Data Mostly Neutral
The bulk of the indexes closed lower Monday with negative internals on the NYSE while those on the NASDAQ were mixed with negative breadth but positive up/down volume. Overall volumes were below Friday’s options expiration levels. One index shifted trend from positive to neutral. The data remains largely neutral as well. As such, we remain of the opinion that the charts and data are implying a near term outlook of “neutral/positive” remains appropriate.
- On the charts, only the COMPQX (page 3) and NDX (page 3) managed to post gains yesterday as the rest declined. One index shifted trend as the DJT (page 4) closed below near term support, turning its trend to neutral from positive. Only the SPX and DJI remain in uptrends on a short term basis with the rest in neutral sideways patterns. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ are now all neutral as well and above their 50 DMAs.
- The data also continues to send a generally neutral forecast. All of the McClellan OB/OS Oscillators are neutral (All Exchange:-24.19/-4.74 NYSE:-33.32/-1.28 NASDAQ:-17.8/-7.26) as are the Equity Put/Call Ratio (0.63), OEX P/C (1.17) and Open Insider Buy/Sell Ratio (45.2). We would also note the detrended Rydex Ratio (contrary indicator) has dropped into neutral territory as the leveraged long ETF traders have lightened up to 0.59. The new AAII Bear/Bull Ratio finds the crowd evenly balanced at a neutral 30.0/35.33 with only the Total P/C bullish at 0.94. Valuation remains a bit stretched with consensus forward 12 month earnings estimates for the SPX at $168.52, leaving the forward 12 month p/e for the SPX at 17.3 versus the “rule of 20” implied fair value of a 16.9 multiple. The “earnings yield” stands at 5.77%.