Breadth Improves
Opinion: The bulk of the indexes closed higher Friday with positive internals on the NYSE and NASDAQ. The one exception was the DJT closing lower on the day. Volume was below prior levels on both exchanges due to the shortened trading session. Multiple new closing highs on the charts were achieved as internal breadth continued to improve. The data is mostly neutral at this stage. So in spite of valuation remaining in its upper historical range, we are of the opinion that the mix of positive and neutral near term trends of the indexes should still be respected given the improvement in breadth.
- On the charts, only the DJT (page 4) closed lower Friday. The rest advanced with positive internals. The SPX (page 2), COMPQX (page 3), NDX (page 3), MID (page 4), RTY (page 5) and VALUA (page 5) all made new closing highs. As well, we now find the cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ to be positive and above their 50 DMAs showing a continuation of improving market breadth as discussed in some of our recent, prior comments. The near term trends of the indexes find the DJT and DJI (page 2) neutral with the rest in near term uptrends.
- The data is largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:+41.13/+6.3 NYSE:+29.01/+33.2 NASDAQ:+41.26/+18.48). The Equity Put/Call Ratio is neutral at 0.57 as is the Open Insider Buy/Sell Ratio at 32.4. Positive readings are found on the OEX Put/Call Ratio (0.76) and Total Put/Call Ratio (0.87).
- In conclusion, while the markets continue to be selective regarding those participating in rallies, the improvement in market breadth, current chart structures and benign data suggest the current index trends should continue to be respected.