Data Largely Neutral
Opinion: The indexes closed mostly higher Monday with the one exception of the VALUA. However, internals were negative on the NYSE while NASDAQ internals were mixed. No violations of support/resistance occurred leaving the index charts in their varied states. The data has turned primarily neutral. The net result is we are seeing a further weakening of market breadth as the number of issues participating in gains lessens in spite of what the large cap charts imply. Valuation remains extended. As such, the various trends of the charts should be respected whether positive, negative or neutral.
- On the charts, the only index to close lower on the day was the VALUA (page 5). The rest posted gains. However, said gains came on poor internals as the NYSE A/D and up/down volume were both negative while the NASDAQ A/D was negative with positive up/down volume. The weak internals are being registered on the cumulative advance/decline lines as well with both the All Exchange and NASDAQ negative and below their 50 DMAs and the NYSE cumulative A/D neutral and above its 50 DMA. So we now find the near term trends of the DJT (page 4) and RTY (page 5) negative, the DJI (page 2), MID (page 4) and VALUA neutral with the SPX (page 2), COMPQX (page 3) and NDX (page 3) positive. The mix of trends suggests to us that each should be respected in its own right.
- The data is mostly neutral. The All Exchange and NYSE 1 day McClellan OB/OS Oscillators are mildly oversold with the balance neutral (All Exchange:-51.8/-31.27 NYSE:-59.59/-21.08 NASDAQ:-47.25/37.97). The Equity and OEX Put/Call Ratios are neutral at 0.69 and 1.0 respectively as are the OpenInsider Buy/Sell Ratio (40.0) and new AAII Bear/Bull Ratio (28.0/43.0).
- In conclusion, the further deterioration of market breadth and mix of short term trends on the charts suggest a tougher environment now exists for market participation. With valuation remaining a concern, the trends of the various indexes should be respected on an individual basis.
- Forward 12 month earnings estimates for the SPX from Bloomberg of $136.79 leave a 5.35 forward earnings yield on a 18.9 forward multiple, a 15 year high.
SPX: 2,547/NA
DJI: 23,314/NA
COMPQX; 6,557/NA
NDX: 5,994/NA
DJT: 9,380/9,750
MID: 1,810/1,843
RTY: 1,450/1,489
VALUA: 5,646/5,843