Some Bearish Stochastic Crossovers Registered
Opinion: The indexes closed mixed yesterday with mixed internals on the NYSE and negative internals on the NASDAQ. Volumes rose on both exchanges from the prior session. A mix of technical signals occurred on the charts while the data remains largely neutral. As such, we have yet to see the weight of the evidence alter our current near term view for the indexes from “neutral/positive”. Extended valuation leaves our intermediate term view at “neutral”.
· On the charts, the indexes closed mixed with the SPX (page 2), DJI (page2), COMPQX (page 3) and DJT (page 3) closing higher. The rest saw minor losses. Internals were mixed on the NYSE with positive A/D but negative up/down volumes. NASDAQ internals were negative. Volumes rose slightly from the prior session. A mix of technical events occurred. On the positive side, the DJT closed above its short term resistance level. Yet it remains below its long term downtrend line. Cautionary signals came from the SPX, MID (page 4) and RUT (page 4) flashing “bearish stochastic crossover signals”. However, we would stress that said signals should be used for confirmation purposes only. And as the indexes affected have not violated their respective support levels, the crossovers are not yet “actionable”, in our opinion. The net result on the charts is that there really wasn’t enough action to alter their current neutral/positive trends.
· The data continues to send a largely neutral message. All of the McClellan OB/OS Oscillators remain neutral (All Exchange:-33.08/+28.72 NYSE:-35.78/+35.56 NASDAQ:-33.39/+21.51). The Equity and OEX Put/Call Ratios are both neutral at 0.59 and 1.27 while the Gambill Insider Buy/Sell Ratio remains neutral at 13.2. Thus the data continues to lack a dominance of evidence suggesting a near term market move in either direction.
· In conclusion, the recent sideways action on the charts combined with the data keep our near term outlook for the indexes at “neutral/positive” while a 17.2 forward 12 month multiple of 17.2 for the SPX leaves our intermediate term outlook at “neutral”.
· Forward 12 month earnings estimates for the SPX from IBES of $127.23 leave a 5.85% forward earnings yield on a 17.2 forward multiple.
SPX: 2,160/NA
DJI: 18,374/NA
COMPQX: 5,160/NA
DJT: 7,795/7,974
MID: 1,534/NA
RUT: 1,199/1,244
VALUA: 4,811/4,939