Data Remains MixedOpinion
The bulk of the indexes closed higher Monday with the one exception of the DJT posting a loss. While breadth was positive on both exchanges, volumes declined again as the recent bounce progressed. No technical events of import were registered, leaving the bulk of the charts in neutral patterns while the data remains mixed. As such, given the state of the charts and data, we have yet to see enough evidence to alter our near term “neutral” outlook for the major equity indexes.
- On the charts, the only index to close lower yesterday was the DJT (page 4). The rest posted gains in spite of a pickup in the last hour of selling pressure leaving most near the midpoints of their intraday ranges. Some resistance levels were tested but not violated. No technical events of import occurred on the charts regarding breaks of resistance or support. As such, the bulk of the indexes remain within their sideways patterns that have been in place since March 22 with the exceptions of the COMPQX (page 3) and NDX (page 3) that are in slightly positive short term trends. Unfortunately, we do not see any strong signals at this point that would suggest which way the charts may break out of their current ranges.
- The data remains mixed. All of the McClellan OB/OS Oscillators are still neutral (All Exchange: +29.08/+29.32 NYSE:+30.07/+33.13 NASDAQ:+27.15/+26.78). The new AAII Bear/Bull Ratio remains neutral as well at 28.0/33.67 as does the OpeninInsider Buy/Sell Ratio at 44.1. And while the Total Put/Call Ratio (contrary indicator) is a bullish 0.93, it is being countered by a bearish Equity P/C (0.54) and OEX P/C (1.46). We would note the OEX P/C, typically viewed as the outlook from professional traders, has now flipped from being long calls during recent strength to now being long puts. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $162.42 at a 16.5 multiple versus the “rule of 20” implied fair value of 17.0.
- In conclusion, The bulk of the charts remain stuck in sideways patterns while the data scales are not yielding any strong signals regarding near term market directional probabilities. Thus we maintain our near term “neutral” outlook for the major equity indexes.
- SPX: 2,613/2,683
- DJI: 23,825/24,690
- NASDAQ: 7,060/7,304
- NDX: 6,592/6,832
- DJT: 10,183/10,565
- MID: 1,873/1,912
- Russell: 1,545/1,595
- VALUA: 6,004/6,114