Data NeutralOpinion
The bulk of the indexes closed lower yesterday with the exception of the RTY posting a gain. Internals were mixed on the NYSE as breadth was mildly positive while up/down volumes were evenly matched. The NASDAQ’s internals were negative. Overall trading volumes declined from the prior session. No technical events of import were generated although we did see more testes of resistance. The data is generally neutral. As such, we remain neutral/positive in our near term outlook although we are starting to get an itch that some resistance levels may soon be violated.
- On the chats, the indexes closed mostly lower with the exception of the RTY (page 5) posting a gain on the day’s action. No resistance levels were violated although we did see more tests of resistance on the RTY, COMPQX (page 2) and NDX (page 2). While it is too early to make a bullish call, the recent action on the indexes noted has us leaning in the expectation of those resistance levels possibly being overcome over the relatively near term. Yet again, we would wait for them to become fact before turning more positive. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ are all positive and above their 50 DMAs. All of the short term index trends remain neutral.
- The data is largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:+30.53/-28.05 NYSE:+32.76/-18.53 NASDAQ:+25.58/-37.98). The Equity Put/Call Ratio (0.65) and OpenInsider Buy/Sell Ratio (49.3) remain neutral while the Total P/C (1.02) and OEX P/C (1.93) are counterbalancing with very bullish and bearish signals respectively. Current valuation of the SPX based on forward 12 month consensus earnings estimates is at a 16.4 multiple versus the “rule of 20” implied fair value of a 17.2 multiple.
- In conclusion, while we remain encouraged by recent action we find it appropriate to maintain our current “neutral/positive” near term outlook for the major equity indexes until more bullish evidence is generated.