been the case over the past several sessions. All of the McClellan OB/OS Oscillators are neutral (All Exchange:-15.26/+21.5 NYSE:-21.74/+37.69 NASDAQ:-10.36/+7.87) as is the OpenIsider Buy/Sell Ratio at 44.1. The put/call ratios are all over the map with a mildly bullish Total P/C (0.85), mildly bearish Equity P/C (0.55) and very bearish OEX P/C (1.94) as the pros are placing a heavy bet on near term weakness appearing. They may be disappointed given the state of the futures this morning. Valuation finds consensus forward 12 month earnings estimates for the SPX of $167.80 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, no evidence has presented itself at this point that would cause a change in our near term “neutral/positive” outlook for the major equity indexes.
- SPX: 2,790/2,839
- DJI: 24,761/25,377
- NASDAQ: 7,691/NA
- NDX: 7,199/NA
- DJT: 10,546/10,940
- MID: 1,968/2,008
- Russell: 1,654/1,712
- VALUA: 6,365/6,487