Data Remains Largely Neutral
The indexes closed mixed again Wednesday with mixed internals on the NYSE while the NASDAQ’s were negative. Overall trading volumes increased notably form those of the prior few sessions. The only technical event of note was the DJT closing above it’s near term resistance level following upon Monday’s rally for that index. All of the short term uptrends remain intact while the data dashboard continues to send a generally neutral message. So while some of the index charts may be a bit extended, we have yet to see evidence appearing that would cause a shift in our near term “neutral/positive” outlook for the major equity indexes.
On the charts, the indexes closed mixed yesterday with positive breadth but negative up/down volume on the NYSE while the NASDAQ’s was negative on both accounts.
- Trading volume increased well above that of the prior few sessions implying a bit of “churn” possibly entering the markets.
- The DJT (page 4), MID (page 4) and RTY (page 5) closed higher as the rest posted modest losses.
- The only technical event worthy of note, in our opinion, was the DJT’s move above another resistance level after breaking above its previous high “volume at price” (VAP) resistance on Monday.
- All remain in short term uptrends and above their 50 DMAs while the cumulative advance/decline lines remain positive on the All Exchange and NYSE with the NASDAQ’s staying neutral.
- High VAP levels are viewed as supportive on the DJI (page 2), COMPQX (page 3), DJT, MID (page 4) and VALUA (page 5).
The data remains largely neutral.
- The 1-day McClellan OB/OS Oscillators are all neutral (All Exchange:+5.68 NYSE:+10.9 NASDAQ:+1.92).
- The detrended Rydex Ratio (contrary indicator) at +0.37 is neutral as is the Open Insider Buy/sell Ratio (66.6).
- Tuesday’s AAII Bear/Bull Ratio (contrary indicator) was also neutral at 30.33/31.67. We continue to view the lack of enthusiasm on the part of the crowd as a positive.
- The % of SPX stocks above their 50 DMAs (81.2) has entered bearish territory but we do not view it as an important “timing” indicator.
- The 12-month forward consensus earnings estimate from Bloomberg for the SPX is $173.85, leaving the forward p/e at a 17.3 multiple as it nears fair value as opposed to being slightly undervalued for the past several weeks while the “rule of twenty” finds fair value at 17.9. As such, it is somewhat less compelling than previously viewed, but not negative.
- The 10-Year Treasury yield is 2.12%.
- The earnings yield stands at 5.79%.
In conclusion, while some of the index charts may be slightly extended, the combination of charts and data continue to suggest a near term “neutral/positive” outlook remains appropriate.