Multiple New Closing Highs AchievedMcClellan 1-Day OB/OS Oscillators Remain Neutral
All of the major equity indexes closed higher Friday with positive internals on the NYSE and NASDAQ as overall trading volumes declined from those of the prior session on both exchanges. Several new closing highs were achieved on the charts as another saw its near term trend turn positive. The data remains largely neutral in its forecast. So while valuation has become somewhat less compelling given the advance of the indexes, we have yet to see enough of a shift in the weight of the evidence to change our current near term “neutral/positive” outlook for the major equity indexes.
On the charts, all of the indexes closed higher Friday with positive internals on lighter trading volume.
- More positive technical events were achieved as the SPX (page 2), DJI (page 2), COMPQX (page 3) and NDX (page 3) made new closing all-time highs.
- The DJT (page 4) also closed above resistance, turning its short term trend to positive from neutral.
- All of the indexes are in short term uptrends and above their 50 DMAs while the cumulative advance/decline lines are positive on the All Exchange and NYSE with the NASDAQ’s remaining neutral.
- High “volume at price” (VAP) levels are now supportive on the DJT and VALUA (page 5).
The data remains largely neutral in spite of the recent gains.
- The 1-day McClellan OB/OS Oscillators are all neutral (All Exchange:+21.96 NYSE:+28.44 NASDAQ:+18.72).
- The detrended Rydex Ratio (contrary indicator) at +0.4 is neutral as is the Open Insider Buy/sell Ratio (79.8).
- Last Tuesday’s AAII Bear/Bull Ratio (contrary indicator) at 32.0/30.33 is neutral as well. We continue to view this lack of enthusiasm on the part of the crowd as a positive.
- However, the % of SPX stocks above their 50 DMAs (83.4) has entered bearish territory but we do not view it as an important “timing” indicator. More negative data would be required.
- The 12-month forward consensus earnings estimate from Bloomberg for the SPX dipped to $173.89, leaving the forward p/e at a 17.3 multiple as it nears fair value as opposed to being slightly undervalued for the past several weeks while the “rule of twenty” finds fair value at 17.9. As such, it is less compelling than previously viewed but not negative.
- The 10-Year Treasury yield is 2.11%.
- The earnings yield stands at 5.77%.
In conclusion, we have yet to see enough shift in the charts and data to warrant a change in our current “neutral/positive” outlook for the major equity indexes at this time.