More New Closing Highs

21 Day McClellan OB/OS Mildly Overbought

Opinion

All of the indexes closed higher Monday with positive internals on the NYSE and NASDAQ as volumes declined from the prior session on both exchanges. Multiple new closing highs were achieved on the charts. The data has turned a bit more mixed but lacks extreme readings that would be strongly suggestive of near term projections. The forward 12-month earnings consensus estimates for the SPX via Bloomberg rose again as the forward multiple has inched up a bit. As such, we have yet to see enough evidence to alter our opinion that the near term uptrends of the various indexes should be respected until proven otherwise.

• On the charts, all of the indexes closed higher yesterday with positive internals on the NYSE and NASDAQ. All closed at or near their intraday highs with only the DJT (page 4) unable to post a new closing high. All of the near term uptrends remain intact as do those of the cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ.
• The data has turned a bit more mixed with the 21-day McClellan OB/OS Oscillators inching into overbought territory and casting a bit of a shadow while the 1-day levels remain neutral (All Exchange +23.1/+52.97 NYSE:+9.48/+56.92 NASDAQ:+39.53/+51.63). The Equity Put/Call Ratio is a neutral 0.56 as is the OpenInsider Buy/Sell Ratio at 29.8. The Total and OEX Put/Call Ratios are bullish at 0.89 and 0.7 respectively. What continues to be the greater concern on the data are the sentiment indicators that show excessive bullish sentiment on the AAII Bear/Bull Ratio (20.33/53.6) and Investors Intelligence Bear/Bull Ratio (12.7/66.87). Yet they have been extended pretty much throughout the rally. As such, they have yet to exert any consequence on said rally to the negative.
• In conclusion, we do not see enough of a shift in the data or charts at this time to alter our opinion that the near term uptrends of the indexes should continue to be respected until proven otherwise.
• Forward 12-month earnings estimates for the SPX from Bloomberg were raised to $152.43, leaving a 5.4 forward earnings yield on a 18.6 forward multiple.
• SPX: 2,671/NA
• DJI: 24,678/NA
• NASDAQ: 6,890/NA
• NDX: 6,400/NA
• DJT: 10,582/NA
• MID: 1,893/NA
• Russell: 1,550/NA
• VALUA: 6,072/NA