McClellan 1-Day OB/OS Oscillators Overbought
The major equity indexes closed higher Monday with positive internals on the NYSE and NASDAQ as trading volumes declined on both from the prior session. It was a remarkable session as all but one of the indexes managed to post new closing highs with all closing at or near their intraday highs, leaving all in near-term uptrends. As well, market breadth was strong enough to shift the cumulative advance/decline lines to positive from neutral.
The data finds insiders increased their buying activity as well. The only fly in the data ointment is we now find all the McClellan 1-day OB/OS Oscillators in overbought territory post the gains. Only it and the detrended Rydex Ratio are now suggesting we maintain our near-term macro-outlook for equities at “neutral.”
On the charts, all the major equity indexes closed higher yesterday with only the RTY unable to post a new closing high. All the index charts are now in near-term uptrends.
- Internals were positive on the NYSE and NASDAQ and strong enough to shift the cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ to positive from neutral.
- No stochastic signals were generated.
The data finds the McClellan 1-Day OB/OS Oscillators, however, were pushed into overbought territory (All Exchange: +55.53 NYSE: +50.11 NASDAQ: +60.73). While not at extremes, they do suggest some pause or partial retracement of recent gains.
- The detrended Rydex Ratio (contrarian indicator) measuring the action of the leveraged ETF traders dipped to 1.26 and remains in bearish territory at 1.25. So now only the OB/OS and detrended Rydex are cautionary.
- The Open Insider Buy/Sell Ratio moved up to 37.1 but remains neutral as insiders stepped up their buying activity.
- This week’s contrarian AAII Bear/Bull Ratio (29.67/41.53) remains neutral with the increase in bulls as does The Investors Intelligence Bear/Bull Ratio (23.8/48.9) (contrary indicator).
- Valuation finds the forward 12-month consensus earnings estimate from Bloomberg dropping back to $214.14 for the SPX. As such, the SPX forward multiple is 21.5 with the “rule of 20” finding fair value at approximately 18.4.
- The SPX forward earnings yield is 4.64%.
- The 10-year Treasury yield closed higher at 1.58%. Its uptrend remains intact with resistance at 1.70% and support at 1.47%.
In conclusion, we remain “neutral” in our near-term macro-outlook for equities primarily due to the OB/OS levels as and detrended Rydex Ratio. All other indicators are now positive.
SPX: 4,540/NA DJI: 35,485/NA COMPQX: 15,153/NA NDX: 15,426/NA
DJT: 15,302/15,945 MID: 2,779/NA RTY: 2,331/2,360 VALUA: 9,707/NA
All charts courtesy of Worden
S&P 500
Dow Jones Industrials
NASDAQ Composite
NASDAQ 100
Dow Jones Transports
S&P Midcap 400
Russell 2000 Futures
