Data Mostly Neutral
The bulk of the indexes closed lower Wednesday with the one exception of the DJT posting a gain. Internals were negative on the NYSE and NASDAQ as volumes increased from those of the prior session. No technical events of import were generated on the charts while the data continues to send a neutral message. As such, we are maintaining our near term “neutral” outlook for the major equity indexes at this time.
- On the charts, all of the indexes closed lower yesterday with negative internals with the exception of the DJT posting a gain.
- The DJI (page 2), COMPQX (page 3) and VALUA (page 5) tested support but managed not to violate.
- Given the lack of technical events, the near term trends remain neutral on the SPX (page 2), DJI, COMPQX, NDX (page 3) and VALUA with the DJT, MID (page 4) and RTY (page 5) negative.
- The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain unchanged and neutral as well.
- We await further evidence as to which direction the indexes will shift when the time comes. At this point it is inconclusive.
The data is generally neutral.
The 1 day McClellan OB/OS Oscillators are all neutral (All Exchange:-29.96 NYSE:+19.6 NASDAQ:-21.15).
The Open Insider Buy/Sell Ratio (58.5), detrended Rydex Ratio (0.19) and % of SPX stocks trading above their 50 DMAs (65.0) are all neutral as well as is the AAII Bear/Bull Ratio at 26.67/35.33.
Valuation finds the SPX forward p/e based on 12 month forward consensus earnings estimates from Bloomberg of $166.93 at a 16.8 multiple of said estimate while the “rule of twenty” finds fair value at 17.6, largely due to the recent notable drop in the 10 year Treasury yield. As such, the SPX continues to appear to be slightly undervalued.
In conclusion, given the current state of the charts and data, the evidence suggests we should maintain our near term “:neutral” outlook for the major equity indexes at this time.