Data Mostly Neutral
Opinion: The indexes closed mixed yesterday with negative internals on the NYSE while NASDAQ internals were positive. Both indexes saw volume decline from the prior session. No significant technical events occurred on the charts, leaving all in near term neutral sideways patterns. The data remains largely neutral as well. As such, we remain “neutral/positive” in our near term outlook for the major equity indexes.
- On the charts, the indexes closed mixed yesterday with all closing at or near their intraday lows. NYSE internals were negative while NASDAQ internals were positive. The DJT (page 4), MID (page 4) and VALUA (page 5) closed lower with the rest posting modest gains after giving up the lion’s share of the day’s rally. No important technical events occurred on the charts, thus leaving all in their near term sideways patterns. However, we do find it encouraging that some of the indexes broke their downtrend lines last Thursday while Friday’s action posted higher lows as the trade war concerns accelerated as the level of proposed U.S. tariffs tripled.
- The data is almost entirely neutral including all of the McClellan OB/OS Oscillators (All Exchange:-6.64/-26.26 NYSE:-0.31/-17.07 NASDAQ::-15.77/-35.11). The AAII Bear/Bull Ratio (contrary indicator) remains neutral but now finds bears slightly outnumbering bulls at 33.0/31.67. The Equity Put/Call Ratio (0.61), OEX Put/Call Ratio (1.33) and OpenIsider Buy/Sell Ratio (44.1) are neutral as well while the Total Put/Call Ratio is a bullish 0.98. We believe valuations remains somewhat attractive with the SPX forward 12 month p/e at a 16.2 multiple versus the “rule of 20” that suggests fair value is at a 17.2 multiple.
- In conclusion, given the shift in the charts last week, current data and valuation levels, we remain “neutral/positive” in our near term outlook for the major equity indexes.