Data Neutral
All of the indexes closed higher Tuesday with positive internals on the NYSE and NASDAQ as overall trading volumes increased from the prior session. Two of the indexes managed to reclaim their short term uptrends but cumulative breadth for the markets remains questionable, in our opinion. The data remains largely neutral as well. 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 higher yesterday with positive internals and higher volume for the NYSE and NASDAQ. Most closed at or near their intraday highs.
- The SPX (page 2) and NDX (page 3) managed to close back above their near term uptrend lines that had recently been violated, turning said trends back to positive.
- Both the COMPQX (page 3) and NDX closed at resistance. So the SPX, NDX, DJI (page 2) and DJT (page 4) are in short term uptrends as the rest remain neutral.
- The cumulative advance/decline line for the NYSE is positive, neutral on the All Exchange and negative on the NASDAQ. As such, breadth remains somewhat questionable, in our opinion.
- High “volume at price” (VAP) is supportive on the DJI, COMPQX DJT, MID and VALUA.
- However, we would note that the NDX support level is 200 points below current price.
The data still remains largely neutral.
- The 1-day McClellan OB/OS Oscillators remain neutral (All Exchange:-11.11 NYSE:-7.87 NASDAQ:-13.74). They need to drop below -50 to become oversold.
- The detrended Rydex Ratio (contrary indicator) at -0.04 is neutral.
- Yesterday’s AAII Bear/Bull Ratio (contrary indicator) also remains neutral at 29.0/33.67.
- However, the Investors Intelligence Bear/Bull Ratio (contrary indicator) is bearish as advisors are too bullish at 16.3/58.0.
- The % of SPX stocks above their 50 DMAs (76.8) is neutral as well.
- The Open Insider Buy/sell Ratio (40.7), while remaining neutral, has been seeing a decline in insider buying activity that may worth noting.
- The 12-month forward consensus earnings estimate from Bloomberg for the SPX is $173.45, leaving the forward p/e at a 17.3 multiple while the “rule of twenty” finds fair value at 17.9.
- The 10-Year Treasury yield is 2.07%.
- The earnings yield stands at 5.77%.
In conclusion, we are maintaining our near term “neutral” outlook for the major equity indexes based on current chart trends, overall breadth conditions and the decline in insider buying activity over the past two weeks..