Some Data Turning More Cautionary
The bulk of the major equity indexes closed higher Tuesday with the one exception of the SPX posting a minor loss. Internals mixed on the NYSE and positive on the NASDAQ as overall trading volumes rose from those of the prior session. A few more new closing highs were achieved on the charts as all remain in near term uptrends. Yet we are maintaining our near term “neutral” outlook as more of the data is turning cautionary while the valuation gap has become more compressed. In short, we are of the opinion that more attractive buying opportunities may be in the offering.
On the charts, the bulk of the indexes closed higher Tuesday with the one exception of the SPX (page2).
- The NYSE saw mixed internals with positive up/down volume but negative breadth. Overall trading volumes were above those of the prior session on the NYSE and NASDAQ.
- New closing highs were achieved on the DJI (page 2), COMPQX (page 3) and NDX (page 3), although said gains were fractional.
- All of the indexes are in near term uptrends.
- The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ are positive as well.
- Yet there still are some concerns. All of the indexes are somewhat extended above their 50 DMAs, suggesting some degree of vulnerability while the VIX, at 13.06, is at levels seen three times over the past 12 months, all of which resulted in volatility and price corrections.
- As well, all of the stochastic levels remain overbought although they can stay in that condition for extended periods.
The data is turning more mixed in its message.
In conclusion, while we would normally be more constructive in our outlook, the VIX, stochastic levels, valuation and psychology data suggest some degree of caution may be appropriate, thus causing us to maintain our near term “neutral” outlook.
- DJT: 10,745/11,042