Valuation At New Peak
Opinion: All of the indexes closed higher yesterday with positive internals on higher volumes from the prior session on both the NYSE and NASDAQ. All of the equity indexes we follow posted new closing highs. Some of the data has not updated this morning so its neutral message may not be all that accurate. However, given the fact that all of the near term uptrends are intact and the data remains mostly neutral, we continue to suggest the current near term trends should be respected until proven otherwise, in spite of valuation reaching another new peak level.
- All of the indexes closed higher yesterday with positive internals on higher volumes from the prior session. All of the short term uptrends remain intact while the cumulative advance/decline lines for the All Exchange and NYSE remain positive as the NASDAQ’s remains neural. All are above their 50 DMAs.
- The data is sending a rather neutral message although we find some data did not update this morning, leaving the data signals debatable. Current readings find all of the McClellan OB/OS Oscillators neutral (All Exchange:+18.95/+23.97 NYSE:+28.35/+36.57 NASDAQ:+12.48/-4.4).The Equity Put/Call Ratio is bearish at 0.54 while the Total p/c is a mildly bullish 0.88 and the OEX p/c a bullish 0.81.. The OpenInsider Buy/Sell Ratio dipped to 48.0 and remains neutral as is the ISEE Put/Call Ratio at -9.59. Again, we would stress the data may not be completely accurate this morning and, as such, should be taken with a proverbial grain of salt. However, the forward p/e for the SPX based on forward 12 month earnings consensus estimates from Bloomberg has hit a new high at a 19.3 forward multiple.
- In conclusion, while valuation continues to be stretched, we have yet to see notable signals that would alter our opinion that the near term uptrends of the indexes should continue to be respected.
- Forward 12 month earnings estimates for the SPX from Bloomberg of $140.60 leave a 5.31 forward earnings yield on a 19.3 forward multiple.
SPX: 2,652/NA
DJI: 24,318/NA
COMPQX; 6,826/NA
NDX: 6,400/NA
DJT: 10,582/NA
MID: 1,893/NA
RTY: 1,525/NA
VALUA: 6,016/NA