Data Mostly Neutral
Opinion
All of the indexes closed lower Friday with negative internals on the NYSE and NASDAQ as volumes rose from the prior session on the NYSE while NADAQ volumes dipped. While no support levels were violated on the charts, several uptrend lines were broken as well as some 50 DMAs. The data is largely neutral with a few encouraging signals. Given the shift in the charts and the current data levels, we are forced to alter our near term outlook for the major indexes from “positive” to “neutral/positive.”
- On the charts, all of the indexes closed lower Friday with negative internals. Options expiration found all of the indexes except the DJT (page 4) and VALUA (page 5) closing below their short term uptrend lines. It also left the SPX (page 2), DJI (page 2), COMPQX (page 3) and NDX (page 3) below their 50 DMAs. As well, we also saw bearish stochastic crossover signals generated on the NDX, DJT, and VALUA. All closed near their intraday lows as well. However, no support levels were violated on any of the charts, leaving us to speculate that the weakness may have been a step back in an otherwise improving environment. The cumulative advance/decline lines remain positive and above their 50 DMAs.
- The data is largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:+1.94/+1.83 NYSE:-0.92/+13.51 NASDAQ:+2.91/-8.6). The Equity Put/Call Ratio (0.65) and OpenInsider Buy/Sell Ratio (40.5) are neutral as well with the Total P/C (contrary indicator) a bullish 0.98. Also, we now find the pros long calls at a bullish 0.86 OEX Put/Call Ratio. Valuation finds the SPX forward p/e based on forward 12-month consensus earnings estimates at a 16.6 multiple versus the “rule of 20” implied fair value at 17.1.
- In conclusion, while we remain generally optimistic, we cannot ignore the action on the charts last Friday that suggest we alter our near term outlook to “neutral/positive” from “neutral”.