Selling Volume IncreasesOpinion
All of the indexes closed lower Thursday with negative internals on the NYSE and NASDAQ as trading volumes surged. No support levels were violated on the charts, leaving their trends a mix of neutral and positive. The data is generally neutral with some conflicting signals thrown in. As such, we see no new evidence being presented to cause a change in our current near term “neutral” outlook for the major equity indexes.
- On the charts, all of the indexes closed lower yesterday with negative internals on the NYSE and NASDAQ on very heavy trading volume as the indexes continued to ping pong back and forth in wide swings this week. All of the indexes closed at or near their intraday lows. However, no support levels were violated on a closing basis although the DJI (page 2) and DJT (page 4) closed very near said support levels. The VALUA (page 5) closed back below its short term uptrend line leaving only the COMPQX (page 3) and RTY (page 5) in near term uptrends as the rest remain neutral. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain positive and above their 50 DMAs. We would note that as we daily scan close to 2,000 individual equity charts based on increased trading volume, we believe we are seeing an increasingly selective market in terms of bullish participants.
- The data is mostly neutral with a few conflicting signals. The bulk of the McClellan OB/OS Oscillators are back at neutral with the one exception of the NYSE 21 day that is mildly overbought (All Exchange: -0.19/+48.48 NYSE:+2.34/+54.09 NASDAQ:-3.35/+46.04). The Equity Put/Call Ratio (0.63) and OpenInsider Buy/Sell Ratio (45.4) are neutral with the Total P/C (contrary indicator) a bullish 1.13 counterbalanced by the pros remaining bearish and long puts with a 1.5 OEX P/C. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $163.14 at a 16.6 multiple versus the “rule of 20” implied fair value of 17.2.
- In conclusion, the volatility experienced this week has been notable. However, both the charts and data are suggesting we maintain our near term “neutral” outlook for the major equity indexes in place at this time as no violations of support or resistance have been registered while the data is inconclusive.
- SPX: 2,671/2,74
- DJI: 24,357/25,017
- NASDAQ: 7,283/7,475
- NDX: 6,769/7,017
- DJT: 10,713/10,995
- MID: 1,917/1,979
- MIDRussell: 1,608/NA
- VALUA: 6,124/6,288