Data Remains Primarily Neutral
The indexes closed mostly lower Wednesday with negative internals on the NSYE and NASDAQ as NYSE volumes declined from the prior session while NASDAQ volumes rose. No important technical events occurred on the charts, leaving their short term trends a mix of positive, neutral and negative. The data remains largely neutral. Given the fact that nothing of note occurred on the charts or data, and in spite of negative futures this morning, we are keeping our near term “neutral/positive” outlook for the major equity indexes in place.
- On the charts, the COMPQX (page 3) and NDX (page 3) managed to post gains yesterday while the rest closed in the red. Market internals were negative. No important technical events occurred on the charts although we did see the MID (page 4) close back below its 50 DMA. So the short term trends for the indexes are unmoved with the DJI and DJT positive, the SPX, RTY and VALUA neutral and the COMPQX, NDX and MID negative. The cumulative advance/decline lines remain neutral for the All Exchange and NYSE while the NASDAQ A/D remains negative.
- The data continues its largely neutral message including all of the McClellan OB/OS Oscillators (All Exchange:-33.71/+17.44 NYSE:-31.49/+36.49 NASDAQ:-37.95/+1.32). The Equity Put/Call Ratio (0.67), OEX P/C (1.22) and Open Insider Buy/Sell Ratio (45.2) are neutral as well. The Total P/C (contrary indicator) is the one positive signal as the crowd is becoming fearful and long puts at a very bullish 1.02. Valuation finds consensus forward 12 month earnings estimates for the SPX lifting to $169.05, leaving the forward 12-month p/e for the SPX at 16.6 versus the “rule of 20” implied fair value of a 17.0 multiple. The “earrings yield” stands at 6.01%
- In conclusion, while the futures are pointing to a down open as trade war fears have come back into focus, we have yet to see enough actual evidence presented on the charts and data to alter our near term “neutral/positive” outlook for the major equity indexes at this point in time..
- SPX: 2,790/2,853
- DJI: 25,000/26,000
- NASDAQ: 7,589/7,821
- NDX: 7,100/7,373
- DJT: 10,769/11,100
- MID: 1,956/1,982
- Russell: 1,654/1,712
- VALUA: 6,365/6,487