Short-Term Outlook Remains “Negative”Opinion
All of the indexes closed lower Thursday with negative internals on the NYSE and NASDAQ as volumes slipped slightly from the prior session. Multiple support levels were violated on the charts as all of the indexes closed at or near their intraday lows. The data remains mixed to slightly positive but not to enough of a degree to alter our near term “negative” outlook for the major equity indexes.
- On the charts, all of the indexes closed lower Thursday with broadly negative internals. The charts continued to weaken as the SPX (page 2), DJI (page 2), DJT (page 3), MID (page 4) and RTY all closed below their respective near term support levels that are adjusted below. The COMPQX (page 3) held support but closed below its 50 DMA that now finds all of the indexes in that condition. All of the indexes remain in short term downtrends with the exception of the COMPQX being neutral. Cumulative advance/decline lines are negative on the NASDAQ and neutral on the All Exchange and NYSE.
- The data is largely neutral but starting to show some positive signals. All of the McClellan OB/OS Oscillators are neutral with the exception of the NASDAQ 1 day that is slightly oversold (All Exchange:-16.45/+22.22 NYSE:-24.6/+30.27 NASDAQ:-50.36/-22.18). The OEX Put/Call Ratio finds the pros still slightly weighted in calls and expecting strength at 0.82 while the crowd has turned nervous via the Equity and Total Put/Call Ratios (contrary indicators) at 0.96 and 0.98 respectively. However, the Rydex Ratio (contrary indicator) finds the leveraged ETF traders near peak levels of leveraged long exposure at 71.8. So while some of the data has turned somewhat encouraging, we are of the opinion that it is not sufficient to alter our near term “negative” outlook for the major equity indexes at this point in time. Investment advisor complacency, a surge in margin debt, extended valuation and poor internal breadth remain concerns as well.